Politics, Policy, and Technology

Small donors are having a significant impact on the amount of money that the Republican and Democratic candidates for president are raising. The Internet, providing the tools for grassroots activists to self-organize and conduct "p-commerce" by giving political money online, has clearly contributed to this.

The interesting story after six months of presidential fund-raising is that some candidates, notably Barack Obama, are doing much better at reaching small donors than others.

In a July 3 CNET post on what the Internet has done for presidential campaign fund-raising, I wrote, "the story technophiles should celebrate and fear how the Internet has enabled such an extraordinary, incredible, surprising increase in dollars (raised by candidates running for president). The Internet has created a new paradigm, connecting once-dormant activists to politics and telling them how important money is to victory."

An even deeper look, comparing the leading presidential candidates from both parties, shows that some have mastered the art of the small donor ($200 or less) better than others. Obama is the leader here, just as he is winning the overall nomination fund-raising fight for both the Democrats and Republicans.

The Campaign Finance Institute, which reviews the legally required raising and spending reports for each candidate, has crunched lots of numbers. Here's a bit of what the numbers reveal:

First, Obama has benefited much more than fellow Democrat Hillary Clinton from smaller donors. This probably shows a breadth of voter support among Democratic activists that Clinton either does not have or has not yet tapped into. This also means that Obama has a larger base of small givers to whom he can return for another installment (that means more cash), and it might mean that he has a grassroots movement that is larger and even more energized than Clinton's.

Obama has received more than $16 million in donations of $200 or less (29 percent of his total), while Clinton has received only $4 million in similar-size donations (10 percent of her total). Even John Edwards has beaten her with $5 million in small donations (24 percent of this total).

The leading Republicans (Romney and Giuliani) did far worse than the leading Democrats in raising smaller donations. Romney's small-donor percentage was 9 percent, and Giuliani's was 6 percent. Not coincidentally, they have raised less money, partly because they have appeared to focus fund-raising only from big donors. The Cadillac market must just be more their style than the Chevrolet set.

Second, despite the huge numbers of small-dollar donors, most money still comes from larger donors ($1,000 to the legal limit of $2,300). Even Obama's phenomenal "grassroots" fund-raising ($200 and less) has not cut too much into his reliance on larger donors. He has gathered 71 percent of his money from the larger donors. But compared to Giuliani, Romney and Clinton--who got 80 percent to 90 percent of their money from the larger donors--Obama is downright dirty in the grassroots fund-raising realm.

What conclusions can be drawn from these small-dollar versus big-dollar comparisons? There is a lot of money to be made by having an energized group of supporters who are willing to give smaller dollars. Any candidate who doesn't have a grassroots base of activists or who chooses not to approach them for contributions puts herself or himself at a serious disadvantage over time.

Further, technology, including the ability to self-organize over the Internet and to contribute online, has clearly factored in the rise in donations, especially the ones less than $200.

Finally, contributors represent one subset of overall voter support. Perhaps Obama's ability to get so many people to write small checks tells a different story from the one believed by the national political press corps and many weavers of conventional wisdom --that Clinton is the inevitable nominee for the Democrats. We'll know for sure in about seven months, when the first nominating elections begin happening.

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Campaign Finance Institute
Daily Kos: Small Dollars and Max Donors, Part II