Can New Technology Beat the Old Campaign Finance System?
by M.A. Engle

    The Nasdaq may have plummeted to new lows this spring, but a techno turning point of a decidedly more upbeat cast occurred earlier this year when lawmakers and large PACs were pushed into the digital age. In January 2001, new rules went into effect requiring any House candidate and most organizations that file with the Federal Election Commission to provide that information in a computer-readable format. The first massive batch of reports required under the new law is due at the FEC on July 31.    
    The new provisions are part of a law signed by President Clinton in September 2000. In addition to House candidates, it covers political action committees that raise or spend $50,000 or more per year - that's up to half of the 3,907 PACs registered with the FEC (and all of the financial heavy-hitters). Mandatory filing for presidential candidates who receive federal matching funds began last year under regulations put in place in 1999. The FEC supplies free filing software, although candidates may use their own as long it conforms to the commission's requirements.    
    Meanwhile, Senators have managed to keep the electronic world at bay. Senate candidates still file their campaign finance reports on paper - not electronically and not with the FEC, but rather with the Office of the Secretary of the Senate. Though summary information for Senate candidates is available on the FEC Web site within 48 hours, full processing can take 30 days or more. In contrast, the raw data in electronically filed reports can be accessed within minutes of receipt by the FEC, and is fully processed within two days, says Bob Biersack, who is responsible for electronic filing at the FEC.    
    The Senate has a history of letting itself off the electronic hook even as it puts forth requirements that apply to other candidates and committees. For example, during the debate on the McCain-Feingold campaign finance reform bill, the Senate passed an amendment to bolster electronic filing, but the amendment exempted the Senate.    
    The speedy delivery of information benefits voters, says the FEC's Biersack. In last year's elections, for instance, reporters and others had immediate access to presidential candidates' electronically filed monthly reports. "Elaborate and comprehensive analyses of those contributions were available the next day," Biersack said. "There was a better understanding than ever before by news organizations and voters of how that money was raised and spent."    
    New Sites, Old Hang-Ups: In the money and politics world, the Internet has had an impact on more than disclosure. By providing a cheaper means to communicate directly with potential voters, candidates can overcome some of the barriers posed by the campaign finance system. As of Election Day 2000, 56 percent of House and Senate candidates had Web sites, according to, a research site created by the Annenberg Public Policy Center.    
    Still, some systemic inequities carry over to the new medium. Mainstream party candidates are more likely to have an Internet presence than their lesser-funded third party brethren. Among GOP candidates, 71 percent had their own sites compared to 62 percent of Democrats, and 34 percent of third party candidates in 2000. Steven Clift, who created the word's first election-oriented Web site in 1994 and now runs Publicus.Net, calls these numbers disappointing for third parties. "A Web site," said Clift, "is one of the few places a third party candidate can really gain an advantage."    
    Several people who are involved with political sites stressed to Capital Eye the advantages to both candidates and voters. "Voters can get a tremendous amount of information, updated daily. You can interact directly with the campaign," said Steven Castleton, who worked on Internet strategies for Rick Lazio's Senate campaign. Castleton estimates he answered 700-800 e-mail messages a day at the height of the campaign.    
    "The candidates who do this best will deepen their relationship with constituents," said Joan Blades of the online advocacy group,    
    "We think that online fund-raising is cleaner, so we'd like to encourage it." /Prof. Michael Cornfield/    
    Digital Fund-Raising: One of the most obvious ways new technology can impact campaign financing is one of the most basic - hauling in the loot. And there seems to be one outstanding feature to it. "The big thing about Internet fund-raising is that, compared to traditional fund-raising, the amount of money that actually goes to the candidate is unbelievable," said the Lazio campaign's Castleton.    
    With "event" fund-raising, every dollar raised costs roughly 30 cents, while direct mail can cost from 50 cents up to 90 cents for every dollar it brings in. By comparison, Internet fund-raising generally costs less than 10 cents per dollar raised.    
    The size of online donations is another plus. Industry experts agree that electronic donations are in a comfortable middle range from one hundred to several hundred dollars - larger than the average direct-mail donation, but less than the $1,000-plus range associated with old-style "fat cat" fund-raising.    
    The FEC does not require candidates or parties to detail how they raised their money, so there are no reliable data on political fund-raising via the Internet.    
    However, some campaigns did release their own figures. John McCain was the undisputed leader, collecting more than $6.4 million from close to 60,000 donors, says Max Fose, who ran McCain's Web site. Lots of those contributors had never given a political contribution before. "You open the box to those outside the typical establishment donor," said Fose.    
    Republican Rick Lazio, who ran for the New York Senate seat, raised $3,028,000 online, about 7 percent of his overall total. Because of the low cost of raising the money, said Castleton, "that $3 million is more like $6 million to the candidate."    
    Castleton also was able to build an e-mail list of names that eventually numbered in the hundreds of thousands, and once raised $56,000 in 12 hours through an e-mail request. This speed factor is particularly helpful to a fledgling campaign. "You can start making income right away with very low start-up costs," Castleton said.    
    Online donors are more interested in influencing elections and politics, while off-line donors are more focused on business concerns and establishing the social contacts that come with giving political donations, according to Ryan Thornburg of the University of North Carolina, Chapel Hill. "Online donors," said Thornburg, "are less likely to have a direct personal material benefit because they are not developing a direct personal relationship with the candidate."    
    Prof. Michael Cornfield of George Washington University told Capital Eye, "We think that online fund-raising is cleaner, so we'd like to encourage it."    
    Instant Advocacy: The Net is peppered with political sites created by non-profit groups, including a number involving campaign finance issues. A few, such as the Center for Responsive Politics site - - and its counterpart at the state level run by the National Institute on Money in State Politics - - deal strictly with data analyses and are not advocacy sites. Others were created specifically to further reform goals. The issue was made personal and immediate at site of Doris "Granny D" Haddock (, where visitors were able to follow the 90-year-old Haddock's progress daily on the Web as she walked across the country to bring awareness to the issue of money in politics. started in 1998 as an Internet-based campaign to halt the Clinton impeachment. The group has since taken on other issues, started a PAC, and become involved in electoral politics, attracting up to half a million people to participate in their advocacy campaigns. In the last elections, they raised $2.25 million in mostly small contributions to distribute to candidates, said co-founder Joan Blades. members more recently have put their muscle toward passage of the McCain-Feingold bill.    

Helping More People Get More Involved
Can technology beat the campaign finance system? It's still too early to tell.

    The 2000 elections were not the watershed elections for Web politics that had been forecast. But the signs are encouraging for campaign finance observers: Information about campaign financing is available more rapidly and in greater detail. Candidates can bypass at least to some extent traditional media to reach voters without an intermediary. The price of admission to the Web is lower, and the speed and agility for fund-raising are promising. Like-minded citizens from all over can pool small contributions to a candidate and perhaps provide a counterweight to large-donor fund-raising. Voters can communicate directly with a campaign, find a depth of information that will make for a more informed decision, and participate by volunteering or giving a contribution online.    
    If technology does ultimately succeed in engaging new, young voters and allows large numbers of people to participate in politics, it could have a profound effect on the campaign finance system.