economics102
01-20-2010, 12:07 AM
========EDIT==========
I realize my original post is incredibly long, so here's the cliff notes on what I think is most important in here:
This is a general idea about a new kind of fundraising website that I think could improve our fundraising abilities to the point where the original money bombs will seem like child's play. Here is one (simple) example of the concept:
1. Rand Paul (or Trevor Lyman, etc) sets a fundraising goal of $1 million thru this new website we'd be creating
2. Each supporter enters their credit card info and signs the pledge "If the total pledges add up to the $1 million goal, I will donate $250.00." (the supporter can write in whatever donation amount they want).
3. Pledge totals (both the monetary total and number of donors) are kept private throughout the fundraising effort. On the day of the moneybomb, if the $1 million goal is reached, all donations will be processed via credit card. If not, nobody is charged.
Now here's another variation, one I think is even cooler:
1. Rand Paul (or Trevor Lyman, etc) sets a fundraising goal of $1 million thru this new website we'd be creating
2. Each supporter enters their credit card info and signs the pledge "I pledge to donate up to $500 to help Rand Paul reach his $1 million goal." (the supporter can write in whatever maximum donation amount they want).
3. On the day of the moneybomb, if the total of all the pledge maximums is, say, $2 million, rather than Rand Paul receiving the full $2 million, the visitor in this example would end up being charged $250, as the extra $1 million in pledges is spread out over all the pledgers, driving down the cost to each donor. This way everyone has an incentive to truly pledge the maximum they're willing to spend to make the moneybomb successful. The spreadback of excess funds might be done in an even fashion, or it might be proportional to donation amounts, or by some other method. As before, if the fundraising effort fails, nobody is charged anything.
There are many significant advantages to this system, these are laid out in the original post and in subsequent posts in this thread. Please read and discuss!
===========ORIGINAL POST==============
Hi all, I’m a long-time (2+ years) lurker, never posted here before. I say this with as much humility as possible, but I have what I think could be a game-changer of an idea for our movement. I don't have the time to execute this idea myself, so I'm putting it out here, where I hope it will be rigorously debated and then executed with the care and caution it would require.
The time for this idea is right now. We have serious candidates that could win with serious financial backing, and our ability to keep the movement strong and growing, and start actually winning elections, depends in large part on our fundraising abilities.
Very simply, consider the following scenario: A candidate is running for a senate or house seat. The candidate presents a clear and realistic picture of what it will take to have a decent, 50/50 or better shot at winning. Perhaps even a second, higher estimate, to really seal the deal, and ensure we can overwhelm any media effort to snuff our candidate. Now consider carefully the following questions:
How much would you be willing to donate, if you think your donation will be “wasted” because it’s unlikely enough of your peers will donate to REALLY seriously fund the candidate?
How much would you be willing to donate if you think there’s a decent chance enough of your peers will join you to raise the amount needed to seriously fund the candidate?
How much would you be willing to donate if you were GUARANTEED, with 100% certainty, that, with the help of your donation, the candidate will have the full funding they need to truly compete?
How much would you be willing to donate if you KNEW, with 100% certainty, that, with the help of your donation, the candidate will be over-funded, with an intimidating political warchest that pretty much guarantees they’re going to be a force to be reckoned with, like Linda McMahon has done in Connecticut?
Right now, #3 and #4 are not available options to us, or any political movement. The minority of us that donate ANYTHING fall into category #2. The majority, I presume, are in category #1. For most political movements, the percentage in category #2 is even smaller than ours, because we’re much more serious and committed than most political movements.
But I submit to you, if options 3 and 4 were suddenly available, it would actually be perfectly realistic to see through the kind of scenario Peter Schiff frequently espouses in his video blogs, where he reminds us how easy it would be for us to raise large amounts of money if we could just get all (or a majority) of us to donate, instead of the minority.
And it’s not just about what % of the supporters donate. It’s about how much. Part of why I’ve been thinking about this so much, is that I find myself frequently saying “I’m going to donate $100, that’s all I can comfortably donate. But, man, if I knew that with my donation I could guarantee a giant warchest that would make this candidate a major political force, heck, I’d donate $500, I’d even donate $2,300, even though that would hurt my pocketbook a lot.” And I think most of us are in that camp – if we knew the money was going to be used in a winning campaign, then it’s a very different question. I’m sure most of us are so committed that we’d gladly dive $2,300 into debt to buy Rand Paul or Peter Schiff a senate seat.
