Federal election regulators decided Thursday to allow corporations and unions to continue making large contributions to finance the two political parties' presidential nominating conventions despite a new law outlawing such donations in elections.

The Federal Election Commission (search) unanimously ruled that the law passed by Congress last year did not apply to fund raising by the local committees in the host cities that help the parties stage the nominating conventions.

Democrats are meeting in Boston next July; Republicans are holding their convention in August 2004 in New York City.

FEC Chairwoman Ellen Weintraub said Congress did not mention the conventions in the campaign finance law it sent to President Bush for his signature. She likened corporate contributions to the conventions to corporate sponsorships of sporting events such as the Super Bowl (search).

"Businesses contribute because they want the promotional benefit," Weintraub said, adding she didn't view the convention fund-raising as partisan.

She noted that the congressional sponsors of the law imposing strict limits on political donations chose not to weigh in with the FEC before it made the decision.

The FEC action not only permitted the continued flow of millions every four years from companies, wealthy business executives and unions to the two party conventions to pay for the hoopla, bunting, entertainment and food, it also expanded the number of companies that could potentially contribute.

The commission eliminated a rule under the old law that permitted companies and unions to contribute to the conventions only if they had a local connection to the host city.

Paul Sanford of the Center for Responsive Politics (search), a campaign finance watchdog group, opposed the ruling, saying it was "another example of the commission being completely captive to the party committees and letting them do whatever they want."

Sanford said the FEC wrongly created a loophole to the new law, arguing that the donations to the convention host committees should have been considered "soft money" covered under the new legal ban on big donations.

He said he feared the commission's rationale -- that the publicity corporate donors get is of equal value to the money they give -- could be used to justify other exemptions to the soft money ban.

Democratic National Committee (searchlawyer Joe Sandler applauded the decision. Had the commission banned soft money for party conventions "the national conventions would not have operated as they do," he said.

The host committees had requested the exemption from the soft-money ban, saying they faced tough economic times and a hefty price tag for throwing next year's events.

Cheryl Cronin, an attorney for the Boston Host Committee, had told the FEC that companies, unions and other national groups needed to contribute to their organization to help meet a goal of $49.5 million for the Democratic Convention.

The Boston committee has raised about $20 million, according to the group's executive director, Julie Burns, but with Massachusetts facing a budget deficit, the group cannot expect any financial help from the state or local government.

The Boston group's biggest donor is John Hancock Financial Services, which has donated more than $1 million, Burns said. She declined to provide specifics.

Kenneth Gross, an attorney representing the New York committee, also asked the FEC to lift its rule allowing only local individuals, companies, unions and others to give to the host committees.

The New York group, led by Mayor Michael Bloomberg (search), is raising money to help the Republicans hold their presidential convention. The committee's goal is $60 million, according to Gross, who declined to say how much it has collected so far.