Ted Cruz and Bernie Sanders now have something in common. The presidential candidates are the first to start accepting contributions via SMS text that are billed to the donor’s phone bill.
In 2012, President Obama and Mitt Romney both had text-to-donate programs, but they weren't based on SMS messages and created a headache for their compliance teams. "I threw a fit about [text message donations]," Bradley Crate, Romney's compliance consultant, once told C&E. "I was jumping up and down like a two-year-old kid."
Today's compliance teams won't face the same frustration because of how the donations are processed.
Cruz recently launched a pure SMS text donation program with the Prosper Group, which has the GOP deal with the cell carriers and their trade group, the Cellular Telephone Industries Association (CTIA). The deal took roughly six months to negotiate, according to Kurt Luidhardt, a vice president and co-founder of the GOP digital firm.
“We’re going to pitch it wide to any GOP-leaning candidate,” said Luidhardt.
The agreement is similar to the one Revolution Messaging just reached with the industry after some eight months of negotiations that allows the Sanders campaign to solicit donations via text and have the amount billed to the supporter’s phone.
But on the Republican side the Prosper Group’s deal has ruptured a fault line in the campaign industry with long-time payment processor CMDI arguing that the technology is still unproven and campaigns may have to wait up to 60 days for their money while the providers transfer the donation. Luidhardt shrugged offer the critique. “Whenever you launch a new technology there will be people who feel threatened,” he said.
Moreover, the Revolution and Prosper deals don’t have the candidates waiting on the entirety of their donations. Factored payments are used, meaning that a portion of the donation gets to the campaign within 10 days in accordance with the FEC. The remainder is transferred when the subscriber pays his or her bill.
Donors can give up $50 per phone number per month to each political committee and up to $200 per individual per year (cumulative) per political committee. The donations, because they’re made in small increments, can be recorded as a single line item on an FEC report.
Safeguards are in place to ensure the donations are legal. Donors still need to check a box and indicate that they’re a U.S. citizen and the funds are theirs, which is the same requirement as credit card processing.
CMDI has warned that people using their work phones could inadvertently make a corporate contribution to a candidate. But the boxes that have to be checked on a text contribution are similar to credit card processing, which indicate that donors must be using their personal credit card.
Luidhardt agreed it’s not ideal for candidates to wait for even a portion of the donation. Instead, he noted that text donations are an ideal way to bring in new donors. “Your conversion rate on these goes up considerably,” he said.
Some 80 percent of donors follow through with a text contribution on average while its only about 30 percent for those going through the steps with a credit card.
It’s also possible, Luidhardt added, to solicit additional funds or ask the text donors to set up a credit card-linked account while waiting on the initial donation. “I look at this as an effective acquisition tool,” he said.
That’s not to say the money being brought it via text is chump change. Luidhardt estimated that a presidential candidate could raise close to $2 million with a pure SMS text program.