Now I realize we’ve used non-binding pledges in the past, and that pledges “sort of” serve a similar purpose. But pledges have some huge weaknesses that undermine the concept:
They’re non-binding
They have a big chicken-and-egg problem. The genius of the live donation trackers used on candidates’ websites is in recognizing that many decide how much to donate by looking at how successful the effort ALREADY IS, and so showing big numbers encourages them. But sadly most people are of the mentality that “oh, phew. I was gonna donate but I see it’s already successful, I’ll just make a small donation (or not donate at all).”
Basically, the truly optimal way for a political movement to raise funds is like this:
a. First, determine “we need at least X amount of money to be a serious, viable campaign”
b. Next, find out the MAXIMUM your supporters would be willing to donate if it would GUARANTEE this target is met
c. If the maximums are not enough to meet the target, don’t waste anyone’s money, call off the fundraiser. If the maximums are so generous that they meet or exceed the target, have your supporters donate just the amount necessary to meet the goal, rather than taking the maximums they offered (this is only fair). This ensures that supporters who are really willing to dig deep if it’s not going to go to waste, will do so, and those that are only throwing around pocket change, or not donating at all, because they’re cynical, have an opportunity to be maximally generous and an insurance plan in case their cynicism/pessimism proves well-placed.
So what am I proposing? There’s a lot of potential variations on my idea but here’s the most likely form of it: I’m proposing that someone build a website that operates on the following process:
Let’s say Peter Schiff needs $2 million to run a credible campaign, and needs $5 million to really make sure he’s taken seriously.
Schiff sets up a fundraising account on this website, with the goals stated above.
Schiff sets a date by which the fundraising effort officially ends (this is the date of the money bomb, in effect).
Potential donors sign up on the site to follow the fundraising effort, entering their credit card info. (of course, the site will no doubt have a widget that gets embedded directly on Schiff’s site, dailypaul.com, etc.)
They choose, for example, to donate $100 if the total of all donors would reach the stated primary goal of $2 million. (They can choose whatever donation amount they want, not everyone has to donate the same amount.)
They also pledge to donate an additional, say, $900 if the totals would reach $5 million.
The pledges are effectively contracts, agreements to donate on a certain date given certain conditions. The site may allow pledges to be canceled prior to the donation date, but once that date arrives, debits to all donors’ accounts happen automatically.
Unlike the current moneybomb setups, stats on how many pledges there are, and how much money has been pledged will be kept private by default, viewable only to the Schiff campaign. This is important, otherwise people will donate less, or not at all, as the totals go up. The Schiff campaign can, at their discretion, announce the fundraising status (“we’ve reached our goal, you can stop donating”), or they might intentionally wait until there are, say, $10 million in pledges, and then announce (“we’re going to cut everyone’s donation in half now that we’ve gotten such a high number of donors”). There are limitless options and opportunity for creativity, etc.
On the scheduled date of the moneybomb, if the targets are reached, the pledges become donations, deployed in one big automated money bomb. If there’s concern that a non-trivial portion of donation transactions will be rejected, this could be solved by first placing authorization holds on all cards to determine whether the rejected transaction rate is acceptable. Or some other methods could be used, etc…
If the totals are NOT reached, no charges will be made, and the donors will be free to keep their money or donate voluntarily as desired.
So again I must emphasize, this is not intended to be a minor process improvement on the money bomb concept. This would be a very different beast. I feel that with a system like this, it would truly be “easy” for us to raise millions of dollars at will for our liberty candidates. Raising $400,000 for Kokesh would be a cinch, for example. Nobody has to worry about whether a moneybomb will be successful. Just email everyone, and we’ll all put down what our donation intentions are, and if the support is there, it will happen, and if not, our scarce resources will not be wasted on candidates that don’t have enough funding to win. We will be able to maximize generosity and minimize risk of wasted resources!
Now, I’m sure lots of “yeah, but…” thoughts go off in your heads as you read through my above description, but with further brainstorming you’ll see that there’s ways to address them. And there’s lots of potential variations on this concept. Just to save some time in discussions, here’s some of the more obvious problems and my thoughts on them:
PROBLEM: If I make a pledge for $1,000 to say, Peter Schiff, and I want to support Rand Paul if Schiff doesn’t meet his target numbers, I’m afraid to pledge to Paul because that creates the possibility that I’ll end up donating to BOTH.
SOLUTION: Well, first of all you can cancel pledges at any time prior to the settlement date. So as long as both candidates aren’t on the same day, there’s no problem. But another solution is that, you can simply select an order of priority for your pledges, and set it up on the site so that “donate $1,000 to Schiff if he hits the $5 million threshold, and if not, donate $$1,500 to Rand Paul, assuming he meets $2 million.”
