Including small-dollar fundraising as a necessary element for debate participation would have two effects. First, it incentivizes candidates to invest — strategically, financially, and emotionally — in growing a small-donor base. Second, it will force potential billionaire self-funders like Michael Bloomberg, Tom Steyer, and Howard Schultz to demonstrate some level of popular enthusiasm for their campaigns, meaning they can’t just flash their own cash and buy their way onstage.

This is a remarkable decision for any political party, and it reflects a growing shift in how campaigns are run and won. It also previews what will be an important way to measure the success of candidates in the Democratic primary: not just looking at how much money candidates raise, but how much of their money comes from small-dollar donors.

The rise of small-dollar contributions in the 2018 election cycle shows a growing appetite for the Democratic base to fund campaigns on its own — and a potential distaste for traditional Democratic power brokers (and their money) determining the winners of primaries. That spells trouble for candidates who might rely on big money or self-funding for their campaigns, and especially for those who will tolerate outside Super PACs supporting their candidacy.

The DNC Needs to Define “Grassroots Fundraising”

A word of caution before getting too excited about the idea of “grassroots fundraising” being a new standard for whether Democratic Party sanctions candidates: The only way it will be a meaningful metric is if the party defines it as how much of a candidate’s money comes from people donating $200 or less, which is the federal definition of an “unitemized,” or small-dollar, contribution. This dividing line is a useful way to understand the amount of money a candidate can raise from people who don’t necessarily have $200 of disposable income for political contributions, but who still feel compelled to donate.

Of course, candidates try to use a looser definition to make their grassroots support seem more impressive than it actually is, most commonly by touting how many of their contributions came from $200 or less. A candidate can say that 90 percent of their contributions came from small-dollar donors, but that means 90 people contributed $1 each and 10 people contributed $2,700 each, then 99.6 percent of the candidate’s money came from big-dollar donors.

That may seem like an extreme example, but take New York Gov. Andrew Cuomo’s 2018 campaign. In his July campaign finance report, eager to blunt the grassroots credentials of challenger Cynthia Nixon, Cuomo touted that 57 percent of his campaign’s contributions came from people giving $250 or less. Seems pretty good, until you look at the money coming from those contributions, which amounts to only 1 percent of Cuomo’s $6 million haul from that reporting period. Sixty-nine of Cuomo’s contributions came from a single individual, almost all in $1 increments — and the donor just happened to be the roommate of a campaign staffer.

In order for the “grassroots fundraising” metric to be meaningful, the DNC must focus on the amount of small-donor money rather than the number of small-donor contributions raised, and even setting the bar as low as 15 or 20 percent of their total cash raised could force candidates to focus on small dollars.

Where the Potential Candidates Stand in Small Dollars

It’s not easy raising money from small-dollar donors. Only two of the 435 members of the House of Representatives elected in 2018 raised the majority of their money from small dollars: Alexandria Ocasio-Cortez and John Lewis. Just eight more representatives pulled in 31 percent or more of their money from the grassroots.

Of the potential 2020 contenders who have filed federal fundraising reports, only four — Sens. Bernie Sanders, I-Vt.; Kamala Harris, D-Calif.; Elizabeth Warren, D-Mass.; and Jeff Merkley, D-Ore. — have raised the majority of their money in the current election cycle from small-dollar donors. Beto O’Rourke is right behind, with $36.8 million, or 45 percent, of his money coming from the grassroots. (In absolute terms, his record-breaking haul puts him well in first place, whereas Merkley’s 63 percent only netted him $2.2 million.)

It may seem like this is a meaningless distinction; money is money, and money (for better or worse) helps win elections. But focusing on this aspect of 2020 Democrats’ finances is important, because they’re going against the only president of the modern era to ever win the White House by relying mostly on small-dollar donations. Donald Trump won in 2016 with 53 percent of his campaign’s money — even including his self-funding — coming from people donating $200 or less.

