Internet Fundraising and Campaigning

1. Internet Fundraising and Campaigning Professor Rick HasenLoyola Law School, Los Angeles http://electionlawblog.org COGEL Conference December2008

2. Outline • What issues does the proliferation of Internet-based fundraising and campaigning raise for campaign finance regulators? • The coming (and arrived) explosion of Internet-based small donor fundraising: data and disclosure issues • The convergence of Internet and television: dangers of regulatory drag and obsolescence

3. Issues Raised for Regulators by Internet-Based Campaigning and Regulating • Treatment of candidate and other committee web advertising • Treatment of candidate and other committee communications (solicitations, value of email lists, posting of video material) • Use of corporate/union owned computers, servers, etc. • My focus: small donor issues and internet-television convergence

4. Small Donation Issues: The Obama phenomenon and the shape of things to come Perhaps the most important way that the Internet has affected fundraising and campaigning is through a dramatic lowering of costs associated with small donation issue. Cheap speech and proliferation of credit/debit card internet based commerce has caused an explosion of small donation fundraising on the internet

5. Presidential small donation fundraising during primary seasons, 2000, 2004, 2008 (small donor data from Campaign Finance Institute reports)

6. Percentage of money raised in micro-donations, 2000, 2004, 2008 2000 primary season Al Gore 20% George W. Bush 16% 2004 primary season John Kerry 37% George W. Bush 31% 2008 Primary season Barack Obama 53% John McCain 31% (Hillary Clinton 36%)

7. The sheer volume of donations raise data collection and processing issues for regulators With presidential candidates attracting up to millions of donors, campaign regulators face problems dealing with mountains of data. As public gets more comfortable with internet-based giving, more of it will take place on the sub-presidential level.

8. Special issues involving micro-donors Micro-donors give <$200 in the aggregate during a federal campaign, and currently are itemized information not reported to FEC.

9. Amount raised from micro-donors, 2008 primary season

10. More on Micro-Donor Fundraising in 2008 Primary Season

11. Concern over Lack of Reporting Requirements for Micro-Donors Some in public raised concerns about illegal contributions (illegal source or excess contributions) Possible congressional move to expand disclosure Disclosure of small donors raises both administrative and constitutional issues. My alternative: disclosure to FEC, not public, with mandatory audits of this aspect of all campaigns

12. The coming convergence of television and the Internet A number of special laws apply only to television and radio advertisements (e.g., federal limits on corporate and union spending on “electioneering communications”) As people begin to get more of their “television” content through their computers, cell phones, and iPods, what is to become of existing regulations?

13. Possible paths • Obsolescence (law doesn’t change, but practices become unregulated) • Law is updated to comport with changed usages • Resistance (FEC regulatory example) • Drafting difficulties • Unintended consequences (Law does not function as it should because it is applied in a new area)

14. Choosing an Approach Regulators should • Figure out goal existing law was meant to meet • Confirm relevant constituency still wants this goal met. • Consider how rise of Internet-based campaign activity might interfere with achieving goal. • Determine whether it is possible to meet goal through (1) existing law; (2) revised law/regulations; or (3) repeal of existing law.