AUDIE CORNISH, HOST:
Here's a way the candidates would like to be able to raise money - donations via text message. It's something nonprofits already do. The American Red Cross, for example, raised $32 million from texts after the earthquake in Haiti. But, for political campaigns, it's not a reality, not yet. In June, the FEC ruled that campaigns can collect donations from text messages, but wireless carriers still aren't onboard.
Today, we wrap up a series of conversations on the campaign toolbox with Erik Nilsson. He's the V.P. of C.M.D.I., a Republican fundraising technology company, and he helped explain how text donations would work.
ERIK NILSSON: For the donor, it's really easy. The donor basically texts a code word to a specific telephone number and the phone company then puts the donation on that cell phone subscriber's bill. So when they get their bill, they make their payment, that money is then passed from the donor to the cell company, then on to the aggregators, who are the ones who are really selling this to the campaigns, and they're the ones who applied with the FEC to get it through the system.
CORNISH: They're essentially the middle men. They're the people who would kind of take in the donations and then front that cash to the campaign, make sure everybody who's supposed to get paid is going to get paid. Right?
NILSSON: Absolutely. They're the ones who are doing it and that's exactly their job. The neat about that is they are getting the campaigns the money within 10 days of the text donation going through, but they're also the ones carrying the big risk because what we've seen historically is it takes three to five months for the money to go from the actual donor paying their cell phone bill and then from the cell company all the way through to the aggregator. So they're going to be fronting that money for quite a long time.
CORNISH: At the same time, you have both the Obama and Romney campaigns who wrote letters in support of this and yet it's not exactly launching, so what are the other concerns that these cell phone carriers seem to have about this?
NILSSON: Well, they've got a lot of concerns because it's not been clear in the FEC ruling who is responsible for determining whether or not somebody is eligible to make a donation. To make a donation to a presidential campaign, you can't be a foreign national. You have to be of a certain age. You have to - you can't go over a certain giving limit, so you cannot go over $2,500 in a campaign year.
Right now, there's nobody policing that, so the carriers are concerned that if they get somebody who makes a donation who is not qualified to make a donation, who's going to catch that? And will the carrier get in trouble if they do process donations for under-aged foreign nationals who are making donations over their company's cell phone? So they want to make sure they're protected should anything go awry.
CORNISH: So what is the real potential for this technology? Essentially, is the idea that it's going to open up the door to small donors even more? I mean, we talked so much about small donors when it came to the last election and President Obama's success there.
NILSSON: That is the philosophy. And let's make sure we're clear on how we're defining small donors. In the political world, we look at anybody who gives less than $200 as a small donor. And what we're talking about here with the - what the FEC has agreed to for text to donate is that only $10 can be made in a text donation, but you can do up to five of those donations per month with a total cap of $200 per subscriber.
CORNISH: OK. So that's still a good amount of money, right?
NILSSON: It's still a good amount. It's still a good amount, but if you look at the - you know, if we look at Obama's numbers at a high level, so far, for the 2012 elections, less than half a percent has come in from $10 or less gifts, so it's not moving the needle yet.
CORNISH: So explain why campaigns are eager to get in on this technology. How, in the numbers, does it compare to fundraising by other means, such as direct mail?
NILSSON: Direct mail, you get about $40 per gift and your cost of processing that gift is between two and five percent. For online donations, online donations are running about $80, on average, and those costs are four to five percent. With a text donation how it's described, it will be about $10 on average and the cost of donating will be about 40 percent. So it's not a very cost - and that's projected right now - but that's not a very cost-effective way to fundraise, so...
CORNISH: Wow. So if I give $10, you're saying four of those dollars goes to the middle men?
NILSSON: Correct. And then, if you think big picture, the campaign is only getting your cell phone number, so they're not even sure that it's Audie Cornish that gave that gift. So that's a challenge for the campaign and it's a challenge for the aggregator to make sure that that small gift comes in and they're able to - they like to move you up the food chain, have you give additional gifts later on.
CORNISH: Aha. So, even though campaigns might be excited, you're saying this essentially cuts them off from some very important data...
CORNISH: ...because it's anonymous.
NILSSON: It's anonymous and, really, campaigns want to build relationships with their supporters. It's all about building a grassroots effort, building your supporters, building your base. And, with kind of an anonymous donation when all the campaign is getting is the cellular number, they're a little bit removed. They'd have to do some data mining to find out who you really are.
CORNISH: Erik Nilsson, thanks so much for talking with us.
NILSSON: My pleasure. Thanks for having me.
CORNISH: Erik Nilsson works in fundraising technology for Republicans and he is excited about the fundraising potential of text donations, but given the concerns he described, he says you're not likely to be able text money to your chosen candidate until after 2012. Transcript provided by NPR, Copyright National Public Radio.