Trump has been even more prolific with grassroots donations as he gears up for his re-election campaign. Of the nearly $86 million Trump has raised in individual contributions to his campaign and joint fundraising account with the Republican Party since he took office, $62 million, or 72 percent, has come from small-dollar donations.

Behind this money is something that can’t be bought: supporter enthusiasm. Increasingly, money alone is not enough to win elections; it’s about how much of the money comes from small-dollar donors, and what else those donors do for the campaign.

Generally speaking, people make small contributions to candidates because they believe in their message or candidacy and want them to win. That also means it’s easy for a campaign to convert their donors into volunteers, and vice versa, as O’Rourke did in his race against Texas Sen. Ted Cruz. Cultivating donors and activists gets people excited and invested in the race, enabling them to give repeatedly, to evangelize for the candidate, and to do anything else the campaign asks for help with in order to win.

Buying Small-Dollar Donors

Grassroots fundraising almost never appears out of thin air; even the most exciting populist candidate has to invest in a program to cultivate these donors. Sanders’s 2016 primary campaign, on which I was the digital fundraising manager, spent tens of millions of dollars on digital ads to boost his fundraising. Harris has spent more than $2 million in 2018 on digital advertising to build her own small-dollar program, even though her next Senate election isn’t until 2022.

A plurality of money for most successful grassroots fundraising campaigns usually comes from a candidate’s email list, and the most effective way of building those lists is by running ads — generally on Facebook — asking people to sign up for the campaign. Sometimes immediately, but most often over several months, the campaign will make back the money spent on building its email list by turning those supporters into donors and starting to profit from that investment.

At least, that’s the idea. If the goal isn’t to actually raise money, but rather to create the appearance of a campaign powered by a grassroots army, then it doesn’t matter if each new “donor” comes at a net loss to a candidate. If a billionaire like Bloomberg needs to get over a bar that includes having a significant portion of his campaign money coming from small-dollar donors, it’s still possible for him to do so. He would just have to run a small-dollar program at a big loss, paying far more per email address and donor than those people give back.

If his campaign does the math right, it could meet the DNC’s theoretical grassroots fundraising threshold, even if it’s coming at a huge cost. However, when Cuomo tried to build a small-donor program this way, he failed miserably at raising any money through it. One would imagine billionaires would have an even harder time doing so, though Steyer does have an advantage here over the other billionaires. Steyer’s Need to Impeach PAC built a 6 million-person email list based on a petition to impeach Trump. However, that email list has only resulted in $1.2 million in small-dollar contributions — a paltry sum for such a large list, and a sign that it would be even harder to convert that list to donors in support of Steyer being the next president.

As the party begins approaching small-donors in an even more sophisticated way, it would be reasonable for the DNC to judge grassroots success by taking into consideration the cost of raising that army. What a candidate needs are soldiers who volunteer, not mercenaries; wherever possible, the party should look out for candidates skirting the spirit of this metric.

The Danger in Big Money and Super PACs

The possibility of a billionaire or corporate candidate faking their way to small-dollar support doesn’t render the idea of a grassroots fundraising metric meaningless. It actually makes the concept more valuable: Inserting the idea of grassroots fundraising into the debates makes it a campaign issue, which then focuses attention on big money in politics as well.

As the amount of money candidates raise from small-dollar donations becomes more important to the actual mechanics of the presidential election, it will force a discussion about who is funding candidates and why. Billionaires and corporate-funded candidates will have to explain their decision to take big money — and explain why they can’t raise it from the grassroots.

Donations tied to the oil and gas industry, financial sector, pharmaceuticals, and for-profit health insurance will be scrutinized and become weaponized by and for candidates who swear off that kind of money. Candidates who say they want to fight climate change will be attacked for accepting money from fracking interests; others who say they support “Medicare for All” will have to explain why they’re taking money from people whose entire industry would go up in smoke if profit was removed from health care.

