Democratic National Committee Chair Tom Perez is setting a kind of cover charge to get onstage for the Democratic presidential primary debates, but not just any money will do. In addition to the usual polling metrics required to join the debate, candidates will also have to meet a to-be-determined criteria for “grassroots fundraising.”

Including small-dollar fundraising as a necessary element for debate participation would have two effects. First, it incentivizes candidates to invest — strategically, financially, and emotionally — in growing a small-donor base. Second, it will force potential billionaire self-funders like Michael Bloomberg, Tom Steyer, and Howard Schultz to demonstrate some level of popular enthusiasm for their campaigns, meaning they can’t just flash their own cash and buy their way onstage.

This is a remarkable decision for any political party, and it reflects a growing shift in how campaigns are run and won. It also previews what will be an important way to measure the success of candidates in the Democratic primary: not just looking at how much money candidates raise, but how much of their money comes from small-dollar donors.

The rise of small-dollar contributions in the 2018 election cycle shows a growing appetite for the Democratic base to fund campaigns on its own — and a potential distaste for traditional Democratic power brokers (and their money) determining the winners of primaries. That spells trouble for candidates who might rely on big money or self-funding for their campaigns, and especially for those who will tolerate outside Super PACs supporting their candidacy.

The DNC Needs to Define “Grassroots Fundraising”

A word of caution before getting too excited about the idea of “grassroots fundraising” being a new standard for whether Democratic Party sanctions candidates: The only way it will be a meaningful metric is if the party defines it as how much of a candidate’s money comes from people donating $200 or less, which is the federal definition of an “unitemized,” or small-dollar, contribution. This dividing line is a useful way to understand the amount of money a candidate can raise from people who don’t necessarily have $200 of disposable income for political contributions, but who still feel compelled to donate.

Of course, candidates try to use a looser definition to make their grassroots support seem more impressive than it actually is, most commonly by touting how many of their contributions came from $200 or less. A candidate can say that 90 percent of their contributions came from small-dollar donors, but that means 90 people contributed $1 each and 10 people contributed $2,700 each, then 99.6 percent of the candidate’s money came from big-dollar donors.

That may seem like an extreme example, but take New York Gov. Andrew Cuomo’s 2018 campaign. In his July campaign finance report, eager to blunt the grassroots credentials of challenger Cynthia Nixon, Cuomo touted that 57 percent of his campaign’s contributions came from people giving $250 or less. Seems pretty good, until you look at the money coming from those contributions, which amounts to only 1 percent of Cuomo’s $6 million haul from that reporting period. Sixty-nine of Cuomo’s contributions came from a single individual, almost all in $1 increments — and the donor just happened to be the roommate of a campaign staffer.

In order for the “grassroots fundraising” metric to be meaningful, the DNC must focus on the amount of small-donor money rather than the number of small-donor contributions raised, and even setting the bar as low as 15 or 20 percent of their total cash raised could force candidates to focus on small dollars.

Where the Potential Candidates Stand in Small Dollars

It’s not easy raising money from small-dollar donors. Only two of the 435 members of the House of Representatives elected in 2018 raised the majority of their money from small dollars: Alexandria Ocasio-Cortez and John Lewis. Just eight more representatives pulled in 31 percent or more of their money from the grassroots.

Of the potential 2020 contenders who have filed federal fundraising reports, only four — Sens. Bernie Sanders, I-Vt.; Kamala Harris, D-Calif.; Elizabeth Warren, D-Mass.; and Jeff Merkley, D-Ore. — have raised the majority of their money in the current election cycle from small-dollar donors. Beto O’Rourke is right behind, with $36.8 million, or 45 percent, of his money coming from the grassroots. (In absolute terms, his record-breaking haul puts him well in first place, whereas Merkley’s 63 percent only netted him $2.2 million.)

