ActBlue was Only the Beginning

The financial realities of the U.S. political system mandates nearly endless fundraising. That used to mean candidates would traipse from chicken dinner to chicken dinner with hands outstretched in both greeting and solicitation. The coincident rise of populist political movements both liberal and conservative, along with nearly universal comfort with e-commerce, has greatly changed the way campaign coffers are filled today.

Consider, for instance, a Facebook ad recently run by U.S. Representative Alexandria Ocasio-Cortez (D-NY):

It is recommended that new members of Congress spend up to five hours a day making calls to donors and figuring out how they will fundraise for their reelection. That's more time allocated to reaching out to PACs, corporate lobbyists, and wealthy donors than spent writing legislation, talking with constituents, or doing the job members of Congress were elected to do.

That is why our campaign is different. 80% of all our campaign funds come from supporters who click on ads like these and give $3, $5, or $10. That way, Alexandria can spend less time on the phone, and more time fighting for big projects like the Green New Deal, Medicare for All, or the Loan Shark Prevention Act. Will you become a small-dollar donor today?

Ocasio-Cortez, who upset a long-term incumbent in the 2018 Democratic primary and later won handily in the general election for her district in New York City, is a lightning rod for the perceived rise of the new social media-savvy, digital-centric politician.

Since the widely publicized success of Barack Obama's grassroots online fundraising efforts in 2008, the digital political money machine has been touted as the secret sauce that completes the recipe of a successful candidacy. That perception, however, may be considerably overstated. In fact, once one gets past ActBlue, the Democrats' unofficial fundraising platform that has helped candidates raise more than $3.5 billion since it launched in 2004, the wider political digital ecosystem is just emerging.

"If the Internet made it as easy as people make it out to be to run an insurgent campaign these days, then we would have seen more than two successful primary unseatings of incumbent Democrats in the last cycle," said Andrew Mayersohn, who researches campaign expenditures for the watchdog Center for Responsive Politics. "Maybe it's most accurate to say all these various Internet tools are a good force-multiplier for various other aspects of a candidacy, but we have seen lots of people with tons of cachet over the Internet, and who have raised lots of money over the Internet, and they still go nowhere. It can help, but by itself, it is not nearly sufficient."

Patrick O'Keefe, chairman of the Maryland Republican Party, said the role of online donations, especially small-dollar contributions, is now on a par with other modes of donation.

"We're seeing, for example, with our events, where as much as half the money is collected online with credit cards," O'Keefe said. "Every campaign is different. In campaigns with a lot of excitement and motivation, you'll see a lot more of the small-dollar donations, but most campaigns are always looking for a balance."

However, achieving that balance, for upstart campaigns especially, is at this point a chicken-or-egg proposition: without a significant investment in digital infrastructure, they can't be competitive in fundraising, but those without significant up-front funding can't invest in a robust digital infrastructure. Some of the obstacles to doing so are technical; others are age-old matters of shaky promotion, outdated legislation, or converting old-style professional networks to digital platforms.

Stumbling on An Answer

One of the newest entries in the digital fundraising ecosystem, Grassroots Analytics, founded in 2017, is exploiting an idealistic theory  (that elective office should be in reach of anyone committed and passionate enough to pursue it) that has often collided with the realities of the amount of money needed to run a competitive campaign.

"We ended up starting this company because we were sort of stunned that it didn't exist already," Grassroots Analytics founder and director Danny Hogenkamp said. "And I honestly still can't believe that I was the one who was forced into doing that."

Hogenkamp became enlightened in the vagaries of early-stage political fundraising when, shortly after graduating from college in 2016, he worked to raise funds for the Congressional campaign of Colleen Deacon, who challenged Republican incumbent John Katko in New York's 24th district, in the central part of the state. Deacon was a classic underdog, with a background that included working as a waitress and receiving public assistance prior to working for Syracuse Mayor Matt Driscoll and U.S. Senator Kirsten Gillibrand.

In working for Deacon, Hogenkamp found there was no real technologically supported way to quickly scout for likely donors. One of the reasons for this, he said, was that campaigns are often akin to fleeting small businesses that open and close, with little continuity in resources. In addition, he said, the amount of money needed to run a viable campaign has created a climate in which those "in the club" constitute a sort of self-perpetuating circle.

"There are regional fundraising consulting companies that operate on a very buddy-buddy, who-knows-who basis," Hogenkamp said. "And the biggest reason of all is that even until five or 10 years ago, most candidates were already pretty wealthy and well-connected, and could raise hundreds of thousands of dollars from their immediate friends. Network-based fundraising is still a very viable way to run for office for 90% of candidates. It's only in the past decade where a large percentage of candidates, and largely on the Democratic side, are running for office after having been making $50,000 or $60,000 a year as a teacher or in a union job."

What Grassroots Analytics does, Hogenkamp says, is to scrape the World Wide Web for donor demographics that indicate someone may be sympathetic enough to a candidate to contribute.

"Let's say a teacher, a female teacher from upstate New York maybe in a sort of red-to-blue district starts a campaign. We'll find female teachers who have given low dollars, maybe a few times. There are a lot of people like that. Basically, our computer would find those needles in a haystack, aggregate them, and our team makes it available to the campaign. We're just enabling the campaign to connect with them to get their story out there, and once the story is out there, hypothetically, if they were a good candidate, they would raise a lot of money."

Hogenkamp said Grassroots Analytics has worked with about 100 campaigns thus far in the current election cycle, and he expects that number may increase 10-fold. He doesn't expect a huge jump in employees from the firm's current six (although more server space is more likely, he said). And, though he feels the company has devised a useful product for candidates who may need it most, he has mixed feelings about it.

