Virtual Fund-Raising, Force for Democracy or a New Edge for Incumbents? by Nancy Watzman

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CAPITAL EYE
Volume 6
Number 3

VIRTUAL FUND-RAISING
Force for Democracy or a New Edge for Incumbents?
By NANCY WATZMAN

FEC MAY REVISE CYBERSPACE CAMPAIGN RULES

You're plopped on your couch, doing your best imitation of a potato, beer in hand and a bowl of popcorn within reach, when the pro-wrestling match is interrupted by a word from a sponsor:

One meeting with a Congressman — $2,000.
One subcommittee vote — $10,000.
One tax break slipped into a piece of legislation — $25,000.
There are some things money can't buy.
For everything else, there's MasterCard.

        Far-fetched? Maybe not. As the 2000 elections approach, increasing numbers of candidates and grassroots groups are soliciting credit card contributions over the Web. In March, Bill Bradley's presidential campaign petitioned the Federal Election Commission (FEC) for permission to count credit card contributions collected through the campaign's website (www.billbradley.com) toward presidential matching funds.

        To read Bradley's arguments to the agency, filed by the Perkins Coie law firm, raising money over the Internet would be the best thing to happen to democracy since a band of colonists rebelled against King George III.

        "At a time of concern over citizen disengagement from the political process, the Commission has the opportunity to ... encourage citizen participation, reduce the influence of large contributions, and restore confidence in democracy," says Bradley's appeal.

        Bradley is not alone. In fact, there seems to be a broad and somewhat surprising consensus in political, high-tech, and academic circles that Internet fund-raising can be a catalyst for a more competitive brand of politics less tainted by the clout of major contributors. Their optimism is not diminished by the fact that, to date, no campaign has raised a significant amount of money on the Web.

        Trevor Potter, a former FEC commissioner, made arguments similar to the Bradley campaign's to the FEC on behalf of America Online. And his personal opinions, he says in an interview, are right in synch.

         "My own sense of the use of the Internet is that it is exactly the sort of fund-raising that should be encouraged and that Congress would have had in mind had they known about the Internet back in 1975, when they created the matching funds program," says Potter. "It's small contributors. It isn't big fancy dinners. It's not $1,000 contributors or anything else. It tends to be people who are really interested in candidates."

        Says Elaine Kamarck, a professor at Harvard's Kennedy School of Government, and author of a paper on Internet use by campaigns in the 1998 elections: "A lot of people who have been really frustrated for a long time about money and politics — about needing money but hating to fund-raise — see the Internet as the first break in awhile."

        For candidates, the appeal is obvious. The candidate doesn't have to make phone call after phone call begging for cash. The medium is far less expensive than direct mail, the main tool now used to raise small donations. Instead of spending money on mailing lists, paper, printing, postage, and tracking systems, the campaign slaps up a website and the donors arrive.

        If the Internet proves to be a way to raise more small contributions with less effort and expense, then it would appear to be a "win-win" proposition, offering politicians wide, more diverse support with less effort.

        Indeed, the idea of Web campaigning and fund-raising seems as popular as Internet stocks are on Wall Street. And just as most Internet companies manage to generate good press and inflated stock prices without turning a profit, the significance of political fund-raising on the Web is based more on conjecture than proven results.

        In the 1998 elections, 43 percent of major and minor party candidates running for governor or Congress had websites, according to Kamarck's study. Of those websites, just 11 percent offered visitors the opportunity to contribute by credit card. Forty-two percent provided information on how to send contributions through the mail. That means more than half the websites did not solicit contributions at all.

        No comprehensive information is available on how much money campaigns collected over the Web, but anecdotal evidence suggests the amounts were encouraging, but hardly astronomical. The San Francisco Chronicle reports that Sen. Barbara Boxer collected $25,000 through her website. According to NBC, Minnesota Governor Jesse Ventura raised $80,000 with his site.

        "The last election cycle was just to see if it worked. Nobody raised a lot of money on line," says Phil Noble, whose consulting firm PoliticsOnline, markets Instant Online Fundraiser (tm), software that enables campaigns to collect credit card contributions over the Web. PoliticsOnline offers the software for free, but retains 10 percent of any money raised. "I wouldn't be shocked if one of the two major presidential campaigns crack $5 million over the Net. Now that's nothing compared to $100 million, $300 million they're going to spend. But we're talking $0 to $5 million in four years."

        Candidates are not the only ones raising money over the Internet. Grassroots groups ranging from the National Organization for Women (NOW) to the Family Research Council are also taking advantage of the new technology. NOW's website (www.nowpacs.org) still shows a notice dated July 1998, urging members to contribute to one of the group's PACs, by credit card or mail: "Help us compete with a well-funded opposition...Our political action committees allow feminists to show our strength in numbers in elections at all levels."

        Though the 2000 elections are still more than year away, all the major presidential candidates are accepting contribution pledges over the Web. So far, Republicans George W. Bush, John McCain, and Malcolm "Steve" Forbes and Democrat Bradley provide browsers with the opportunity to donate online with a credit card. Vice President Al Gore, a Democrat, plans to add the feature soon.

        Other groups are using the Internet to collect pledges rather than actual contributions. The group Censure And Move On (www.moveon.org), started last September by husband-and-wife-team Joan Blades and Wes Boyd in Berkeley, Calif., made headlines when its guests pledged to contribute more than $13 million to opponents of representatives who voted to impeach President Clinton. The pledges come due in the 2000 congressional elections, and it remains to be seen how many of the promised donations are delivered. But even if a fraction of the pledges are honored, Blades and Boyd will have proven the power and ease of political fund-raising over the Internet.

        The 2000 elections may well show that it's possible to raise large amounts of money over the Web. Whether it will cure all the ills of the campaign finance system and "restore confidence in democracy," as Bradley's campaign claims, is another question.

        The history of campaign finance shows that, over and over again, established, well-financed interests figure out how to exploit any new fund-raising tools and techniques that come along.

        A study of 1,400 federal campaigns in the 1998 elections by Net.Capitol (www.netcapitol.com) concluded that well-funded campaigns were more likely to have websites, while cash-poor campaigns were more likely to use e-mail. The group hypothesized that incumbents — with more money to spend on websites and experienced staffers to update them — enjoy the same advantages on the Internet as they hold in other areas.