Candidate	Committee	Total Raised	Unitemized Contributions (<$200)	Percentage
Bernie Sanders	2018 Senate	$12,561,473.98	$9,384,655.11	74.71%
Kamala Harris	2022 Senate	$6,591,903.57	$4,906,438.63	74.43%
Elizabeth Warren	2018 Senate	$30,652,544.13	$19,369,886.27	63.19%
Jeff Merkley	2022 Senate	$3,443,186.53	$2,164,287.06	62.86%
Beto O’Rourke	2018 Senate	$80,319,754.49	$36,861,722.22	45.89%
Tulsi Gabbard	2018 House	$1,404,103.28	$532,401.97	37.92%
Joe Biden	American Possibilities PAC	$2,562,524.76	$879,845.92	34.34%
Kirsten Gillibrand	2018 Senate	$20,800,733.76	$6,608,743.01	31.77%
Sherrod Brown	2018 Senate	$25,608,242.88	$6,898,825.24	26.94%
Richard Ojeda	2018 House	$2,850,434.08	$758,049.94	26.59%
Cory Booker	2020 Senate	$7,676,915.64	$1,836,282.50	23.92%
Amy Klobuchar	2018 Senate	$10,754,297.70	$2,413,680.09	22.44%
Joseph Kennedy III	2018 House	$4,449,388.80	$812,432.40	18.26%
Tom Steyer	Need to Impeach PAC	$14,582,593.86	$1,271,735.07	8.72%
Eric Swalwell	2018 House	$3,026,601.31	$212,750.36	7.03%
John Delaney	2020 Presidential	$4,997,566.39	$35,575.54	0.71%

It may seem like this is a meaningless distinction; money is money, and money (for better or worse) helps win elections. But focusing on this aspect of 2020 Democrats’ finances is important, because they’re going against the only president of the modern era to ever win the White House by relying mostly on small-dollar donations. Donald Trump won in 2016 with 53 percent of his campaign’s money — even including his self-funding — coming from people donating $200 or less.

Trump has been even more prolific with grassroots donations as he gears up for his re-election campaign. Of the nearly $86 million Trump has raised in individual contributions to his campaign and joint fundraising account with the Republican Party since he took office, $62 million, or 72 percent, has come from small-dollar donations.

Behind this money is something that can’t be bought: supporter enthusiasm. Increasingly, money alone is not enough to win elections; it’s about how much of the money comes from small-dollar donors, and what else those donors do for the campaign.

Generally speaking, people make small contributions to candidates because they believe in their message or candidacy and want them to win. That also means it’s easy for a campaign to convert their donors into volunteers, and vice versa, as O’Rourke did in his race against Texas Sen. Ted Cruz. Cultivating donors and activists gets people excited and invested in the race, enabling them to give repeatedly, to evangelize for the candidate, and to do anything else the campaign asks for help with in order to win.

Buying Small-Dollar Donors

Grassroots fundraising almost never appears out of thin air; even the most exciting populist candidate has to invest in a program to cultivate these donors. Sanders’s 2016 primary campaign, on which I was the digital fundraising manager, spent tens of millions of dollars on digital ads to boost his fundraising. Harris has spent more than $2 million in 2018 on digital advertising to build her own small-dollar program, even though her next Senate election isn’t until 2022.

A plurality of money for most successful grassroots fundraising campaigns usually comes from a candidate’s email list, and the most effective way of building those lists is by running ads — generally on Facebook — asking people to sign up for the campaign. Sometimes immediately, but most often over several months, the campaign will make back the money spent on building its email list by turning those supporters into donors and starting to profit from that investment.

At least, that’s the idea. If the goal isn’t to actually raise money, but rather to create the appearance of a campaign powered by a grassroots army, then it doesn’t matter if each new “donor” comes at a net loss to a candidate. If a billionaire like Bloomberg needs to get over a bar that includes having a significant portion of his campaign money coming from small-dollar donors, it’s still possible for him to do so. He would just have to run a small-dollar program at a big loss, paying far more per email address and donor than those people give back.

If his campaign does the math right, it could meet the DNC’s theoretical grassroots fundraising threshold, even if it’s coming at a huge cost. However, when Cuomo tried to build a small-donor program this way, he failed miserably at raising any money through it. One would imagine billionaires would have an even harder time doing so, though Steyer does have an advantage here over the other billionaires. Steyer’s Need to Impeach PAC built a 6 million-person email list based on a petition to impeach Trump. However, that email list has only resulted in $1.2 million in small-dollar contributions — a paltry sum for such a large list, and a sign that it would be even harder to convert that list to donors in support of Steyer being the next president.

