CFB Taking the Measure of Text Message Contributions
Small-dollar text message (or SMS, for “short message service”) contributions can be quick, easy, and convenient. From a donor’s perspective, making a contribution to a cause via SMS is now commonplace and straightforward. And, since cell-phone ownership is so widespread, SMS contributions give candidates the chance to engage a much wider set of potential contributors and the CFB an opportunity to expand the reach of NYC’s landmark small-dollar matching funds program.
However, SMS contributions have not been widely adopted by political campaigns as a fundraising tool. There are some additional behind-the-scenes obstacles that may prove especially challenging for New York City’s public matching funds program: the high fees charged by wireless carriers, and the timing of the contributor’s payment via his or her wireless phone bill.
So, on November 24, the CFB will hold a hearing on proposed rules to allow text message contributions to candidates for New York City office. The proposed rules implement Local Law 116 of 2013 to permit SMS contributions in city elections and set out requirements by which small SMS contributions could be matched with public funds under the existing matching funds program.
The Federal Election Commission (FEC) considered proposals to allow SMS contributions for federal candidates in the spring of 2012. Good-government groups supported the proposal. In a letter to the FEC, the Brennan Center for Justice suggested that allowing SMS contributions could help “strengthen our government and our democratic process” by encouraging more widespread participation by small donors. After the FEC gave its approval (PDF) in August 2012, both major-party candidates for president accepted contributions via SMS. According to published reports, the Obama campaign raised nearly $1 million by text.
The opportunity to expand participation is clear, particularly among New Yorkers who do not own a smartphone or use credit cards. Cell-phone usage is almost universal among Americans; nearly 90% of adult Americans own a cell phone, according to a study by the Pew Research Internet Project. Pew shows that while a clear majority own smartphones as many as one-in-three cell phone owners have only a basic phone capable of sending and receiving phone calls and text messages but not much more. A Gallup survey shows that nearly 30% of adult Americans lack a credit card.
Still, while the utility of SMS contributions is clear, adoption has not spread very far beyond Presidential-level campaigns. Though three states (California, Maryland, and Texas) have approved text message contributions for state campaigns, there are few reports of candidates in those states raising funds via SMS.
Fees. Though wireless carriers have sought FEC approval to charge lower fees to political campaigns than to other business customers, the fees associated with processing SMS contributions are higher than the typical fees charged in other fundraising channels.
Complexity. The experience of making a contribution by text message couldn’t be simpler for the donor. But the system for processing contributions can be very complex, involving multiple actors between the contributor and the campaign: wireless carriers that bill the contributor; connection aggregators, which advance funds to the campaigns; and vendors that handle SMS communications with donors.
Timing. An SMS transaction is only completed after the contributor pays his or her bill to the wireless carrier—a time lag that could take months. Connection aggregators often fill this gap, by advancing funds to the campaign against the expected contribution.
The payment timing issue creates specific challenges for New York City’s system. The FEC’s text message rules characterize the advance payment from aggregators as a loan. If the CFB follows the FEC’s course, such payments would not be matched, because loans are not matchable under the rules of NYC’s program.
The Board’s proposed rules require that the campaign receives the contributor’s funds from the wireless carrier before matching funds are paid. This will make it difficult for campaigns to solicit or receive matchable SMS contributions close to the election, when most New Yorkers are most likely to be paying close attention.
We invite interested and knowledgeable parties to comment on the Board’s proposed rules, particularly on ways to match contributions earlier in the process.
A public hearing on the proposed rules, aimed at getting suggestions on how to meet the intent of the law and harness the full possibilities of SMS technology, will be held November 24, 2014 at 10:00 am at the offices of the New York City Campaign Finance Board, 100 Church Street, 12th floor, New York, NY.
If you wish to appear in person at our hearing on Monday, please email Giovanni Mejia. You may also email written comments to CFBRules@nyccfb.info any time before November 20, 2014.