GOP Still Spending on Calls

Posted October 29, 2007 at 6:35pm

The House GOP’s huge cash disparity versus Democrats this cycle has been attributed to everything from the party’s minority status to paying down leftover debt, but one of the least talked-about factors may be the most important — efficiency.

Specifically, Republicans’ $26 million cash-on-hand deficit has developed as they continue to spend far more money to make money than their Democratic counterparts do.

National Republican Congressional Committee officials have explained that their paltry $1.6 million bank balance as of Sept. 30 is largely the result of an effort to pay down a substantial debt left over from the 2006 elections. On top of that, they have experienced depressed fundraising from an angry donor base.

But while their overall fundraising totals may be down, one thing hasn’t changed in that the NRCC continues to spend a large portion of its budget on telemarketing.

The committee has spent more than $14 million so far this cycle on phone banks — roughly half of the $27 million it has raised so far from individual donors.

Overall, the NRCC raised $37.2 million through September, compared with the $52.6 million the Democratic Congressional Campaign Committee collected.

In recent cycles, the NRCC has come to rely heavily on telemarketing as a way of prospecting small donors in the post-soft money era. But over the years its exorbitant expense has led some Republicans to question its cost-effectiveness.

NRCC Chairman Tom Cole (Okla.) called phone banking the “crack cocaine of politics,” referring to its quick result and high price tag.

“It is an immediate rush, but boy do you pay for it,” Cole said.

NRCC officials said they are spending less money on phone banks than the committee has in the past and that the rate of return for every dollar spent is roughly the same as it has been. In mid-2005, the committee was keeping 39 cents of every $1.

Cole argues that one of the many challenges the committee has faced this cycle is rebuilding a direct mail program that he said was allowed to lapse over the course of the GOP’s 12-year majority. Direct mail is less costly up-front than phone banking, though phones often have a more steady return.

“We did a lot of phone banking. We didn’t do a lot of direct mail,” Cole said, referring to the 12 years the GOP was in the majority.

He said the committee has had to invest heavily in re-establishing the committee’s small-donor base up front, the rewards of which hopefully will be reaped next year.

So far this year, the NRCC has spent $2.4 million on generic postage and generic direct mail production.

Democrats, meanwhile, have spent almost $2.9 million so far this cycle on telemarketing. The committee reported an additional $6 million in expenses for generic printing, postage and fundraising services, according to figures compiled by CQ MoneyLine.

Republicans say there are many reasons why it is more costly for their party to raise funds. Cole argued that the DCCC has more donors who contribute the maximum amount and that it costs less money to score those high-dollar donations than it does to court the smaller donors that comprise the bulk of the GOP’s fundraising base.

The NRCC has always had more individual donors than the DCCC, though the disparity between the two has begun to close over the past two years.

Through the end of September, the NRCC has had more than 19,800 individual contributors this year while the DCCC has had less than half that number — 8,900.

While only a snapshot of this cycle so far, those figures are a stark contrast to the 2004 cycle, when the NRCC had 151,361 individual contributions and the DCCC reported 16,246.

The decline in individual contributors to the NRCC was evident even last cycle, when the committee had 92,878 individuals donate — a 39 percent drop from the 2004 cycle.

Some observers in GOP political circles have privately been critical of Cole’s decision to do away with the Business Advisory Council, which had proven to be one of the committee’s most successful fundraising tools.

But the program — which sought out individuals to become members of the council in return for a donation to the NRCC — also led to some bad publicity and unwelcome headlines, causing Members to complain.

For instance, in 2003 the NRCC gave Harry Weiss its National Leadership Award and appointed him California co-chairman of the Business Advisory Council. Weiss had close ties to the adult film industry, even landing a handful of roles in his own adult films.

NRCC officials said the program had become too costly and was no longer worth the return it produced.

Meanwhile, Cole is working to stress the zero-cost benefit of two types of donations — transfers from Members to the committee and donations from the political action committee community and lobbyists downtown.

The NRCC has gotten nearly double the dollar amount from PACs so far this cycle — $9.66 million compared with the DCCC’s $4.73 million.

But Democratic Members have given more than twice the amount from their campaign committees and PACs to the DCCC than GOP Members have given to the NRCC.

One GOP fundraiser said some Members are even less apt to give to the committee when they see huge sums of money being spent on telemarketing without much of a tangible return to show for it.

“It’s one more reason why a Member of Congress isn’t going to dip into his campaign fund to give to the NRCC,” said the fundraiser. He added that the bureaucratic nature of campaign committees often prevents them from being able to react quickly enough to the latest trends in the political marketplace.

Cole also argued that while in the majority, the GOP came to rely too much on that same easy money from K Street and transfers from Members’ campaign funds. And that, he said, is the reason the committee has to build back a small donor base now.

“We didn’t make $100-to-$200 friends,” Cole said. “We just didn’t do enough of that.”

Still, over the past four cycles, Republicans have sent millions to an Akron, Ohio-based telemarketing firm to do just that, and InfoCision Management Corp. remains the primary telemarketing firm used by the NRCC today.

In the 2004 cycle, the NRCC paid InfoCision $55 million while raising a record total of $186 million. During that cycle alone, the InfoCision program brought about 500,000 new donors to the NRCC, but it was a costly acquisition. Six months into 2003, the NRCC was banking just 15 cents of every dollar raised.

When concerns about the high cost and relatively small return were raised by Members, NRCC officials at the time argued that culling small donors then would pay big dividends down the road.

After restructuring the InfoCision contract as part of an effort to lower overhead and cut down on fundraising expenses, by mid-2005 the NRCC was keeping 39 cents of every dollar raised.

Current figures for how much of every dollar the NRCC has banked so far this cycle via telemarketing were unavailable Monday.

NRCC officials argued that unlike the DCCC, they also have built-in fundraising costs each year associated with their two large annual dinners. They said they are working this cycle to expand their online fundraising component, a relatively low-cost element that they conceded their Democratic counterparts have been much more successful in cultivating.

In fact, the DCCC just launched an effort to collect the names and e-mail addresses of 250,000 potential supporters over the next three months for their grass-roots rapid response network.

The DCCC’s fundraising formula is based largely on the idea that one-third of funds come from Members, one-third from individual donors via direct mail and online fundraising and one-third from higher-dollar donors.

At the NRCC, Cole hired Janice Knopp as finance director in his effort to return to the fundamentals of fundraising and re-establish connections with small and medium donors. Knopp was responsible for building the Republican National Committee’s direct mail and marketing program, which Cole said remains the gold standard among GOP committees.

“Give it time,” said GOP fundraising consultant Tom Hammond. “She’s proven through the RNC that that’s the type of operation she’s run extremely well and it takes time. It’s investing money up front for the future reward.”