Why Digital Politics Pros are Still Skeptical About Mobile Donations
BY Christian Bourge | Thursday, July 12 2012
Despite a June ruling from the Federal Election Commission approving a new scheme for accepting political donations via text message, political fundraising consultants and campaign technology experts are unsure that SMS donations — heralded as a boon for nonprofits — will be ready for use this election cycle.
It's not just that mobile carriers are reportedly worried about their own obligations and liabilities under the text-to-donate setup that was approved by the FEC. Political pros are balking at the price tag — expected to be anywhere from between 30 and 50 percent of each text message — and at start-up costs. They say the amount of information coming in about donors won't be enough. And they're unconvinced that text message donations will be useful to anyone except, perhaps, the presidential campaigns.
Craig Engle is counsel for the firms that petitioned the FEC with the plan: the obtusely named Red Blue T LLC, progressive political advertiser ArmourMedia, Inc., and corporate text message and billing aggregator m-Qube, Inc. He says the FEC decision should allow for political fundraisers to plug in to an existing industry that's already powering donations by text message for nonprofits.
"The technological limitations are few given the fact that the texting industry is maturing quickly," Engle told techPresident. "And it really is a straightforward opinion in that political committees want to receive contributions via text messaging and there wasn't any problem with the texting industry that prevented political committees from receiving texted contributions."
Political fundraising consultants and campaign technology experts said the reality is far more complex.
Becki Donatelli, president of Republican campaign fundraising and media consultancy Campaign Solutions, said that while her firm is exploring the ability to provide such services to their customers through partners, she doesn't plan on recommending it for this cycle.
“There is spin and then there is reality,” she told TechPresident. “The way things stand from the fundraiser perspective, it is far better to use a smart phone mobile donations page without the strings than do what the FEC is going for."
Here's how the plan is supposed to work, according to a draft opinion considered by the FEC: Donors will be able to give via text message at a rate of $10 per text and no more than $50 per month, in order to stay in compliance with FEC disclosure requirements that start to kick in above that level. Political committees would enter into an agreement with m-Qube for their "factoring" service, in which m-Qube gets a cut of the committee's eventual take in exchange for expediting the transactions. According to a draft document, m-Qube is expected to assess transaction data it receives on a daily basis and a calculation of the funds that it will eventually get from mobile service providers, then transmit "factored" payments to political committee customers on a weekly basis. After m-Qube is paid by wireless providers, according to the FEC documents, it reconciles what it has paid out to customers with what each customer is entitled to receive and makes a "trailing payment" to make up any difference. This "typically" happens within 30 days of receiving payment from the wireless service providers.
All of this is necessary to make sure that money changes hands fast enough to keep pace with FEC requirements. Previous proposals to allow donations via text message were rejected, among other reasons, because those requirements call for committees to receive contributions within a set time period after the money is pledged. In the nonprofit sector, donations can take between 30-90 days to get from the donor to the recipient, depending on the carrier. (TechPresident tried to double-check these particulars with Engle to make sure they were still correct, but he did not return follow-up calls and emails seeking comment.)
As part of another way this arrangement stays in line with FEC disclosure regulations, campaigns won't get donor names or addresses — just each donor's mobile phone number.
Donatelli calls this a “paucity of data.”
“Look, we’re fundraisers, we’re all about multi-donors,” said Donatelli. “We want a donor that is not only going to give a gift to us today but stay with us and give again tomorrow," she said. "We want all the information we can possibly get. If all we have is a cell phone number or it takes a bit of time to get the rest of their information it is not as good.”
Engle dismissed concerns about the lack of data, comparing the limitations to contributions where only the donor's address is available.
“Considering that the contribution was initiated by the phone number and follow up is by phone number, I don’t find that to be very limiting,” he said.
Another issue for critics is while cellular phone companies typically reduce or even eliminate their charges for processing donations to charities, the political campaign cost is expected to be anywhere between 30 percent to 50 percent of each text on top of high implementation costs. Especially after donors gave millions via SMS to support relief efforts after the 2010 Haiti earthquake, nonprofits saw great potential in mobile donations as a way to quickly raise large amounts. In politics, the cut carriers may take isn't outrageous when compared to the kinds of commissions some campaigns can pay on direct mail. But online fundraising can cost campaigns as little as two to eight percent of each transaction, not 30 to 50 percent.
Adrian Arroyo, director of communications for non-profit progressive online fundraiser ActBlue, whose campaign tools include mobile fundraising platforms, said that with the FEC approved plan, money “looks as if it ends up with the middlemen carriers instead of getting the donations where they need to go.
“The idea that this can be a potential powerful force of democratization is not wrong, but the devil is in the details,” said Arroyo.
Peter Fullerton, a partner at conservative Republican campaign social media consultancy Swiftcurrent strategies, agreed that at first look, the current plan looks to be a rather expensive fundraising solution, particularly for smaller political campaigns.
“For a state-wide campaign or a congressional race it seems just too expensive right now,” said Fullerton. “At a presidential level it may be more possible to dive into that right now. But in a state race, that 30 to 50 percent rate is a huge chunk of that donation."
Fullerton's firm has been quoted startup costs from potential partners for text-message fundraising services of $2,500 in addition to monthly costs of around $1,500 to manage the five-digit "shortcode" that donors would use to send a donation, he said.
“Unless you’re a national presidential campaign, it doesn’t make much sense to deal with,” Fullerton said.
This leaves mobile messaging experts waiting to hear from the carriers about how much of each contribution they'll take, and on what timetable.
"They assumed that the telecoms would just jump right in," said Erik Nilsson, a vice president at the Republican firm CMDI, which handles back-office work like transaction processing for a high volume of contributions to right-leaning candidates and causes.
For telecoms, Nilsson said, handling political donations via SMS might lead to an increase in service calls from customers — something no company would want. And while the new proposal satisfied the FEC's concerns about the long delay between when a pledge is made and when money begins to change hands, Nilsson and others are still wondering about how exactly campaigns working under this new scheme can expect to get paid promptly.
“We’re excited about the overall possibilities,” said Scott Goodstein, who was external online director for Obama for America 2008 and now runs the mobile messaging and strategy firm Revolution Messaging. “What are the carriers going to do? That’s the million-dollar question that no one knows the answer to at this point. Anyone that tells you they know the answer are either A, kidding themselves, or B, a carrier. Right now the smart folks that are trying to couch this for their clients in a right way say that this is good news. It’s going to take some time to sort out. These things will keep moving. Mobile giving is moving forward but it’s just not going to be overnight.”
Christian Bourge is a contributing writer for techPresident.