Saturday, July 03, 2010

Spending money to make money

There's plenty to discuss about the 2009 year-end returns - both in their original form, and the handy comparison put together by Alice at Pundits' Guide. But let's start with an obvious explanation for the differences in fund-raising between the national political parties which signals both an opportunity for the opposition parties to bring in more money, and the fact that there's much less of a gap in apparent fund-raising capacity than the top-line contribution numbers might suggest.

While the Globe and Mail notes the massive amount spent by the Cons on fund-raising only in passing and doesn't mention the comparable figures for the other parties, take a look at the relationship between expenditures on fund-raising and returns:

Party Expenses Contributions Net
Cons $7,183,514 $17,704,401 $10,520,887
Libs $2,377,395 $9,087,756 $6,710,361
NDP $1,594,566 $4,006,641 $2,412,075
Green $0* $1,142,893 $1,142,893

*It's possible that the Greens may have fund-raising costs embedded in another category ("wages and benefits"? "professional fees"?). But I'll count this as zero since they don't list a separate expenditure category for fund-raising.

So what can we take from the net numbers? The first obvious point is that the Cons' advantage over the Libs in particular looks a lot smaller when one considers the respective amount each party is plowing into fund-raising efforts. Rather than having an insurmountable lead in the amount of money they're able to raise for advertising or other purposes, the Cons actually have a relatively small advantage which seems to be driven mostly by their more aggressive fund-raising efforts.

But that isn't to say that the Cons have their strategy wrong by any stretch of the imagination. As I've noted before, the ideal point of fund-raising for any political party would seem to be that where the incremental fund-raising value of the next dollar spent approaches zero - or maybe even slightly less than that to the extent it's possible to derive valuable information about donor preferences and public buy-in from a fund-raising campaign. And from the massive gap between the amounts spent by the Libs (and Greens) and the amount received in contributions, it looks like both of those parties are falling well short of the ideal spending amount.

Meanwhile, the NDP looks to have roughly matched the Cons' spending on fund-raising as a percentage of its contributions. But of course that's a double-edged sword: if the NDP is already near the optimal point of fund-raising spending for its current level of public support, then any further increases in fund-raising would figure to involve an extra step to try to expand the pool of potential donors.

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