Web gears up for 'political e-commerce'

The Federal Election Commission Thursday took a major step toward allowing credit card contributions to qualify for matching federal funding -- a move that political professionals say will revolutionize campaigns in general and fundraising in particular.

The FEC commissioners discussed a proposal that would allow campaigns to seek matching funds for online contributions made since Jan. 1. A spokeswoman at the FEC said that although commissioners asked that the proposal be amended to include more detail about proposed regulation changes, they seemed set to give it the green light.

With that in mind, presidential campaigns such as John McCain for President and Alan Keyes for President are already gearing up for a brave new world of e-commerce, signing deals with firms -- such as Aristotle and Campaign Solutions -- that offer secure e-contribution services.

Keyes campaign communications director Becky Fenger said that the 2000 election cycle will be to political fundraising what last Christmas' online shopping blitz was to e-commerce. "We are excited because the possibilities are open," Fenger said. "You are hitting a high-pro [voting] audience for not much of an outlet of money. You can [raise funds] seven days and week, 24-hours a day. No down time."

Fenger said she was particularly "partial" to the Net because of its potential for grassroots fundraising. The Keyes campaign this week signed up political software firm Aristotle to handle its e-contributions.

Aristotle President John Phillips predicted that the Internet will account for 80 percent of campaign fundraising by the 2004 election. Considering the fact that the Democrats and GOP raised a combined total of $650 million between January and November last year, a boom in online fundraising could mean big business for firms like Aristotle, Campaign Solutions and the king of online targeted advertising, America Online Inc. (NYSE:AOL). Aristotle, a San Francisco-based firm with 25 years experience in campaigns, is even planning to file for an IPO as a direct result of the FEC proposal.

Sleeper hit
Online fundraising could prove the sleeper hit of the 2000 election cycle. Currently, at least seven presidential candidates' Web sites are seeking online contributions via credit card -- and they're receiving particularly strong responses from first-time contributors. Under current regulations, credit card contributions are not eligible for matching funding.

Democrat presidential hopeful Bill Bradley put online fundraising on the FEC's agenda on March 18, when his campaign sought an advisory opinion on credit card contributions. In a letter to FEC general counsel Lawrence M. Noble, Bradley campaign general counsel Robert F. Bauer argued that online fundraising would help democratize campaign financing by attracting grassroots contributions, and spelled out an elaborate system designed to guard against fraudulent contributions.

AOL, Aristotle, Campaign Solutions, Vice President Al Gore's campaign, and the Republican and Democratic national committees all came out in support of Bradley's petition. In response, the FEC drafted its current proposal.

Once FEC counsel Noble amends the proposal, the six FEC commissioners will review the document, then hold a tally vote. If at least four of the six commissioners approve the proposal, it will then go to Congress. It will only come into effect if approved by Congress and President Clinton.

A different world
The FEC spokeswoman said the safeguards, including elaborate checking procedures and electronic and paper filings with the FEC, suggested by the Bradley campaign verged on "overkill," but helped overcome fears of fraud. "We are concerned about the potential for fraud and the potential for catching fraud, because public moneys are involved," she said.

Campaign Solutions Chairman R. Rebecca Donatelli said her Virginia-based firm had already set up a secure online contribution system for the McCain presidential campaign. In its first three weeks of operations, the McCain site attracted $20,000 worth of contributions, much of which could potentially qualify for retroactive matching funding.

Besides the bullish response from wired McCain supporters, Donatelli noted the different demographic of online contributors. "Internet demographics are younger -- and they are new givers. Internet donors are not your typical donor," she said.

Donatelli said 50 percent of online contributions processed by Campaign Solutions came from first-time contributors. Of those contributors, 80 percent are younger than 55 years old, and 60 percent are under 44 years of age -- a much younger crowd than the traditional contributor profile.

"I call this the ultimate grassroots politicking tool," Donatelli said.

Effect on election process
Aristotle spokesman Jay MacAniff said his firm's software products, which are FEC-approved for electronic filing, were currently being used by six presidential campaigns, including the just-signed Keyes campaign.

"The FEC's decision is going to have repercussions all throughout the political arena, from the federal to the municipal level, essentially paving the way for political e-commerce," MacAniff said. "It means smaller, underdog candidates have a greater chance to raise more money more efficiently -- therefore leveling the fundraising playing field.

"It will affect every candidate.

"It's the right target group," MacAniff said of wired voters. "They are more educated, more affluent and more likely to vote."