Colin Delany September 20, 2009

As Courts Overturn Campaign Finance Limits, Small Online Donations Will Matter More

Also published on techPresident

The announcement largely got lost in Friday clutter, but U.S. campaign finance restrictions took a serious hit at the end of last week. With the Roberts Supreme Court already apparently reconsidering past precedents with an eye toward treating corporate and union donations as free speech, a federal appeals court has now ruled on behalf of Emily’s List that nonprofits can use functionally unbounded “soft money” to finance their election-year activities.

For decades, candidates and their financial supporters have lived within a series of limits on the amounts and sources of their campaigns’ funding. Individual donors can give no more than $5000 per campaign under the current rules, for example, while direct donations from corporations and labor unions are banned altogether. Of course, every measure eventually demands a countermeasure, and political professionals have long used techniques from “bundling” donations from networks of large donors to creating formal Political Action Committees to aggregate contributions from people sharing a particular set of interests or legislative goals.

The 2004 election cycle saw a dramatic rise in the number and size of nonprofit organizations that bought TV ads, organized voter turnout drives and conducted political “education” campaigns that were effectively working on behalf of (or against) one candidate or party, and because they used “soft money” in the process, their donors weren’t limited in how much they could give and didn’t fall under the strict disclosure rules required when trying to influence an election.

Though the actual results of their work were mixed, and as individual donors such as George Soros became demons to their enemies, Congress responded by trying to stifle the practice by law. It was those restrictions that were struck down on Friday, and it’s quite possible that the Supreme Court will soon invalidate even more of the campaign finance regulatory system.

The upshot is more money flowing into American politics, and almost certainly arriving in larger chunks than before. Some will land directly in candidates’ bank accounts, but even more may go to independent political actors who might or might not be coordinating with their work with campaigns behind the scenes. But a candidate being hit by outside attack ads and other soft-money campaigns already has a countermeasure at hand, since the natural answer to big political money is to pile up large amounts of small money. As Obama’s campaign showed in 2008, if you have enough people on your list, aggregating their individual small donations can add up to real money real quick.

The techniques Obama used to raise $500 million online are no secret (many of them have been common practice at nonprofit organizations for years), and the tools available to congressional, state and local candidates are already more than adequate to the task. What’s been lacking in most cases so far has been the skills and the will to apply them consistently in the thousands of political races that unfold every two years. Obama showed that online organizing and online fundraising work can on a presidential level, but we’ve only just begun to see them applied effectively in races up and down the political scale. More on that shortly.

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