Finding Money on the Web

Finding Money on the Web

Finding Money on the Web

Tracking politics as it's practiced on the Web.
Oct. 1 1999 9:30 PM

Finding Money on the Web

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Slate and the Industry Standard join forces to examine the effect of the Internet on Campaign 2000.

The Internet economy has already revolutionized the world of campaign fund raising, even if only a tiny fraction of the total money raised so far for the presidential contest was raised online. Evidence that the two worlds have collided does not show in the bottom line. Instead, there are subtler signs: Online contributors give more on average than offline contributors; they are repeat contributors; and congressional candidates have begun to clamor for online contributions.

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The news is so encouraging, in fact, that one firm supplying presidential wannabes with Web fund-raising tools may soon go public. Aristotle, previously Aristotle Publishing, which has provided campaign-management software to candidates for 20 years, has already reserved the Nasdaq stock ticker symbol VOTE. The company, which has offices in Washington, D.C., and San Francisco, recently received venture-capital financing from high-profile Silicon Valley investors including W.R. Hambrecht & Co., Rupert Murdoch's e-partners, and the market research firm Odyssey. Company officials say they don't intend to file with the Securities and Exchange Commission until later this year.

The news of the possible public offering comes at a time when only about $1 million has been raised online in the presidential race--and that's by all the candidates combined. More than half of that amount has gone into the coffers of former Sen. Bill Bradley, who has e-raised at least $600,000--including contributions from donors who print out the form on Bradley's Web site and mail it in with a check. That $1 million is less than 1 percent of the more than $120 million raised in the race so far. (The campaigns are expected to release updated figures Oct. 1.) While some are quick to conclude that the Net hasn't lived up to its hype as a cheap, efficient fund-raising tool, the people at Aristotle beg to differ.

"We expect that within four and a half years, 80 percent of the money raised from individuals for political candidates will be raised on the Internet," says Aristotle co-founder John Aristotle Phillips. While only $125,000 was raised online in 1998, he expects $20 million to be raised in all federal campaigns in 2000. "The presidential funds are just a fraction of the money that will be raised," he says. "The overwhelming majority of the funds that will be raised and spent next year will be in races for senators, congressmen--and the dog catcher."

Five presidential contenders--Republicans Pat Buchanan, Dan Quayle, Alan Keyes, and Orrin Hatch, and independent Bob Smith--have signed up for Aristotle's CampaignContribution.com. The Internet fund-raising service processes contributions, gathers demographic information, coordinates data for FEC reports and, using a nationwide list of registered voters, checks that contributors are voters in good standing. The company, like its competitors Campaign Solutions and PoliticsOnline, charges campaigns a percentage of the contributions they raise. In Aristotle's case, the company charges an initial setup fee plus 10 percent of the contributions, a percentage that's also split with credit-card issuers and middlemen who interact with the banks, such as CyberCash.

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Phil Noble, president of PoliticsOnline, a nonpartisan firm in Charleston, S.C., is discouraged by this year's showing, but he doesn't think the problem is the public's discomfort with using credit cards online. The man who once said new fund-raising tools were "going to do for campaign finance what the machine gun did for bank robberies" blames the presidential candidates for the tepid public response. "I haven't seen them give anyone a reason to donate money," he says.

The George W. Bush and Al Gore campaigns have raised little more than pocket change through their Web contribution "storefronts." Bush has raised $90,000 online out of a pot of $52 million. The last figure the Gore campaign released was $85,000 online out of more than $25 million. Steve Forbes, who dips deep into his own considerable pockets, has netted less than $50,000 online, although he has arranged with a bank to develop a contribution site. Elizabeth Dole, whose campaign won't reveal how much she has raised on the Internet, had her site designed by Intershop Communications, a San Francisco-based commercial Web design firm. Sen. John McCain, whose fund-raising figures are also unavailable, uses tools supplied by Campaign Solutions, an Alexandria, Va., firm.

Despite the numbers, some observers are impressed with the activity on the Web. "The key to raising money online is trying to develop a relationship of e-commerce with supporters. ... I almost said customers," says Michael Cornfield, an adjunct associate professor of political management at George Washington University. "The enthusiasts of e-fund raising hope they will be able to get more out of each individual donor during the course of the entire campaign."

The Forbes campaign's Internet strategist, Rick Segal, says campaigns are already able to draw some conclusions about the type of people donating via the Internet. "I would say we have learned some fundamental things," he says. "1) The political contributor is willing to make a contribution in a secure online environment. That's been proven and validated in this election cycle. 2) You get the $10 contribution and the $1,000 contribution. And 3) you can get the repeat contribution."

The Bradley campaign has been raising at least $6,000 per day in credit-card donations online since Sept. 8. Last Friday, the day Sen. Daniel Patrick Moynihan endorsed Bradley, the campaign netted $13,000 over the Internet. "I can tell you that our average contribution is around $130, and that is much higher than the average contribution for direct fund-raising mail in Democratic campaigns," says Bradley's Internet consultant Lynn Reed.

The campaigns seem to reach a new pool of contributors. "We're seeing younger donors. The average age of direct-mail respondents is 65 to 70. That's not your demographic profile on the Net," observes consultant Rob Arena, of Presage Internet Consulting, who coordinated Bob Dole's Internet campaign in 1996. He notes that contributions might jump if campaigns used innovative approaches--the PBS donor model, for example, in which campaigns offer donors incentives, such as a T-shirt or a mouse pad featuring the candidate's likeness or slogan.