PROBLEM: Situations will arise where a candidate falls just short of their target and winds up losing the whole boatload as a result.
SOLUTION: This is a real problem, but there’s lots of ways to address this. I’ve got a lot of ideas on how to mitigate this problem but I’ll leave that for another post because this post is already really long!
PROBLEM: This sounds great, but this will also be used by other political movements, so aren’t you just escalating things?
SOLUTION: There’s some truth to this. I think the reality is still that most political activists are not as dedicated as us. They don’t have as much to gain, frankly, so they’re generally not willing to spend money. Think about it this way: most political movements are supporting already-viable mainstream candidates, so the concern over wasting their money is not really there. Imagine what our movement gains if we manage to get Rand Paul or Peter Schiff into the senate. We go from having zero honest libertarians in the senate, to having two. And of course if the liberty movement succeeds at that, it will inspire the majority who sit on the sideline, who suddenly will feel like they can do more than just shoot spitballs, and can actually get their candidates elected. But yes, it will be hard to predict the unintended consequences of putting this kind of tool out in the open – it may just create a bigger arms race for all we know. The "money bomb" is largely a marketing tool with some degree of fundraising innovation in place. This is actually an evolved fundraising concept that outright eliminates some of the major barriers to raising money.
PROBLEM: Couldn’t the opposition sabotage the fundraising efforts by making pledges and canceling them at the last minute?
SOLUTION: Not really. The only people that will be “screwed up” by that are the campaign, which may be making plans based on looking at the not-yet-published pledge count, but assuming the stats are kept private, as I advocate, this kind of sabotage activity would have no impact on the ultimate success or failure of the moneybomb. If this really became an issue though, one solution is to simply not allow canceling of pledges, or charge a small fee for canceling, or some other more creative solution.
PROBLEM: Some people don’t know if they’ll financially be able to afford to donate until the day of the moneybomb.
SOLUTION: That’s OK, they can sign up anytime up until the day-of, it really doesn’t matter, as long as they get their pledge in by the deadline.
So, please discuss. I’m a very experienced software developer, I wish I had time to build this site myself but I don’t. Once there’s been a lively exchange and the best ideas rise to the top, my hope is that this project is taken up by real pros. This is the kind of project where solid execution is really important, as is making sure you’ve got all the legal aspects of a site like this straightened out.
Hope something good comes from this. Sorry if I sound overconfident that this is a “big idea” – I think it is but I’m not trying to be self-important. I trust the value of this idea will be assessed by the people in this thread
I realize my original post is incredibly long, so here's the cliff notes on what I think is most important in here:
This is a general idea about a new kind of fundraising website that I think could improve our fundraising abilities to the point where the original money bombs will seem like child's play. Here is one (simple) example of the concept:
1. Rand Paul (or Trevor Lyman, etc) sets a fundraising goal of $1 million thru this new website we'd be creating
2. Each supporter enters their credit card info and signs the pledge "If the total pledges add up to the $1 million goal, I will donate $250.00." (the supporter can write in whatever donation amount they want).
3. Pledge totals (both the monetary total and number of donors) are kept private throughout the fundraising effort. On the day of the moneybomb, if the $1 million goal is reached, all donations will be processed via credit card. If not, nobody is charged.
Now here's another variation, one I think is even cooler:
1. Rand Paul (or Trevor Lyman, etc) sets a fundraising goal of $1 million thru this new website we'd be creating
2. Each supporter enters their credit card info and signs the pledge "I pledge to donate up to $500 to help Rand Paul reach his $1 million goal." (the supporter can write in whatever maximum donation amount they want).
3. On the day of the moneybomb, if the total of all the pledge maximums is, say, $2 million, rather than Rand Paul receiving the full $2 million, the visitor in this example would end up being charged $250, as the extra $1 million in pledges is spread out over all the pledgers, driving down the cost to each donor. This way everyone has an incentive to truly pledge the maximum they're willing to spend to make the moneybomb successful. The spreadback of excess funds might be done in an even fashion, or it might be proportional to donation amounts, or by some other method. As before, if the fundraising effort fails, nobody is charged anything.
There are many significant advantages to this system, these are laid out in the original post and in subsequent posts in this thread. Please read and discuss!
===========ORIGINAL POST==============
Hi all, I’m a long-time (2+ years) lurker, never posted here before. I say this with as much humility as possible, but I have what I think could be a game-changer of an idea for our movement. I don't have the time to execute this idea myself, so I'm putting it out here, where I hope it will be rigorously debated and then executed with the care and caution it would require.
