Monday, July 16, 2007

The Unreported Campaign Finance Story--Small Donors

Well, the second quarter Presidential fundraising reports are in and there will be lots of reporting on the numbers. We already knew that Obama would have the biggest haul, both in terms of number of contributors and amount raised. Some stories, such as the Washington Post, are leading with the concept of raising lots of money and spending lots of money. Others stories will focus on methods, like the power of the internet as a fundraising tool. Still others will focus on the general fundraising race in terms of who has more money than whom or breaking it down by party. The campaign finance reform community will no doubt focus on the high end donors, those contributing more than $1,000 per person or giving the maximum amount.

The truth is, that is boring and has been done before.

I have tried to look at some different numbers, things the mainstream media won't report. Last quarter, I looked at spending on payroll and consulting as my first pass through. This quarter I want to look at fundraising a little closer. Once again, the first pass through will focus on the big six, that is the top three candiddates in each party. Sure, Edwards is becoming more and more of an after-thought and McCain is likely to be dead in the water at the end of the next quarter, but I needed to start somewhere.

To me the power of a candidate is not about the big donors. Most candidates rely on a circle of fundraisers, either professional or volunteer, to bring in the high dollor donors. Such the candidate must makes lots of phone calls and shake lots of hands to bring those donors in, but that is not news and it is not, at least to me, and indicator of their personal appeal on a broader scale or a very good indication of their fundraising operation within the campaign. High dollar donors are about who you know, not about how you operate and appeal to the masses.

The true measure of a solid fundraising operation is the small dollar donors. Traditionally, the GOP has done exceedingly well in this area and the Democrats are getting better, learning something from the unions and the GOP. But smaller donors tend to be a better bread and butter source of funding since they can be tapped over and over again. To that end, I looked at three categories of contributors in the second quarter, those who give under $200 for the cycle, those who give between $200.01 and $500 and those who give between $500.01 and $1000. To be sure, these numbers are not absolute and perfect, but give a pretty good indication of where money is coming from on the smaller level.

Standing not only head and shoulders above the rest of the field, but just completely crushing the competition for small donors is Barack Obama. Obama raised just over #32.9 million from individual contribotors in the second quarter. Of that total, 57.9 percent or $19 million came in amounts under $1,000. In contrast, Hillary Clinton raised $26.7 million from individuals, of which only 30 percent came in amounts of less than $1,000, a mere $8.08 million. Further adding to Obama's power base among small donors, he raised $9.76 million in unitemized, that is less than $200, contributions. That is nearly four times the amount in unitemized contributions than his nearest competition in that regard, John Edwards, who pulled in $2.89 million.

Among thet GOP canddiates, Romney has gotten 47.3% of his individual contributions in amounts less than $1,000, or $6.59 million. Rudy Giuliani brought in $4.84 million and John McCain, $5.53 million, or 27.9 percent and 40.63 percent respectively.

I need to look a little deeper into the first quarter fundraising numbers to do a similar comparison. But my gut tells me that Barack Obama is expanding his fundraising base at a pace that, if sustainable, may very well carry him to the Democratic nod. A large fundraising base translates into a large voter base as well. People who contribute money to a candidate will tend to vote for that candidate.

The primaries are about two matters. First, is the ability to appeal to the base and the second, is the ability to put together an operation. Obama appeals to the base and has much better favorability/unfavorability ratings than Hillary Clinton. Obama's positions generally appeal to the important constituencies in the Democratic party. Second, Obama has put together an operation, which at teh grassroots, is completely shattering records. Assuming fundraising is a good proxy for appeal, Obama is appealing to a larger number of people than the other canddiates. Whether he can transalte that into a win at the polls is a tough question.

Much more to come, inlcuding charts when I get them done.

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