The Influence Industry: Text to donate to your favorite candidate
By Dan Eggen,
After Japan was devastated by a tsunami and nuclear disaster last year, charities raised millions of dollars simply by asking for donations from cellphone users. “Text REDCROSS to 90999 to donate $10 from your phone,” said one appeal from the American Red Cross.
Now the same fundraising technique could be coming to national political campaigns.
Two consulting firms — one from each party — are asking the Federal Election Commission for permission to accept political contributions via text messages, a move that could reshape the way many campaign donations are collected.
The idea has attracted support from campaign-finance watchdogs, who view it as a way to broaden participation in political campaigns and push back on the influence of interest groups funded by billionaires and corporations.
The strategy would be limited to donations of $50 or less, which can be made anonymously under federal guidelines. If the FEC approves it, President Obama, Mitt Romney and other 2012 candidates could begin using the approach in time for the November elections.
“This could change the way candidates think about fundraising,” said David Donnelly, executive director of Public Campaign, one of 10 watchdog groups that are backing the request for FEC approval. “There’s an important need to increase participation in the political system, and increasing small donations from people is one way to do that.”
Candidates have long tried to follow the lead of charities by using text-messaging fundraising, but they were hobbled by technical limitations that made it impossible to conform to FEC rules, legal experts say.
The main stumbling block is a requirement that campaigns must deposit donations within 10 days. But text-message contributions can take as long as 60 days to be paid because the money is collected as part of monthly cellular bills. The timing problem was one of the key reasons that the FEC rejected a proposal for text-message contributions in 2010, records show.
Red Blue T, a Republican consulting firm, and ArmourMedia, a Democratic one, say they have come up with a way around the problem.
Under their proposal, the groups would use a third-party firm called m-Qube, an “aggregator” that works with cellphone companies to arrange transactions for businesses and charities.
The arrangement would work a bit like a public-radio pledge drive: The contributor would pledge a certain amount, say $10, to a campaign. The campaign would then sell that pledge to an aggregator for a portion of the amount — say $7 out of $10 — and would be given the rest of the money, minus a small service fee, once the transaction went through.
The system would limit contributions to $50 per month per phone, and $50 in total for any campaign committee, according to the proposal. That way, the donations would fall under the FEC’s $50 limit for anonymous contributions.
Attorney Brett Kappel of Arent Fox, who brought the proposal to the FEC along with Arent Fox partner Craig Engle, said the approach is similar to the way credit card transactions are carried out. Previous FEC rulings allowing campaigns to sell mailing lists and other assets should apply to selling pledges as well, he said.
The potential for such fundraising appears enormous. A January study by the Pew Research Center shows that one in 10 American adults have used text messages to make charitable contributions. In the wake of the 2010 earthquake in Haiti, aid groups collected more than $43 million in donations through text-messaging services, the center found.
The Obama campaign, which aggressively solicits donations as small as $3, is already a heavy user of text messages to ask for money. But donors have to go to the campaign’s Web site to complete the transaction.
Under the new proposal, a candidate could ask thousands of attendees at a rally to immediately text the campaign with a small contribution — a modern version of passing the hat.
Maryland and California already allow state and local candidates to accept text donations, but allowing the practice nationwide could transform political fundraising, Kappel said.
“Our clients believe this would be a great fundraising tool for all candidates,” he said. “It allows for that kind of instantaneous fundraising and should bring more people into the system.”
For previous Influence Industry columns, go to washingtonpost.com/