The time for this idea is right now. We have serious candidates that could win with serious financial backing, and our ability to keep the movement strong and growing, and start actually winning elections, depends in large part on our fundraising abilities.
Very simply, consider the following scenario: A candidate is running for a senate or house seat. The candidate presents a clear and realistic picture of what it will take to have a decent, 50/50 or better shot at winning. Perhaps even a second, higher estimate, to really seal the deal, and ensure we can overwhelm any media effort to snuff our candidate. Now consider carefully the following questions:
How much would you be willing to donate, if you think your donation will be “wasted” because it’s unlikely enough of your peers will donate to REALLY seriously fund the candidate?
How much would you be willing to donate if you think there’s a decent chance enough of your peers will join you to raise the amount needed to seriously fund the candidate?
How much would you be willing to donate if you were GUARANTEED, with 100% certainty, that, with the help of your donation, the candidate will have the full funding they need to truly compete?
How much would you be willing to donate if you KNEW, with 100% certainty, that, with the help of your donation, the candidate will be over-funded, with an intimidating political warchest that pretty much guarantees they’re going to be a force to be reckoned with, like Linda McMahon has done in Connecticut?
Right now, #3 and #4 are not available options to us, or any political movement. The minority of us that donate ANYTHING fall into category #2. The majority, I presume, are in category #1. For most political movements, the percentage in category #2 is even smaller than ours, because we’re much more serious and committed than most political movements.
But I submit to you, if options 3 and 4 were suddenly available, it would actually be perfectly realistic to see through the kind of scenario Peter Schiff frequently espouses in his video blogs, where he reminds us how easy it would be for us to raise large amounts of money if we could just get all (or a majority) of us to donate, instead of the minority.
And it’s not just about what % of the supporters donate. It’s about how much. Part of why I’ve been thinking about this so much, is that I find myself frequently saying “I’m going to donate $100, that’s all I can comfortably donate. But, man, if I knew that with my donation I could guarantee a giant warchest that would make this candidate a major political force, heck, I’d donate $500, I’d even donate $2,300, even though that would hurt my pocketbook a lot.” And I think most of us are in that camp – if we knew the money was going to be used in a winning campaign, then it’s a very different question. I’m sure most of us are so committed that we’d gladly dive $2,300 into debt to buy Rand Paul or Peter Schiff a senate seat.
Now I realize we’ve used non-binding pledges in the past, and that pledges “sort of” serve a similar purpose. But pledges have some huge weaknesses that undermine the concept:
They’re non-binding
They have a big chicken-and-egg problem. The genius of the live donation trackers used on candidates’ websites is in recognizing that many decide how much to donate by looking at how successful the effort ALREADY IS, and so showing big numbers encourages them. But sadly most people are of the mentality that “oh, phew. I was gonna donate but I see it’s already successful, I’ll just make a small donation (or not donate at all).”
Basically, the truly optimal way for a political movement to raise funds is like this:
a. First, determine “we need at least X amount of money to be a serious, viable campaign”
b. Next, find out the MAXIMUM your supporters would be willing to donate if it would GUARANTEE this target is met
c. If the maximums are not enough to meet the target, don’t waste anyone’s money, call off the fundraiser. If the maximums are so generous that they meet or exceed the target, have your supporters donate just the amount necessary to meet the goal, rather than taking the maximums they offered (this is only fair). This ensures that supporters who are really willing to dig deep if it’s not going to go to waste, will do so, and those that are only throwing around pocket change, or not donating at all, because they’re cynical, have an opportunity to be maximally generous and an insurance plan in case their cynicism/pessimism proves well-placed.
So what am I proposing? There’s a lot of potential variations on my idea but here’s the most likely form of it: I’m proposing that someone build a website that operates on the following process:
Let’s say Peter Schiff needs $2 million to run a credible campaign, and needs $5 million to really make sure he’s taken seriously.
Schiff sets up a fundraising account on this website, with the goals stated above.
Schiff sets a date by which the fundraising effort officially ends (this is the date of the money bomb, in effect).
Potential donors sign up on the site to follow the fundraising effort, entering their credit card info. (of course, the site will no doubt have a widget that gets embedded directly on Schiff’s site, dailypaul.com, etc.)
They choose, for example, to donate $100 if the total of all donors would reach the stated primary goal of $2 million. (They can choose whatever donation amount they want, not everyone has to donate the same amount.)
