Raising more than funds

Jim's post on the final 2006 party fund-raising numbers both reminded me of one point I'd been meaning to discuss, and pointed to some additional material worth mentioning. So let's take a look at what last year's fund-raising numbers mean - and how all parties may be missing some of the possible upsides of political fund-raising efforts.

For the strongest indication of a party which is missing out, let's start with the Libs as discussed in the Globe and Mail's article on the numbers:

Newly disclosed financial reports reveal the Conservative Party has built a multimillion-dollar fundraising machine, spending $6.7-million in order to raise far more cash than the competition.

Proving the old adage that it takes money to make money, the new figures released by Elections Canada reveal the party's $18.6-million in donations came at a price...

Liberal Party spokeswoman Elizabeth Whiting said the $6.7-million expense shows the Conservatives do not have as much money as the $18.6-million total would suggest.

"They're spending a lot to raise a lot," she said...

Over all, the Liberal Party put a positive spin on the numbers. Party president Marie Poulin issued a statement describing the $4.5-million surplus as a record high.

Now, in almost any other area, the idea of limiting the expenses required to achieve a given net return would be a positive one. But I have to wonder whether that's the case in the political sphere.

After all, while most businesses are out solely to make money, a political party has a far different ultimate purpose. Indeed, the main value in the money brought in lies in its ability to help a party to achieve electoral success. And the fund-raising process may do just as much as the funds actually raised to assist in reaching that end.

Consider what a fund-raising campaign can do by aiming to reach as many people as possible (rather than generating the highest net return possible):
- Fund-raising can help in disseminating a party's message. This is particularly significant since a substantial chunk of any funds raised will get used for advertising anyway: to the extent that the fund-raising process helps a party to remind its supporters of its message and get them talking about it, a campaign likely has a definite positive impact even if it only breaks even from a money standpoint.
- Fund-raising can be used as a means of gathering information from potential and actual supporters. Every new person who responds to a fund-raising appeal offers another potential volunteer and supporter in other ways as well - and even among a party's established supporters, it's possible that fund-raising can serve to help focus-test which messages are most appealing to a party's base.
- Fund-raising can give an individual supporter a stake in the party's success. Presumably some individuals who donate to a party will feel a stronger personal connection to the party's success - and thus be more likely both to follow through with an intended vote for the party, and assist the party in other ways. (Of course, this may be a mixed blessing, as some people may also figure that a financial donation absolves them of any responsibility to volunteer or otherwise help the party.)
- Finally, fund-raising helps to shape the media's perception of parties. While this also offers some excuse for the Libs playing dumb in trying to downplay their own poor results, there can be little doubt that a party's gross numbers will be discussed to at least some extent as a proxy for its internal support and political momentum. And since political perception can so quickly turn into reality, a party which settles solely for the highest net returns at lower levels of support does so at its own peril.

It remains to be seen whether the Libs will recognize, or indeed have recognized, the wider effects that fund-raising can have. But if they continue to consider fund-raising to be a business rather than a party-building exercise, then that will leave the other major parties with a significant advantage.

That is, to the extent that they seek to raise funds at the grassroot level. And the fund-raising numbers over the past couple of years suggest that both the Cons and the NDP have done substantially better than the Libs in that department. But CBC's coverage points out the most significant recent development in NDP and Con fund-raising, which may itself reduce the beneficial spillover effects of the income flowing into these parties:

Figures also show that the Conservative party is successfully convincing many of its members to sign up for automatic monthly donations in small amounts of $20 and $25.

That technique is also being used by the NDP, which raised nearly $4,000 (sic) from 25,000 donors in the same time period.

Now, a monthly payment plan may make for an extremely low-effort means of raising money. But it too seems to result in some disconnection between the party and the donor - limiting in particular the message-sending and information-gathering points in the list above.

In fairness, it may well be that the political parties are efficient enough in spending money that it's worth their while to simply maximize the dollars in their pocket. But it seems likely to me that the hidden costs of easy money may make it worth the parties' while to put in more effort to keep their supporters interested. And it'll be interesting to see whether any of the parties buck the seeming trend - and how their results differ as a consequence.

(Edit: fixed typo, added label.)