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The 2008 Online Money Race

Reprinted from National Journal's Technology Daily

New Online Rules May Boost Presidential Fundraising
By Heather Greenfield

The Federal Election Commission last month quietly issued a ruling that was buried amid the news of the mid-term election. But the decision is one that some observers predict will play an unprecedented role in who wins the nominations for the 2008 election.

The FEC ruled that ActBlue, an online group that raises money for Democrats, can create draft funds and collect donations ahead of potential candidates announcing their candidacies.

"I think it is the most significant change in how people are going to raise money for public office in a long time," said R. Rebecca Donatelli, the chairwoman of Campaign Solutions and previously the lead Internet consultant for the 2000 presidential campaign of Sen. John McCain, R-Ariz. "This is a whole sea change, and I don't think people realize the difference it can make."

Until now, it was possible to raise pledges for would-be candidates. Candidates would explore their own viability by sending workers to collect pledges, usually from big donors.

But ActBlue founder Benjamin Rahn said anyone who has ever worked for a campaign knows the difficulty of collecting pledges with follow-up letters, calls or e-mails. The exercise gets exponentially harder when collecting from lots of small donors, like those who contribute at ActBlue, rather than from a few big ones.

"In 2004 the Clark folks did a great job, but it was hard for them to follow up on all the pledges," Rahn said of Democrat Wesley Clark. He had $1 million in pledges when he announced he would run. "With this [new system], the money is actually in the bank."

Organizations like ActBlue and the Republican counterpart, ABC PAC, can hold the money for candidates and transfer it within 10 days of official announcements. If a candidate does not enter the race, rules must be specified when donations are made for what will become of the money.

ActBlue told donors that if a candidate fails to form a presidential campaign committee before the Democratic National Convention, the money will go to the Democratic National Committee.

ActBlue raised $17 million for Democratic candidates during the last election cycle -- much of it increments of $10 to $25. Since the FEC ruling, ActBlue has raised $1,387 for Clark, $1,235 for Sen. Barack Obama of Illinois, and $867 for former Vice President Al Gore.

Rahn said the donations serve as a real-time poll of support for the candidates. "This is expanding the pool of people in deciding whether someone should make that run" for the presidency.

Outgoing FEC Chairman Michael Toner, a Republican who voted with the 4-2 majority to approve collecting money for non-candidates, made a similar observation, calling it an "innovative way" to involve small donors in the presidential race. He added that he expects Republican-leaning groups to copy the idea soon.

Jason Torchinsky, the general counsel to ABC PAC, called the ruling "great news." He said donations to potential Republican candidates on his site would go to the Republican National Committee, with "a little for ABC PAC," if a candidate does not eventually run.

"Where it becomes bigger is if we could raise money for other offices," Torchinsky said. "The FEC ruling could appear to allow that."

What is more of a gray area is whether it is possible to raise money against an undeclared candidate -- for example, collecting money for the eventual Republican opponent to Sen. Hillary Rodham Clinton, D-N.Y.

Torchinsky was the deputy general counsel to the 2004 re-election campaign of President Bush and said 80 percent to 85 percent of contributions exceeded $200, at which point organizations like his must provide contributors' occupations and employers. But in 2006, he said, few of the people who donated to the online "Rightroots" drive for specific House, Senate and gubernatorial candidates gave anywhere near that amount.

Both Democrats and Republicans hope the FEC ruling will give them not just a huge boost of early funds to influence who run and possibly who wins the nomination, but an expanded e-mail list of small donors who could easily be approached for more money later.

Posted by Danny | 05:27 PM

Comments

Go ActBlue :) Good news.

Karl | 12.27.06 03:42 PM

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