This is to say nothing of the danger inherent in Super PACs, which can accept unlimited funds from any person or corporation. Sanders swore off a Super PAC in 2016, and would almost certainly do so if he runs again. Warren made rejecting Super PACs a key part of her initial Senate race against Scott Brown. Joe Biden, writing in his book, said he wouldn’t use a Super PAC if he ran for president. But Cory Booker has a Super PAC-in-waiting, founded by a Democratic donor, with $4 million already committed — and its leader says he’ll continue to operate even if Booker says he doesn’t want the help.

What we will see in the Democratic primary is a direct relationship between taking big money and not raising small money. It also becomes a lot easier for candidates to actively say they don’t want big money and don’t have Super PACs; it creates an incentive for grassroots donors to contribute, because the candidate’s success is tied only to their supporters. As more and more candidates can say they’re raising money from small-dollar donors, why should activists looking for a candidate give to someone who can raise money from Big Pharma? Why should a teacher give a hard-earned $20 to a candidate if they know that a billionaire is funding a Super PAC anyway?

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Super PACs and big money are going to create far more problems than they’re worth for Democratic candidates. Every donation will be scrutinized and used as an attack. Candidates who reject big and outside money will be able to use that stance as a way to supercharge their own grassroots fundraising. It will become harder and harder for Super PAC candidates to justify their tolerance of outside money in a race that will be shaped by grassroots enthusiasm.

What to Expect in the Small-Dollar Primary

Perez’s introduction of a grassroots fundraising threshold to participate in debates is born out of the DNC’s efforts to appear unbiased in the primary, correcting its mistakes from 2016. But in doing so, Perez is actually putting his thumb on the scales of the race — only for once, it’s against big money and corporate candidates.

This extra incentive to focus on grassroots fundraising will transform how the primary is run. For years, when candidates filed their campaign finance reports, reporters raced to get up stories on how much each hauled in — the bigger the better. But with the DNC spotlight on small donors, reporters will now zero in on that small-dollar number. It won’t just be Sanders touting his average contribution amount; expect any candidate with a decent grassroots program to do so as well.

In the wake of Citizens United, things are changing fast in Democratic politics. Corporate political action committee contributions, until recently an obscure part of campaigning, are now rejected by nearly every 2020 candidate, as are Super PACs. Donations over a certain threshold might be the next to become stigmatized. In the meantime, whoever makes it out of the 2020 gauntlet will be up against one of the most successful grassroots fundraisers in history — and they’re going to need all the help from Democratic small-dollar donors they can get.

The post The DNC Is Putting Its Thumb on the Scales Again — This Time in the Right Direction appeared first on The Intercept.

Within hours of O’Rourke’s campaign announcing his fundraising totals, anonymous Democratic operatives complained to the New York Times about how useful that money could be elsewhere, given recent polls that show him down by 8 points or more to Cruz. O’Rourke’s money, they suggested, would be more valuable to other Democrats in critical Senate races in Arizona, Missouri, Nevada, or Tennessee.

It was a familiar response from establishment figures to an insurgent, progressive Democrat posting huge fundraising numbers: incredulity at how much grassroots donors contributed; skepticism that progressives can win; and a hunger to divert that money to centrist candidates who can’t raise grassroots money themselves.

How’s O’Rourke Raising All That Money?

While raising $38 million in three months is an impressive feat for any candidate, what’s more interesting is how O’Rourke did it: almost entirely online, from hundreds of thousands of people donating small amounts of money, while explicitly turning down money from political action committees. His campaign also actively discourages Super PACs from intervening on his behalf.

This most recent fundraising report saw 44 percent of O’Rourke’s money come from donors giving less than $200 in total, colloquially known as “small-dollar” money. In total, 42 percent of all the money raised by his campaign now comes from small donors. But even that number is a bit misleading because many of the people who gave more than that — and thus, are not counted as small donors — have done so in small increments, their enthusiasm eventually popping through that arbitrary $200 line. His average contribution this quarter was around $47.

