There's been a lot of discussion about the term "Internet Fundraising." Many assume—perhaps based on past elections—that money raised on the Internet is somehow more reflective of the general public as a whole.

But the online world changes quickly, and other variables may exist. Some cost-conscious small donors may opt for an offline check to avoid online processing fees. Barack Obama has likely attracted first-time contributors from diverse backgrounds to the process, and we don't know the extent to which these participants are giving online (indeed, the digital divide may mean that the much of the true "grassroots" giving is offline). And regardless of the vehicle of soliciting or submitting the money, most of us would agree that flatter, retail engagement that encourages friends to give and be a part of a movement (personalized telephone calls, conversations, notes, or emails) is preferable to wholesale, generic, hierarchical solicitation from the campaign (telemarketing calls, generic form bulk snail mail or email).

I agree with those who define "grassroots" fundraising as the funds that a candidate receives from smaller contributions of $200 or less.

The resources that a campaign collects from smaller contributors is important because smaller contributions are much more likely to reflect the economic diversity of America. A study from the 2000 election showed that American households earning less than $100,000 made up 86.6% of the general population. This group accounted for 66.1% of contributions of $200 or less, but for only 14.3% of the contributions over $200.

Grassroots fundraising is also an important marker because it may be reflective of: a) the amount of popular support a candidate enjoys among the electorate as a whole (not just upper income people); and/or b) the number of people who are vested in a campaign and are willing to be active in the future (e.g., organize events, raise and contribute additional money).

Grassroots Fundraising in 1st Quarter 2007
(amount of money received from $200 or less contributions, from candidates who raised at least $100,000 from small contributors)

$5.77 M -- Obama (D)
$2.54 M -- McCain (R)
$2.27 M -- Clinton (D)
$2.04 M -- Edwards (D)
$1.23 M -- Romney (R)
$1.09 M -- Guiliani (R)
$0.92 M -- Tancredo (R)
$0.75 M -- Brownback (R)
$0.60 M -- Richardson (D)
$0.25 M -- Kucinich (D)

A few interesting notes . . .

*Of the top tier candidates, Obama raised 22% of his funds from contributors of $200 or less, McCain 19%, Edwards 15%, Clinton 9%, Guiliani 7%, and Romney 6%.

*Conventional wisdom is that the first quarter was a fundraising failure for McCain because he raised only $14.8 M total. But McCain beat all but one candidate (Obama) in the amount raised and percentage of money raised from contributors of $200 or less--people who are most likely to reflect the economic status of most Americans. In essence, pundits are suggesting that McCain's presidential campaign may be doomed (which may become a self-fulfilling prophecy) because he has not spent enough time reaching out, organizing, and appealing to wealthier, $1000+ donors.

*Many of the Republican candidates outside of the top tier received a large percentage of their funds from contributors of $200 or less: Tancredo 78%, Brownback 61%, and Paul 39%.

*Of the Democratic candidates outside of the top tier, Kucinich raised 68% of his funds from contributors at $200 or less, while Biden was only at 4% and Dodd at 2%.

*A study of the 2000 election showed that American households earning more than $100,000 made up 13.4% of the general population, but accounted for 92.6% of $1000 contributions (in 2002 the maximum contribution limit was raised from $1000 to $2000 and an inflationary adjustment was added, so that in the 2007-08 cycle the limit is $2300).

*Of the top tier candidates in the first quarter 2007, Romney raised 89% of his money from contributors of $1000 or more, Guiliani 87%, Clinton 86%, Edwards 77%, McCain 74%, and Obama 68%.

Much more detailed analysis of this data is available at the Campaign Finance Institute.

The benefits to democracy of increasing the number and percentage of smaller contributions relative to larger contributions are detailed in my University of Pennsylvania Law Review Article The Donor Class.