Obama to accept donations by text

In a US election dominated by multimillion-dollar donations, Democratic President Barack Obama’s campaign is about to give small donors a new weapon by starting to accept text message donations for the first time in history.

Marking the beginning of what could be a revolution in US campaign finance, the Obama campaign said yesterday it is wrapping up agreements with Verizon Wireless, Sprint Nextel Corp, US Cellular and T-Mobile USA — a unit of Deutsche Telekom AG — to open the floodgate for donations by text this week.

In the coming days, voters are likely to start seeing a message on video screens at Obama rallies, at the end of ads or on fliers, encouraging them “to contribute $10 (€8) to Obama for America, text GIVE to 62262.”

The campaign of Republican Mitt Romney, Obama’s rival in the Nov 6 election, has supported the notion of text donations in the past. It is expected to follow suit for its own short code of 466488, although has not made any announcements yet.

The Obama campaign said agreements with other phone companies — including AT&T Inc, the second-largest after Verizon — were anticipated “in the near future.”

Thanks to their small size and spontaneity, text donations could empower smaller donors in a campaign marked by six-figure donations to outside groups to fund what is likely to be the most expensive US election in history.

Text donations, as they are currently approved, can be made anonymously but have to be capped at $10 (€8) per text, $50 (€40) per month and $200 (€160) in total for one candidate or campaign. Donations are prohibited from foreigners, people under 18 or corporations, which could also mean corporate phone accounts.

The United States has more than 330m wireless service subscribers. Almost nine in 10 US adults have at least one cell phone line and about three-quarters of those use text messaging, according to the Pew Research Center’s Internet & American Life Project.

The process of political giving over text would be similar to giving to charity: a donor would send a short message to a text code, confirm intention and eligibility and later pay for the donation as part of the monthly mobile phone bill.

But in this case, carriers and aggregators processing the payment would take a significant cut from each transaction as they do with other non-charitable transactions, such as purchases of ring tones.

Typically, these fees can take 30% to 50% of the money sent over text, industry experts told the Federal Election Commission earlier this year. It remains unclear what percentage exactly the Obama campaign will be paying in fees.

“Every avenue of fundraising that we have costs us money,” said an Obama campaign official. “We pay the most competitive rates available in the marketplace to ensure our supporters have the greatest impact with their contribution.”

Text donations had originally been expected to launch in early June, when federal regulators first approved the program. But the wireless carriers, whose support is key to facilitate the process, had caused a delay as they sought legal protections over fraud and profitability.

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