Small Problem

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There's been a lot of talk about the rising power of the small donor in this presidential campaign, from the talk of Barack Obama's large internet fundraising base to Ron Paul's record-breaking online contribution numbers. This article in Business Week investigates the small donor narrative and finds that, for all the hype, big donors are still where the power lies.

There's no question this will be the most expensive presidential race in history and candidates are tapping into any sources of money they can find. The "internet effect" of bringing in small donors has not been enough to offset the institutional preference for big donors and big checks:

By the end of the third quarter of 2007, the last for which data are available, the Presidential contenders had collected more than twice the amount generated in the same period during the last two elections. The top six candidates alone raised more than $340 million by the end of the third quarter, according to the Center for Responsive Politics (CRP), a nonpartisan, nonprofit research group that studies campaign finance. Candidates must report fundraising totals for the fourth quarter by Jan. 31. "There is no question that more small donors are active," says Weissman. "But it has been counterbalanced by candidates really intensifying their large donors."

What's more, candidates backed by larger numbers of big donors are raking in more money—and performing better in the polls—than hopefuls who are most reliant on small-time giving.

Not all money, it would seem, is created equal. Those on the inside -- candidates popular with the establishment -- stay in the inside while those on the outside can't compete. For all the tools available to integrate small donors into campaigns the modern campaign rewards a big donor rewards system.

However, in the seven states and two cities where Clean Elections legislation has been passed, the power of the small donor is paramount as candidates solicit small contributions from supporters to qualify for public financing for their campaign. A Clean Elections program is the only way to address the gulf between big and small donors effectively.