Small Bills

Campaign 2016's Unlikely Tycoons: Small Donors Fuel Insurgents

A combination of high tech and high anger are helping outsider candidates play with the big boys and girls.

IRAN RALLY

Senator Ted Cruz speaks during a Tea Party Patriots rally against the Iran nuclear deal on Capitol Hill on Sept. 9, 2015.

Photographer: Pete Marovich/Bloomberg

Thanks to the Supreme Court's ruling in Citizens United, this was supposed to be the era of big money in politics. It's proving to be the era of small money, too.

Establishment candidates for the presidency like Jeb Bush, Marco Rubio, and Hillary Clinton, who rely on the traditional dinner-party fundraising circuit to collect stacks of $2,700 checks, are being upstaged in the money race. Ben Carson, Bernie Sanders, and Ted Cruz are turning their popularity with their parties' grassroots into cash, piled up in smaller increments, often over the Internet.

Carson, a retired brain surgeon who has never held public office, led the Republican field in campaign fundraising for the quarter that ended in September. His $21 million take included $12 million in contributions of less than $200. Sanders' $26 million haul, gathered mostly from under-$200 donors, almost equaled Democratic front-runner Clinton's total.

“There are just more small donors in the action, because they think this time they're in control,” said Kellyanne Conway, a Republican pollster in New York who runs a super-PAC supporting Cruz. “It's a contest between electability and electricity, and electricity is winning.”

Technology is transforming the election, allowing candidates to turn an attention-grabbing debate performance or a viral sound-bite into millions of dollars in a matter of hours with the help of social media and smartphones. Carson said he raised $1 million within 24 hours of his appearance at a Republican debate in September, and that donations poured in at a similar rate later in the month when he declared that a Muslim shouldn't be president. Sanders's campaign said he raised $1.3 million in four hours after his first debate appearance.

To be sure, the avalanche of super-PAC money unleashed by Citizens United and subsequent court decisions in 2010 remains a critical factor in the race. Bush, who has gathered only $25 million for his campaign since declaring his candidacy in June, spent much of the first half of the year assembling a $102 million super-PAC. These vehicles can raise unlimited sums from individuals and corporations—some individual Bush donors wrote checks of $1 million or more—as long as they don't coordinate certain types of spending with a campaign.

The limitations of unlimited money were brought into focus in September, when the campaigns of Republicans Rick Perry and Scott Walker collapsed. Both had the backing of super-PACs with millions of dollars still in the bank, but a drought of traditional campaign cash left them unable to fund the basic necessities of running for office, such as airline tickets and payroll.

Under campaign finance law, an individual can contribute no more than $2,700 per election directly to a campaign. In the past, candidates have often used networks of “bundlers” to overcome this limitation. Bundlers are well-connected supporters who can raise hundreds of thousands of dollars by convincing friends  and business associates to contribute the maximum amount. Of the bundlers from 2012 who have signed on to a campaign so far, most have gravitated to Clinton, Bush, and Rubio.

Howard Dean pioneered online political fundraising in his unsuccessful 2004 campaign for the Democratic nomination, raising about $20 million online, according to Larry Biddle, who served as Dean's finance director. President Barack Obama raised even more in 2008 when he defeated the onetime front-runner Clinton for the Democratic nomination. But this year marks the first time that small donations were able to propel outsider candidates to near the top of the fundraising heap early in a campaign.

Online fundraising will continue to expand dramatically, driven by the growth in the pool of people who are comfortable making payments online, said Joe Trippi, who managed the Dean campaign. Given how big it is already, he said he's surprised Sanders didn't raise even more this summer. “He's now just scraping the surface of the huge network that has been established,” Trippi said.

Why haven't establishment candidates like Clinton and Bush been able to capitalize more on the technology? Partly, said Bill Smith, a political consultant at Civitas Public Affairs in Washington, it's because such candidates are loath to make the kind of inflammatory statements that would ignite donors' passion and risk alienating independents in a general election. “Ben, Ted, Bernie—they're saying some pretty out-there things,” he said. “They're able to use that to big effect to fire people up.”

Clinton has outpaced Bush when it comes to attracting small donations. She raised $5.2 million from under-$200 donors in the third quarter, or 18 percent of her total. Bush's fundraising included only $877,000 of these small donations, or 7 percent of what he raised.

Overall, candidates running for president this year have raised about $96 million, or about 36 percent, of their funds in under-$200 increments, split evenly between the two major parties. That compares with $57 million, or 39 percent, for the entire field as of September 2011, when incumbent President Obama dominated small-donor fundraising. The figure was $67 million, or 18 percent, in September 2007.

Eric Anton, a commercial real-estate broker at HFF Inc. in New York, said the surge in small-dollar fundraising hasn’t affected his ability to bundle donations for his favorite candidates. Anton backed Walker until his withdrawal from the race and is now considering who to support next. He said the ardor fueling the small-donor surge may burn itself out.

“It's the year of revolt. There's real anger,” he said. “But it will settle down when fewer issues and more important issues are the focus. And there will be less anger at traditional politicians.”

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