O’Rourke’s reliance on grassroots donors further distinguishes his campaign from most congressional races, which by and large rely on a smaller number of donors contributing large amounts of money — even among members of the Congressional Progressive Caucus, most of whom still take corporate PAC contributions. This gives him a big advantage over big money: Very few of his donors have given the legal maximum, meaning that he can — and, according to the new figures, does — go back to those donors again and again asking for more contributions.

Reliance on big donors is a problem that politicians have faced for decades — even for those who want to buck big money. As John Nichols and Robert McChesney recounted in their book “Dollarocracy,” Idaho Sen. Frank Church, a populist campaign finance advocate, wrote in a 1962 New York Times op-ed, “I couldn’t begin to finance my campaign on the offerings of small contributors.”

He was correct, at the time. While Republican operatives like Karl Rove began to find success for party committees in direct mail fundraising in the late 1970s, it was a slow, expensive prospect for candidates to raise money in small amounts up until this century, when digital fundraising allowed small-dollar fundraising to happen at scale.

From the outset of his campaign, O’Rourke made a conscious effort to invest in a digital fundraising operation, knowing that it would be nearly impossible to convince traditional big-money donors to help a Democrat win a Senate race in Texas. In this way, he followed the model of successful small-dollar fundraisers like Howard Dean, Elizabeth Warren, Barack Obama, Bernie Sanders, and Alexandria Ocasio-Cortez.

He hired the digital fundraising firm that ran Sanders’s operation (I was involved in both), and followed the email and advertising staff to their new agency.

O’Rourke has now spent at least $12 million on his digital program, or around 30 percent of all his campaign spending — a huge sum compared to other campaigns, particularly on the Democratic side. The vast majority of that money likely went toward digital advertisements, many of which are designed to grow his email list and get supporters to become donors, but also double as ads that people see (though many of those may be out of state). According to Google’s political advertising transparency report, no other candidate on the ballot this year is spending more money on Google’s platform than O’Rourke. And Facebook’s political advertising tool shows more than 5,300 ad variations run by his campaign.

Empowering Through Authenticity

It might be easy to mistake donor enthusiasm for O’Rourke’s campaign for the Democratic base’s dislike of Ted Cruz. And, to be sure, every donor to O’Rourke knows without him saying so that his opponent is Cruz, a fundraising advantage that isn’t exactly scalable. Asked by The Intercept during a SXSW interview whether it helps to have Cruz as a foil, he said: “It doesn’t hurt.”

But in his campaign’s fundraising appeals, you won’t see attacks on his opponent. The content of virtually every communication is about helping O’Rourke win, not defeating Cruz. In the tweet and video announcing his most recent fundraising totals, he addressed supporters directly: “You just raised a record-breaking $38.1 million.” This is a subtle but significant part of O’Rourke’s approach to fundraising language, in which he speaks with his supporters, not at them. O’Rourke didn’t raise the money, you did.

His rejection, however, of PACs and corporations is highly significant here. By actively shunning big money, he puts the onus of fundraising on his supporters. There won’t be any cavalry of big donors coming to the campaign’s rescue: If O’Rourke is going to win, it will be because of his supporters alone.

Shunning PACs in favor of individuals allows his campaign to practice fundraising jiu jitsu. When Cruz released his first attack ads, O’Rourke’s campaign responded by challenging supporters to raise a matching amount of $1 million to counter the ads — breaking that goal by pulling in $1.2 million over a single weekend.

“Here’s how we fight back: Every time Ted Cruz and the Super PACs behind him launch negative attacks on Beto, we will make them pay by raising more money online and signing up more volunteers than ever before,” the campaign wrote in an email announcing the $1 million goal. “We’re going to keep this campaign positive, and in doing so we’ll send an unmistakable message about the way campaigns should be run.”

It was a familiar tactic for a small-dollar-driven campaign, harkening back to Howard Dean challenging his 2004 presidential campaign’s supporters to match the amount of money Vice President Dick Cheney raised at a luncheon fundraiser for George W. Bush, while Dean sat at a computer eating a sandwich, watching his own money come in online.

