Speculation About the Possible Implications of Square on Political Fundraising

The 2008 Presidential Election witnessed the most significant volume of financial contributions—USD 1,788,800,000 to Presidential candidates alone—that the United States has ever seen. Though these totals certainly included the traditional big-dollar contributions of several thousands of dollars and the “bundled” contributions of significant contributors, they also had a record number of online & low-dollar donations.

In the case of then-Senator Obama, for example:

Three million donors made 6.5 million donations online, adding more than $500 million. Of those 6.5 million donations, 6 million were in increments of $100 or less. The average online donation was $80, and the average Obama donor gave more than once.

If nothing else, the 2008 election proved that when provided with a strong motivation & easy opportunity, average citizens are willing, if not eager, to contribute to political candidates. In 2008 this combination was given form & substance in Mr. Obama (the motivator) and the Internet (the easy opportunity), and the result was nothing short of incredible. Pundits were amazed, strategists were caught off guard, and everyone—and I mean everyone—in the political world will be looking to duplicate that success in 2012.

Of course, it’s difficult to catch lightning in a bottle: you know it’s coming, but it never strikes in the same place twice. 2012 may see a similar sort of fundraising magic, but it’s unlikely that it will be an exact repeat of 2008. Though the same strategies that were so successful in 2008—email “calls to action,” easily accessible online contribution forms, etc.—will still be utilized, they will have lost their novelty; voters will have become wise to them, jaded by their overuse, and (ultimately) less motivated to contribute. They will still be effective, but less so, and because everyone will be utilizing them, the winner will be the candidate who innovates.

Politics is Social; So is Fundraising

Politics is social: this is nothing new. For generations, candidates have earned votes through word-of-mouth, coffee hours, and phone banks. What is new is how the Internet has amplified the reach & influence of the activist.

Again, 2008 saw an incredible explosion in the use of the Internet as a tool for rapidly organizing activists & mobilizing a focused, coherent message. Tools like my.barackobama.com & Facebook allowed the campaign to grow organically from the ground up and helped to make individual activists feel directly involved and invested in its success. These tools were successful because they provided a simple, universal medium that modernized conventional campaign activities.

I believe that the successful application of this social model to fundraising is precisely the sort of innovation that will set the winners apart from the losers in 2012. By empowering individual activists to organically fundraise on behalf of the campaign to the extent that they become personally invested in its success, these campaigns will create an organic, social source of fundraising that will be as dramatic a shift from online fundraising as online fundraising had been from traditional forms.

The Tools are Already Here: Meet Square

Square, a new venture from Twitter co-founder Jack Dorsey, is set to revolutionize how ordinary people make financial transactions. What exactly is Square?

It’s essentially a small magnetic reader that plugs into the headphone jack of an iPhone. When a credit card (or a debit card) is swiped through the reader, it reads the data and converts it into an audio signal. The microphone picks up the audio, sends it through the processors, and then is routed to Square’s software application on the iPhone. The encrypted data is transmitted using either Wi-Fi (for iPod touch) or a 3G Internet connection to back-end servers, which in turn communicate with the payment networks to complete the transactions. (Source)

In short, Square lets you accept payments anywhere, anytime. Square doesn’t require a merchant account. It doesn’t charge any hidden fees. It doesn’t require a monthly contract. It automatically sends a receipt of each transaction to the payee via email. It’s simple, secure, and intelligent.

Most—in fact, all—of the coverage I’ve seen of Square has focused on how it might revolutionize small business and person-to-person transactions. This is, of course, understandable: the commercial market is potentially huge, and Square has been characterizing its product in precisely that light. I’d argue, however, that the possible implications of utilizing this technology in the political sphere are equally, if not more, significant because of its potential to make fundraising a personal, social activity.

Consider This Scenario

A volunteer is going door-to-door on behalf of a candidate. After several exasperating interactions with unsupportive residents, he finally happens upon an enthusiastic supporter—the sort every canvasser hopes for. He asks if they’d be willing to post a lawn sign supporting the candidate; they say “yes.” He asks if they’d be willing to volunteer; they say “yes.” Finally, he asks if they’d be willing to contribute $25 to support the candidate (to pay for the aforementioned lawn signs); they say, “I would, but I can’t: I don’t have my checkbook on me.”

No one can say for sure how many dollars have been lost due to the lack of a checkbook: likely millions. At that moment, the supporter was highly motivated (the first condition for low-dollar contributions); what he lacked was an easy opportunity. Even if he did have his checkbook handy—perhaps upstairs on his nightstand—it would have taken him several minutes to fetch it. The time was a deterrent, which ultimately he chose not to overcome (at a cost of $25 to the campaign).

Yet if the volunteer had been trained to receive contributions via Square, the situation may have turned out much differently. The volunteer, most likely, was carrying an Android, Blackberry, or iPhone device that was compatible; the supporter, most likely, had his check or credit card in his back pocket. Using Square, a $25 contribution could have been logged in seconds, with the transaction being cleared and reported soon after that.

Conclusion

This same scenario could be repeated during coffee hours, campaign rallies, and dinner table conversations. The rapid rate at which ordinary people have contributed money via text message to the Red Cross’s Haitian relief efforts (text 90999 to donate $10) demonstrates the incredible potential that strong motivation and easy opportunity afford. The possibility that someone could—while sitting in a coffee shop or walking in a park—convince his friend to donate to a cause swiftly, securely, and on the spot offers an entirely new paradigm for political fundraising. You’ll see it happen in 2012. Trust me.