The national party committees continue to outpace the fundraising totals set in the 2000 election cycle, despite the ban on soft money. The latest totals suggest that the national committees are adapting successfully to the new fundraising restrictions imposed by the Bipartisan Campaign Reform Act (BCRA), more commonly known as McCain-Feingold, and that they will have the resources needed to mount meaningful campaigns on behalf of their candidates in the fall election. Moreover, the parties have demonstrated financial strength despite the unprecedented fundraising efforts of their presumptive presidential nominees and unrestricted fundraising by so-called 527 committees and other nonparty organizations in the quest for campaign dollars in the hotly contested race for the White House.
After 15 months in the 2004 election cycle, the national parties have raised a total of $433 million in hard money alone, compared to $373 million in hard and soft money combined at this point in the 2000 campaign. Every one of the six national committees has substantially increased its hard dollar fundraising in response to the ban on soft money. The Republican committees have replaced all of the $86 million in soft money they had solicited by March of 2000 with hard dollar contributions subject to federal limits. The Democratic committees, which were much more dependent on soft money than their Republican counterparts, raising more than half of their funds from soft contributions at this point in 2000, have already replaced most of their soft money receipts with new hard dollar contributions.
This surge in national party fundraising is the result of a substantial increase in the number of individual contributors that have been added to party rolls. While the higher contribution limits for national party committees adopted under BCRA (up to $57,500 per person every two years) have produced millions of additional dollars for these committees, the vast majority of the increase in party hard money receipts is a result of the extraordinary growth in the number of small donors on both sides of the aisle.1 No longer able to solicit unlimited soft money donations, the parties are investing more resources in direct mail, telemarketing, and Internet fundraising, with notable success in soliciting small contributions of less than $200. The RNC, which for decades has had the largest donor base of any of the party committees, has added more than a million new donors to its rolls since 2001.2 The NRCC, in 2003 alone, recruited more than 400,000 new contributors.3 The DNC has increased its number of direct mail donors from 400,000 in 2001 to more than 1.2 million so far in 2004, and increased its number of email addresses from 70,000 to more than 3 million. In the first four months of this year, the DNC posted 35 million pieces of fundraising mail, which, according to DNC Chairman Terry McAuliffe, exceeded the amount of fundraising mail posted by the committee "in the entire decade of the 1990s."4
As anticipated by most observers, the Republicans have proved to be more successful in raising hard dollars than the Democrats, outraising the Democrats by a margin of two-to-one and increasing the fundraising gap between the parties. Overall, the Republican committees collected $288 million during the course of the first 15 months of this cycle, as compared to $216 million in hard and soft money combined four years ago. The Democratic committees took in $145 million, as compared to $157 million in hard and soft money combined four years ago. The Republicans have more than doubled last cycle's hard money total, while the Democrats have almost doubled their hard money receipts, increasing their take by 89 percent. The most recent quarter, however, suggests that the Democrats' investments in small donor fundraising are paying off and that the party may be beginning to narrow the gap. In the first quarter of this election year, the Democrats received $50 million as opposed to $82 million by the Republicans, and recent reports suggest that fundraising on the Democratic side continues to strengthen.5
Even so, the Republicans have increased their financial advantage as compared to four years ago, when the Democrats controlled the White House. The gap has grown from about $59 million to $143 million. The Republicans are therefore likely to have an even greater financial advantage over the Democrats than they did four years ago. In 2000, the Republican national party committees received approximately $346 million in hard money, as opposed to $204 million for their Democratic opponents.
The gap between Republicans and Democrats is much narrower in terms of cash available to spend in the months ahead. As of the end of March, the Republican committees had almost $86 million of net cash available to spend, led by the RNC, which has a cash balance of $54 million. The Democrats had $43 million available to spend, led by the DNC, which had $27 million in cash. The expenditure-to-cash ratios for each party are now roughly equivalent, with the Republicans raising twice as much as the Democrats and generating twice as much net cash.
When BCRA was adopted, many observers expressed concern that the law would weaken the parties by depriving them of the resources needed to mount viable campaigns on behalf of their candidates. Yet, to date, the parties have proven that they can effectively adjust to a hard money world. They have altered their strategies and ended their reliance on soft money, replacing large soft money donations with thousands of small individual gifts.
The rise of a number of federal-election-related 527 organizations, which are not wholly subject to federal contribution limits and may raise funds from unlimited sources in unlimited amounts, has not dimmed the resources available to the parties. So far, the monies raised and spent by these committees represents only a portion of the monies the party committees have received, and a relatively small share of the total resources spent so far in this year's federal elections. In the first 15 months of this cycle, the national parties raised $433 million. State and local party committees collected more than $94 million for federal election activity, including $59 million by Republican committees and $35 million by Democratic committees. The presidential contenders, George Bush and John Kerry, took in more than $270 million. Congressional candidates garnered $583 million, or 35 percent more than they raised at this point two years ago.6 The major new 527 organizations active in federal elections in the aftermath of BCRA (Joint Victory Committee 2004, Media Fund, Americans Coming Together, MoveOn.org, and America Votes) raised slightly more than $47 million, while Club for Growth, a conservative group, generated more than $5 million.7
To what extent this will change in the aftermath of the FEC's May 13 decision to defer immediate action on proposed regulations for 527 groups remains to be seen. But it now appears that the parties are benefiting from the deep partisan divide within the country and the high level of competition in the presidential race, which is spurring tens of thousands of individuals to contribute to their preferred party for the first time. This suggests that the funds spent by nonparty groups will supplement, rather than overshadow, the role of the parties in 2004.
View the accompanying data tables (PDF - 16K)
1 An analysis of national party committee receipts by the Center for Responsive Politics found that 1,376 donors in 2003 had given the maximum contribution of $25,000 to a party committee. These maximum donors were responsible for an estimated $34.4 million of the $301.8 million raised by national committees in 2003. At a minimum, assuming that every one of these donors would have given the $20,000 maximum to a party committee permitted before BCRA, the additional $5,000 permitted under BCRA represents about $6.9 million in additional hard dollars last year alone. The Center's analysis is available at http://www.capitaleye.org/inside.asp?ID=122 (accessed May 17, 2004).
2 Paul Fahri, "Small Donors Grow Into Big Political Force," Washington Post, May 3, 2004, p. A11.
3 Thomas B. Edsall, "McCain-Feingold Helps GOP," Washington Post, February 7, 2004, p. A8.
4 Democratic National Committee, "DNC Fundraising Continues to Break Records," press release, May 10, 2004.
5 Ibid., and Paul Farhi, "Politics: Senate Democrats See Silver Lining," Washington Post, April 3, 2004, p.A6.
6 Federal Election Commission, "Congressional Fundraising Continues to Grow," press release, May 11, 2004. Available at http://www.fec.gov/press/press2004/20040511canstat/20040511canstat.html (accessed May 17, 2004).
7 Based on information reported in IRS filings, with adjustments for transfers among committees, as compiled by PoliticalMoneyLine (www.politicalmoneyline.org).