As the party begins approaching small-donors in an even more sophisticated way, it would be reasonable for the DNC to judge grassroots success by taking into consideration the cost of raising that army. What a candidate needs are soldiers who volunteer, not mercenaries; wherever possible, the party should look out for candidates skirting the spirit of this metric.

The Danger in Big Money and Super PACs

The possibility of a billionaire or corporate candidate faking their way to small-dollar support doesn’t render the idea of a grassroots fundraising metric meaningless. It actually makes the concept more valuable: Inserting the idea of grassroots fundraising into the debates makes it a campaign issue, which then focuses attention on big money in politics as well.

As the amount of money candidates raise from small-dollar donations becomes more important to the actual mechanics of the presidential election, it will force a discussion about who is funding candidates and why. Billionaires and corporate-funded candidates will have to explain their decision to take big money — and explain why they can’t raise it from the grassroots.

Donations tied to the oil and gas industry, financial sector, pharmaceuticals, and for-profit health insurance will be scrutinized and become weaponized by and for candidates who swear off that kind of money. Candidates who say they want to fight climate change will be attacked for accepting money from fracking interests; others who say they support “Medicare for All” will have to explain why they’re taking money from people whose entire industry would go up in smoke if profit was removed from health care.

This is to say nothing of the danger inherent in Super PACs, which can accept unlimited funds from any person or corporation. Sanders swore off a Super PAC in 2016, and would almost certainly do so if he runs again. Warren made rejecting Super PACs a key part of her initial Senate race against Scott Brown. Joe Biden, writing in his book, said he wouldn’t use a Super PAC if he ran for president. But Cory Booker has a Super PAC-in-waiting, founded by a Democratic donor, with $4 million already committed — and its leader says he’ll continue to operate even if Booker says he doesn’t want the help.

What we will see in the Democratic primary is a direct relationship between taking big money and not raising small money. It also becomes a lot easier for candidates to actively say they don’t want big money and don’t have Super PACs; it creates an incentive for grassroots donors to contribute, because the candidate’s success is tied only to their supporters. As more and more candidates can say they’re raising money from small-dollar donors, why should activists looking for a candidate give to someone who can raise money from Big Pharma? Why should a teacher give a hard-earned $20 to a candidate if they know that a billionaire is funding a Super PAC anyway?

Super PACs and big money are going to create far more problems than they’re worth for Democratic candidates. Every donation will be scrutinized and used as an attack. Candidates who reject big and outside money will be able to use that stance as a way to supercharge their own grassroots fundraising. It will become harder and harder for Super PAC candidates to justify their tolerance of outside money in a race that will be shaped by grassroots enthusiasm.

What to Expect in the Small-Dollar Primary

Perez’s introduction of a grassroots fundraising threshold to participate in debates is born out of the DNC’s efforts to appear unbiased in the primary, correcting its mistakes from 2016. But in doing so, Perez is actually putting his thumb on the scales of the race — only for once, it’s against big money and corporate candidates.

This extra incentive to focus on grassroots fundraising will transform how the primary is run. For years, when candidates filed their campaign finance reports, reporters raced to get up stories on how much each hauled in — the bigger the better. But with the DNC spotlight on small donors, reporters will now zero in on that small-dollar number. It won’t just be Sanders touting his average contribution amount; expect any candidate with a decent grassroots program to do so as well.

In the wake of Citizens United, things are changing fast in Democratic politics. Corporate political action committee contributions, until recently an obscure part of campaigning, are now rejected by nearly every 2020 candidate, as are Super PACs. Donations over a certain threshold might be the next to become stigmatized. In the meantime, whoever makes it out of the 2020 gauntlet will be up against one of the most successful grassroots fundraisers in history — and they’re going to need all the help from Democratic small-dollar donors they can get.

Please Help ZNet and Z Magazine

---