Voters this fall in Democratic strongholds are witnessing an increasingly common sight. Staked out on busy sidewalks in at least 38 American cities, political activists carrying credit-card authorization forms are drumming up donations for the campaign to defeat George W. Bush. Outfitted in T-shirts emblazoned with star-spangled Democratic National Committee logos, these earnest young men and women come across as grass-roots volunteers of the most enthusiastic sort. Little old ladies interrupt their strolls to thank them for their hard work.
But appearances can be deceiving. The organization behind these fund-raisers is Grassroots Campaigns Inc., a for-profit company that counts the Democratic National Committee as one of its flagship clients. It's a safe bet that few pedestrians talked into donating $149—"the price of a bus ticket from Washington, D.C., to Crawford, Texas"—realize that once these canvassers beat their daily quota, they keep up to 30 percent of the take.
In the rapidly shifting terrain of political fund raising, Grassroots Campaigns Inc. has emerged as a juggernaut. Founded just nine months ago as a sister company to Telefund, a telemarketing firm that specializes in progressive causes, Grassroots Campaigns has gained top-dog status as a fund-raiser. Its canvassers are every bit as enthusiastic and ideologically committed as their nonprofit counterparts. The décor of the company's makeshift field offices tends toward Fahrenheit 9/11 posters and inflatable George W. Bush-shaped punching bags. More important, these political entrepreneurs can flat-out sell.
While Howard Dean and Joe Trippi bask in the media glare for putting Internet fund raising on the map, canvassing firms may actually be doing more to revolutionize political organizing. Companies like Grassroots Solutions and FieldWorks have become the new ward heelers, specializing in neighborhood recruitment, door-to-door persuasion, and small-dollar fund raising. Their clients include congressional candidates, state party committees, and issue groups. Grassroots Campaigns is one of the younger firms in the niche, but its work with the DNC has put it at the center of the presidential election.
"When this program was first presented to me," DNC Chairman Terry McAuliffe said during the Democratic Convention, "the idea of young people knocking on doors, standing on street corners, talking about the Democratic Party, talking about the nominee, John Kerry, I said, 'It's the greatest idea I've ever heard!' "
"Canvassing definitely exceeded our expectations," said DNC Marketing Manager Jennifer Johnson. Grassroots Campaigns has done particularly well, she added, in the traditionally painstaking and expensive task of recruiting new donors. Grassroots Campaigns' recruiters tell job applicants that while the DNC initially hoped the company would raise between $2 million and $4 million, the actual haul has exceeded $15 million. That, incidentally, translates into a healthy fee for the company. According to the Center for Responsive Politics, Grassroots Campaigns has received more than $5 million from the DNC, three times the amount Telefund has gotten.
The knowledge that street canvassers dressed in DNC garb are working for commission may trouble some donors. But it costs money to raise money, no matter how you do it. Neither party wants to discourage givers by publicizing the profit margins of their fund-raising middlemen, but both parties pay dearly for donations. Grassroots Campaigns may look like a rip-off to donors, but they're really a bargain for the DNC.
Outside the realm of the $2,000-a-plate rubber-chicken dinner, direct-response marketing remains the mainstay of fund raising. The newer techniques, however, are coming on strong. "The tried and true methods are obviously direct mail and telemarketing," said Johnson. "We pretty much know what we're gonna get out of that. But Internet and canvassing are both so new that those two are still going to have to be evaluated."
Determining which technique channels donor money most efficiently is difficult. A lot hinges on whether a campaign targets existing donors or goes after new ones. "Typically, it is expected that when you are doing a mailing to known contributors—to your organization, to your campaign—that 80 or 90 cents of every dollar raised goes to the organization or the campaign," says Charles Pruitt, co-managing director for AB Data, a direct mail firm that shut down its telemarketing arm several years ago. "There's probably a 10- to 15-cent cost for every dollar that's raised." A telemarketing campaign, in contrast, might cost in the neighborhood of 40 to 50 cents per dollar raised—costs that can rise dramatically when it targets new instead of established donors.
Web-based fund raising also involves steep commissions. In July the Republican National Committee announced an Internet fund-raising initiative that rewarded independent Web sites that routed donors to the RNC Web site with a 30 percent cut. Direct-response e-mail marketers offer what might seem like a more appealing package, touting cost ratios as low as 3 cents on the dollar. Yet e-mail appeals tend to work best when narrowly targeted to an already energized base. Spam filters and a general reluctance to give online conspire to depress the yield of broader campaigns. Internet appeals also tend to miss senior citizens, the most highly prized fund-raising demographic. "The mail is less efficient but you raise more money," Pruitt said. "For a typical mail appeal, you might raise $100,000 and keep $90,000. For an online appeal, you might raise $20,000 but keep $19,000."
Grassroots Campaigns doesn't boast efficiency rates like those. But it has beaten expectations both in raising money and acquiring new donors that the Democrats can add to mailing lists for future solicitations. Penny-wise donors and progressive purists may wish otherwise, but the fact that the DNC has spent more on Grassroots Campaigns than on any single telemarketing firm suggests that canvassing as a business is here to stay. In fact, the company is already diversifying its client portfolio. It was recently hired to coordinate a battleground-state voter mobilization drive for another political group: MoveOn.org.