For the first time, the FEC allows text donations to campaigns
Donations are capped at $50 a month
Experts say this opens an entirely new revenue stream for campaigns
Campaigns also gain cell phone numbers from the effort
Could the national conventions become more than just political rallies? That’s what one political expert predicts with the Federal Elections Commission ruling that will allow people to text donations to the campaign of their choice.
“You now have the ability to turn the political conventions to a texting telethon,” said Mark Armour, president of Armour Media, a political advertising firm that advocated for the change with the FEC. “You can even put the number to text on every TV spot. The potential is almost unlimited, and it opens up an entirely new fundraising stream.”
Armour, a former press secretary to Al Gore, says the ruling that came Monday will eliminate some of the barriers that inhibit people from contributing to a candidate. You don’t need a credit card. You don’t have to walk to a mailbox. You just type a number into a cell phone, something most people take with them everywhere they go.
“Bigger picture, this is democracy with the small ‘d,’ ” he said. “Now, millions of Americans with their $50 can become the antidote to the super PACs.”
The FEC rejected a similar appeal in 2010, citing record-keeping concerns. But the companies that brought the current appeal – Red Blue T LLC, ArmourMedia Inc. and m-Qube Inc. – devised a work-around that met FEC requirements.
Here’s how it will work: An aggregator will track texted donations. Donors will be allowed to send up to $50 a month, the maximum an individual can give anonymously to a candidate or PAC. Texted donations will max out after $200. If someone tries to send more, the aggregator will reject it. The contribution then appears directly on the donor’s phone bill.
Both the Romney and Obama presidential campaigns wrote letters in support of the change.
“Among innovations, those with the potential of encouraging and easing the means of small donor participation are highly favored,” said Robert Bauer, general counsel for Obama for America campaign, in his letter to the committee. “It is fair to say that, in light of developments in contemporary campaign finance law, this objective is more urgent than ever before.”
Kathryn Biber, general counsel for the Romney campaign, wrote in her letter to the FEC, “The time to permit contributions via text has come. The American public has embraced texting as an important form of communication and commerce, and it is time for federal regulations to catch up.”
If the success of charity text donation campaigns are any indication of what this could mean for politics, both parties should be very happy with the ruling. When the American Red Cross asked people to text $10 to help victims of Haiti’s devastating earthquake in 2010, people sent more than $3 million in the first 24 hours. A Pew study found that the majority of Americans now text, and one in 10 has contributed to a charity this way. This method will especially appeal to young voters.
For the past several elections, donors have been able to contribute to campaigns using smartphones, but it was never easy and required several steps. You’d have to access the Internet, type in detailed contact information and then contribute online via a credit card. In contrast, the simplicity of texting could generate many more impulsive contributions from people caught up in a political moment during a speech or rally.
Ultimately, texted contributions from individual donors may not equal the hundreds of millions that super PACs will spend on the elections this year, especially since phone companies and aggregators will take a percentage of every dollar contributed via text. But campaigns will be gathering something even more valuable than the amount donated with these texts: cell phone numbers.
“With those numbers, you can keep the dialogue going and communicate with that donor, keep them engaged, get them to volunteer and maybe even upsell them on contributing more down the road,” Armour said.
Chris Newell, who designed the mobile campaign for Hillary Clinton’s 2008 presidential run, now operates a UK-based mobile payment company, Impulsepay. He predicts that this ruling could make a significant difference in politics.
“Long-term, this will have a big impact on fundraising,” Newell said. “The immediacy of a text donation, combined with detailed knowledge of voters’ interests, will allow highly targeted campaigns to solicit donations on a scale not seen before. We’ve seen this already take shape in other parts of the world and believe this is well-suited to the U.S.”
As far as the effect this ruling will have on the 2012 election, the jury is still out, Newell says.
“From a practical standpoint, it may be a little too late for the 2012 election to be considered a core fundraising tool,” he said. “However, candidates will be able to experiment with the technology and take those learnings into the Congress, Senate and state elections to get the maximum benefit from it. This should especially help reduce reliance on big donations and allow candidates to seek a broader fundraising base.”
Small donors have been a weakness of the Romney campaign. They have not shown the passionate support that they had for other candidates at this point in past elections. According to analysis by the nonpartisan Campaign Finance Institute (PDF), small donors – those who give less than $200 – make up only 10% of Romney’s donors as of April 30. Through those donors, he has raised $9.8 million.
In contrast, Obama has a long history of small-donor support, according to the same analysis of money raised through April. Forty-three percent of his donations were in the $200 or less range, accounting for $88.5 million of the money his campaign has raised overall.
While the FEC ruling has been applauded by both campaigns, at least one company wrote in opposition to the change.
Xtreme Payment Processing raised concerns about people abusing the anonymity of text donations. It warned that donors could circumvent the $50 limit by making donations through a prepaid cell phone. By law, those phones don’t have to be registered to anyone and the major carriers that make the phones do allow text donations.
Another concern is the possibility of foreign nationals, who are banned from giving money to candidates, using an American cellphone to make a donation. Corporations, which aren’t allowed to donate anonymously, could also encourage individuals to use their corporate-owned cell phones to donate.
“It is time for new technology, certainly, but we think it’s important to proceed with caution here,” said Susan Hampel, Xtreme Payment’s executive vice president, who wrote the letter of concern. “The FEC has spent so many years and so much effort to safeguard the system and help identify where moneys are coming from, now we worry the floodgates are open a lot more than the have been leaving room for potential abuse.”
Despite these concerns, the FEC concluded that the proposal is consistent with its legal requirements.
The ruling takes effect immediately, but the phone carriers still need to approve the application. Once the carriers approve, it could be up and running within the month.