Published Thursday, May 20, 1999, in the San Jose Mercury News

Online campaign donations ready to
take center stage

BY JIM PUZZANGHERA
Mercury News Washington Bureau

WASHINGTON -- Federal elections officials are poised to fully open the Internet to
presidential campaign fundraising today, making online credit-card contributions eligible
for matching funds.

The move, stemming from a request by former Sen. Bill Bradley's campaign, could help
underdogs like him compete in the increasingly big-bucks world of presidential politics,
experts said. It also would signal the Internet's arrival as a political fundraising tool that
soon could rival direct-mail and glitzy dinners.

``It's a very powerful symbol that online fundraising is an important and expected part of
American campaigns,'' said Phil Noble, president of PoliticsOnline, a company that
provides Internet and fundraising tools for politicians. ``It hasn't come of age yet, but it's
just been born.''

The Federal Election Commission is expected to approve the disbursement of matching
funds for online credit-card contributions at a meeting in Washington this morning. It
comes as the FEC begins grappling with issues involving the Internet and politics,
including how to regulate banner ads for candidates on Web sites and links to candidate
pages from other Web sites.

Under the draft proposal, credit-card donations made since Jan. 1 would be eligible for
matching funds. FEC commissioners today may consider making credit-card donations
that are not made online also eligible for matching funds, said FEC official Ian Stirton.
The request by Bradley, a Democrat, only involved online contributions.

Federal funds match up to $250 of each contribution with public campaign money. Each
candidate can receive up to about $16.75 million in matching funds for the 2000 election.
Matching funds are only available for presidential races.

Soliciting donations online

Several candidates or their exploratory committees are soliciting credit-card contributions
on their Web sites using secure servers, including Bradley and such Republican
candidates as Texas Gov. George W. Bush, Sen. John McCain of Arizona and publisher
Steve Forbes. But Bush's Web site, for example, specifically warns contributors that
credit-card donations are not eligible for matching funds.

Federal election rules are more stringent on the disbursement of matching funds because
they involve the use of taxpayer money, Stirton said. One concern with credit-card
donations is that it could be hard to determine the true identity of the contributor, allowing
people to skirt rules that cap individual donations at $1,000 and prohibit contributions
from foreign nationals.

But the Bradley campaign has proposed a series of warnings on its Web site and blanks
that contributors must fill out properly in order for the contribution to be accepted. A
contribution would be kicked back, for example, if the credit-card billing address were
different from the person's home address. A credit-card processing company also would
screen the information to make sure it was correct.

Paul Gronke, a Duke University political scientist who has studied the Internet's impact
on politics, said it was inevitable that federal elections officials would have to deal with
online contributions. Still, he warned that such contributions could be open to fraud. A
foreign national, he said, could get somebody in the United States to open a credit-card
account and use that to funnel contributions.

``I can within five minutes show you how to (make anonymous) who you are on the
Internet,'' said Gronke. But he said fraud using online contributions would probably be
no easier than it would be using the current system.

The FEC also is working with Congress to require candidates to file fundraising reports
electronically, to be posted immediately online. As legislation advances, Bradley and Vice
President Al Gore last month became the first major presidential candidates to voluntarily
file campaign disclosures electronically, said Kim Alexander, president of the California
Voter Foundation.

Should the FEC approve online matching funds, underdogs would have another weapon
to battle the more organized and better-financed campaigns of big-name rivals such as
Gore, she said.

Grass-roots political tool

``We live in a capitalist democracy where people speak with their dollars. My feeling is
the electoral process needs to adapt as times change in order to make it as possible for as
many people as possible to speak with their dollars,'' said Alexander, whose
Sacramento-based non-partisan group advocates using new technologies to give voters
more information. ``The Internet is a tremendous tool for grass-roots political organizing,
and if you can make it more convenient for people to support your cause, more people are
likely to support your cause.''

Bradley representative Eric Hauser agreed.

``The Internet is one of the best tools to reach out to new voters or people who have left
the process. That applies to organizing and volunteers and money,'' Hauser said.
Bradley's campaign has raised slightly more than $100,000 through the Internet so far, he
said, though he did not know how much came from credit cards and how much came
from checks. The campaign had raised a total of $4.3 million through the end of March,
the most recent filing period.

Though no figures were available, McCain's campaign has seen a ``steady stream'' of
credit-card donations made on its Web site, said campaign representative Howard
Opinsky. The campaign would welcome the ability to match those donations with federal
funds, he said.

``We don't foresee the Internet fundraising component is going to make up a large
portion of our donations, but like so much with the Internet, who knows what it's going to
be six months from now or a year from now?'' Opinsky said. ``It could end up being
important.''