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Inaugural Chair Kelly Knight speaks at the inauguration of Kentucky Gov. Matt Bevin, right of the podium in pale blue tie, December, 2015.Teresa Revlett

A top Republican fundraiser and activist has moved a step closer to becoming Donald Trump's ambassador to Canada.

The U.S. State Department is vetting Kelly Knight Craft, the first move toward an appointment. If she passes, the President will have to put her name forward to the Senate for confirmation.

Mr. Trump's choice of Ms. Knight Craft was first reported last Friday by The Globe and Mail. Sources have since confirmed the State Department is vetting her and that she is the only person it is reviewing.

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Ms. Knight Craft and her billionaire husband, Joe Craft, president of coal company Alliance Resource Partners, are prodigious GOP fundraisers and frequently make generous contributions themselves.

Ms. Knight Craft gave $265,400 (U.S.) to Trump Victory, an organization backing Mr. Trump in last year's election campaign, in two increments: A $105,400 contribution on July 14 and $160,000 on Sept. 15, according to records from the U.S. Federal Election Commission. She also gave Mr. Trump's campaign two direct donations of $2,700 each. Ms. Knight Craft and her husband sat on the committee planning Mr. Trump's inauguration.

The White House would not confirm Ms. Knight Craft's impending appointment on Wednesday.

"I do not have any announcements to make at this time," spokesman Michael Short wrote in an e-mail.

Ms. Knight Craft made her name as a GOP organizer and fundraiser in her native Kentucky in the mid-2000s. Then-president George W. Bush appointed her to the U.S. United Nations delegation in 2007.

Ms. Knight Craft runs a business consulting firm and has served on the boards of charitable organizations.

In a 2007 interview with the Glasgow Daily Times, the newspaper in her Kentucky hometown, Ms. Knight Craft said she first became involved in politics during Mr. Bush's 2004 re-election bid. She had raised funds for charity and thought she would transfer those skills to the political arena, she told the paper.

Ms. Knight Craft went to high school in Glasgow before attending the University of Kentucky in Lexington, where she still lives.

She and her husband are major donors to the University of Kentucky, where an athletics facility is named after Mr. Craft, and where Ms. Knight Craft is on the board of trustees.

She told the Daily Times her focus at the UN would be on "social, humanitarian and cultural issues," and matters concerning children.

"It will be a special honour to be part of the U.S. delegation, especially given the enormous global issues at stake for our country," she told the paper.

FEC filings show the breadth of Ms. Knight Craft's assistance to the GOP: Her donations go back 13 years and include contributions to the Republican National Committee, the Kentucky state party, GOP branches in several other states and such big-name politicians as Senate Majority Leader Mitch McConnell, former House speaker John Boehner, Senator Marco Rubio and presidential candidate Mitt Romney, for whom she and her husband served as Kentucky state finance chairs.

Between 2012 and 2016, Mr. Craft gave more than $2-million to several SuperPACs, including $1.25-million to American Crossroads, which was founded by Karl Rove, architect of Mr. Bush's election victories. His company gave $3.3-million to SuperPACs, with $2-million to American Crossroads.

The Canadian government may find it helpful to have a U.S. envoy in Ottawa with close connections to senior decision makers in Congress as Washington deals with issues such as tax reform and Buy America provisions for infrastructure spending.

Appointing an effective political operative to an ambassadorship is common. Canada's ambassador to the United States, David MacNaughton, for example, was co-chair of the Liberals' victorious 2015 federal election campaign.

Ms. Knight Craft's accession to the ambassadorship could take some time. If she clears State vetting and Mr. Trump puts her in front of the Senate, the foreign relations committee and the full chamber will have to approve the appointment.

Procedural feuding between Republicans and Democrats in the Senate led to months of delays in 2013 and 2014 before the Senate approved Barack Obama's pick for ambassador to Canada, Bruce Heyman, who resigned in January.

Mr. Trump asked all ambassadors appointed by Mr. Obama to resign before the Jan. 20 inauguration of his government.

Ms. Knight Craft and her husband announced last June they were backing Mr. Trump in part because he had privately promised to support keeping House Speaker Paul Ryan and Mr. McConnell in their leadership roles.

With a report from Robert Fife

In a speech to Congress, U.S. President Donald Trump praised Canada's "merit-based" immigration system. The same speech included tough rhetoric on undocumented immigrants in the U.S. and the plan to build a wall between the America and Mexico.

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