Centrist Vultures Circling

Donors give for a variety of reasons, but a reliable way to spark donations is by making an emotional connection and showing why someone’s contribution — of time, energy, or money — will make a difference.

The emotion that O’Rourke banks on is one of hope and movement building. It’s a stark contrast to the desperate, frenetic tactics of Jon Ossoff’s digital fundraising in his failed special election bid last year, despite raising more than $30 million, with nearly two-thirds coming from small-dollar donations. Ossoff followed in the tradition of fundraising emails as debt collection notices, producing a whiplash effect that alternatively shamed and lifted up potential donors multiple times a day.

O’Rourke’s supporter-centric messaging is a distinction lost on establishment Democrats who wonder why donors are flooding Texas with small-dollar cash instead of centrist Senate candidates like Claire McCaskill, Phil Bredesen, and Kyrsten Sinema, all of whom rely on big money for nearly three-quarters of their fundraising.

The act of donating is not generally a calculated one for grassroots supporters. Very few people sit down with their credit card, look at polling averages and turnout models, and then make donations to candidates based on the likely impact their contribution could have at winning the race.

So instead of putting in the work themselves, Democratic groups are hoping to ride O’Rourke’s campaign coattails. House Majority PAC, a Democratic PAC that looks solely to elect Democrats to the House of Representatives, sent a fundraising email last week with O’Rourke’s name plastered all over — with the fine print saying the money would support “candidates like” O’Rourke, with none of the money going to the Texas Senate race.

Brady PAC, a Super PAC linked to the Brady Campaign to Prevent Gun Violence, used O’Rourke to raise money, though the link sends the cash directly to Brady PAC, the kind of organization O’Rourke has discouraged from getting involved.

Oh look, another email from a PAC claiming to be raising money for Beto, but if you look closer, it's really a fundraising pitch for Brady PAC. Presumably they will spend some of that money in Texas, but who knows… pic.twitter.com/spSozyaw4X

— Ryan Grim (@ryangrim) October 15, 2018

Even Michael Avenatti got in on the action, tweeting a link to a fundraising page asking people to support O’Rourke — while diverting half of the funds on that page to his own PAC.

Turning Money Into a Movement

O’Rourke’s secret weapon if he hopes to win a Senate seat in November will be a massive, volunteer-led organizing effort powered by volunteers, donors, and supporters.

The critical difference for O’Rourke is that his campaign does not limit a supporter’s input to the act of making a financial contribution. Where Ossoff treated people as ATMs, O’Rourke is converting donors into volunteers to turn out voters.

O’Rourke’s field operation is unlike any ever seen outside a presidential campaign. In an act of radical campaign transparency, O’Rourke’s campaign published its entire organizing plan online, showing every supporter — and everyone on Ted Cruz’s side — the exact plan, goals, and methods for how O’Rourke can win. The campaign’s precinct-by-precinct goals are updated in real time on his campaign’s website.

His campaign only has 10 official field offices across the entire state of Texas, which ordinarily might never be enough to organize the votes he needs to win. Instead, the campaign asked supporters to set up “pop-up” campaign offices, of which there are currently 862 across the state, each staffed by “super volunteers” who can ask the campaign for support as needed. These small, volunteer-run offices in garages, offices, and homes are official intake points for anyone who wants to knock on doors or make phone calls to turn out voters.

The most reliable indicator of the strength of a campaign is not just how much money you raise, but from how many people, and how many volunteers you have knocking on voters’ doors. And it’s very easy for campaigns to turn donors into volunteers, and volunteers into donors.

While polls of likely voters may show O’Rourke down by 8 points or more, his campaign hopes that this massive volunteer operation will turn out enough new, infrequent, or otherwise unpredictable voters to overcome any deficit polling might show.

The bet O’Rourke made is that a populist campaign that explicitly rejects the influence of big money in politics can win, even in a deep-red state like Texas. If it works, it will be because he successfully organized money and people, one dollar and door at a time.

The post How Beto O’Rourke Raised a Stunning $38 Million in Just Three Months appeared first on The Intercept.