"We would love to be out of business," he said. "The campaign finance system we work in every day is completely ridiculous. You have to raise $3 million to run for Congress. I sort of don't even really like fundraising at all, but there will never be any progressive change in the country if you have to raise millions of dollars by calling rich people to run for office. We are trying to come up with some other way, some other viable path for someone to run for Congress."

GOP Plays Catch-Up

While many Democrats end up using ActBlue as their fundraising platform, the Republicans did not provide an analog until late June of this year. O'Keefe outlined some of the reasons, including entrenched players using different platforms, in a post on Medium last year; subsequent developments illustrated issues with creating a brand as instantly recognizable as ActBlue.

In January, the GOP announced it was going to launch a platform called Patriot Pass. However, O'Keefe said, after New England Patriots owner Robert Kraft commented the name sounded too much like it had something to do with his team, the name was changed to WinRed, and its launch was postponed until late June.

WinRed, with a tag line of "They Act. We Win" that clearly targets ActBlue, is being promoted as a way for the Republicans to reduce the party's longstanding online balkanization in one platform.

"WinRed is similar to other donation platforms (create a page and send email or ads traffic to it) —except our technology layer is executed by way of a PAC," its FAQ page states. "This lets you easily and quickly earmark donations to anyone on WinRed. If you wanted to create a page that split donations to your five favorite campaigns, you can do that—no additional lawyers or treasurers needed. Or, if you just want to create a single page that raises money for a single entity, that works too."

"Our technology processes the donation and ensures that it gets to the right place. Then it provides all the necessary donation data in a timely manner so it can be used by your compliance officer to file your reports.

Whether or not that promotion works may depend on how much GOP campaigns spend digitally on visibility, according to O'Keefe. For instance, he said, Donald Trump's presidential re-election campaign is spending 40%–50% of everything it raises on Facebook ads, largely to build lists and get donations.

"That doesn't happen down the ballot," he said. "Congressional campaigns are only spending 4–6% of their budget that way."

CPR's Mayersohn said that historically, the Republicans have relied on direct mail to reach small donors. "That has been a tactic dominated by Republicans and conservative outlets for as long as we have data," he said. "That has disadvantages. It's much more expensive to raise money through direct mail than online. Online, you're only paying a credit card fee of 3 or 4%, and for direct mail there is the cost of all those envelopes going out."

Whether or not those extra costs will offset what is raised and result in changes in representation is a very open question. While there is currently a lot of momentum behind the left wing of the Democratic party, O'Keefe said he did not think it represented a long-term alteration in the balance of fundraising power.

"They are raising money off of frustration with Trump, similar to the Tea Party in 2010, which made its money off frustration with Obama," he said. "It is cyclical, it doesn't last forever."

Enduring Change Afoot?

While the fortunes of partisan fundraising platforms may ebb and flow depending on the political zeitgeist at any given time, several jurisdictions are pioneering a concept designed to counter the effects of big-money donors: small-donor public financing. The fiscal year 2020 budget for New York State, for example, mandates a nine-member commission with the binding power to implement public campaign financing for legislative and statewide offices, authorizing up to $100 million annually in public funds. The commission's report is due Dec. 1 and will be binding within 20 days of issuance.

Exactly how donors might navigate that system is still unknown, but the system's architects may need to look no further for inspiration than the New York City Campaign Finance Board's  online platform, NYC Votes Contribute. Launched in 2013, the tool works with payment processing vendor Stripe, which charges a competitive transaction fee, and offers a compliance engine and documentation and reporting elements. Set-up and maintenance are free.

Seattle also recently joined the online public financing roster. In February, the city launched the online version of its Democracy Vouchers project, itself the result of a 2015 citizen-led referendum. Each eligible voter is given four $25 contribution vouchers by the Seattle Ethics and Elections Commission (SEEC), which budgeted $4.2 million in voucher funding.

"There will be some offset costs over time," SEEC spokeswomen Annie Tran said in an email. "Residents who sign up for online vouchers will no longer receive paper vouchers, but the goal of online vouchers is to improve access to the program for our residents."

One possible, and profound, stumbling block for an efficient political fundraising ecosystem resides in the outdated rules regarding the use of contributors' information—under the Federal Election Campaign Act, information about individual contributors taken from FEC reports cannot be sold or used for soliciting contributions (including any political or charitable contribution) or for any commercial purpose. The act became effective in 1972 and its antiquated provisions fly in the face of a world in which big data, especially publicly available big data, is being used to tailor marketing campaigns for everything imaginable. In effect, firms like Grassroots Analytics need to proactively scrub any URLs that are obvious descendants of FEC data, but Hogenkamp said the ambiguities and antiquity of the law make it nearly impossible to follow.

"You can literally ask anyone working in the campaign space, nearly every single campaign across the country is violating those finance rules every day," he said. "They are downloading the list themselves, looking through Excel themselves, and because they are not automating the process or using the data in any sort of intellectual way, they don't really need to worry about it—and also, the FEC doesn't really enforce anything. Probably because they know the law is ambiguous and arcane."

CPR's Mayersohn said the boom in online donations has not been matched by any increase in FEC enforcement capabilities. Whether or not that will lead to dangerous loopholes is still a question.

"Drastically increasing the number of donors and having campaign finance reports that are literally 5 million pages long in the case of ActBlue, I have to figure that makes it harder to enforce things," he said. "That's an inevitable side-effect of having so many more donors. If you're getting four-figure checks at fundraisers, it's much easier to vet people than if you're getting money from literally hundreds of thousands of voters."

Gregory Goth is an Oakville, CT-based writer who specializes in science and technology.