They also pledge to donate an additional, say, $900 if the totals would reach $5 million.
The pledges are effectively contracts, agreements to donate on a certain date given certain conditions. The site may allow pledges to be canceled prior to the donation date, but once that date arrives, debits to all donors’ accounts happen automatically.
Unlike the current moneybomb setups, stats on how many pledges there are, and how much money has been pledged will be kept private by default, viewable only to the Schiff campaign. This is important, otherwise people will donate less, or not at all, as the totals go up. The Schiff campaign can, at their discretion, announce the fundraising status (“we’ve reached our goal, you can stop donating”), or they might intentionally wait until there are, say, $10 million in pledges, and then announce (“we’re going to cut everyone’s donation in half now that we’ve gotten such a high number of donors”). There are limitless options and opportunity for creativity, etc.
On the scheduled date of the moneybomb, if the targets are reached, the pledges become donations, deployed in one big automated money bomb. If there’s concern that a non-trivial portion of donation transactions will be rejected, this could be solved by first placing authorization holds on all cards to determine whether the rejected transaction rate is acceptable. Or some other methods could be used, etc…
If the totals are NOT reached, no charges will be made, and the donors will be free to keep their money or donate voluntarily as desired.
So again I must emphasize, this is not intended to be a minor process improvement on the money bomb concept. This would be a very different beast. I feel that with a system like this, it would truly be “easy” for us to raise millions of dollars at will for our liberty candidates. Raising $400,000 for Kokesh would be a cinch, for example. Nobody has to worry about whether a moneybomb will be successful. Just email everyone, and we’ll all put down what our donation intentions are, and if the support is there, it will happen, and if not, our scarce resources will not be wasted on candidates that don’t have enough funding to win. We will be able to maximize generosity and minimize risk of wasted resources!
Now, I’m sure lots of “yeah, but…” thoughts go off in your heads as you read through my above description, but with further brainstorming you’ll see that there’s ways to address them. And there’s lots of potential variations on this concept. Just to save some time in discussions, here’s some of the more obvious problems and my thoughts on them:
PROBLEM: If I make a pledge for $1,000 to say, Peter Schiff, and I want to support Rand Paul if Schiff doesn’t meet his target numbers, I’m afraid to pledge to Paul because that creates the possibility that I’ll end up donating to BOTH.
SOLUTION: Well, first of all you can cancel pledges at any time prior to the settlement date. So as long as both candidates aren’t on the same day, there’s no problem. But another solution is that, you can simply select an order of priority for your pledges, and set it up on the site so that “donate $1,000 to Schiff if he hits the $5 million threshold, and if not, donate $$1,500 to Rand Paul, assuming he meets $2 million.”
PROBLEM: Situations will arise where a candidate falls just short of their target and winds up losing the whole boatload as a result.
SOLUTION: This is a real problem, but there’s lots of ways to address this. I’ve got a lot of ideas on how to mitigate this problem but I’ll leave that for another post because this post is already really long!
PROBLEM: This sounds great, but this will also be used by other political movements, so aren’t you just escalating things?
SOLUTION: There’s some truth to this. I think the reality is still that most political activists are not as dedicated as us. They don’t have as much to gain, frankly, so they’re generally not willing to spend money. Think about it this way: most political movements are supporting already-viable mainstream candidates, so the concern over wasting their money is not really there. Imagine what our movement gains if we manage to get Rand Paul or Peter Schiff into the senate. We go from having zero honest libertarians in the senate, to having two. And of course if the liberty movement succeeds at that, it will inspire the majority who sit on the sideline, who suddenly will feel like they can do more than just shoot spitballs, and can actually get their candidates elected. But yes, it will be hard to predict the unintended consequences of putting this kind of tool out in the open – it may just create a bigger arms race for all we know. The "money bomb" is largely a marketing tool with some degree of fundraising innovation in place. This is actually an evolved fundraising concept that outright eliminates some of the major barriers to raising money.
PROBLEM: Couldn’t the opposition sabotage the fundraising efforts by making pledges and canceling them at the last minute?
SOLUTION: Not really. The only people that will be “screwed up” by that are the campaign, which may be making plans based on looking at the not-yet-published pledge count, but assuming the stats are kept private, as I advocate, this kind of sabotage activity would have no impact on the ultimate success or failure of the moneybomb. If this really became an issue though, one solution is to simply not allow canceling of pledges, or charge a small fee for canceling, or some other more creative solution.
PROBLEM: Some people don’t know if they’ll financially be able to afford to donate until the day of the moneybomb.
SOLUTION: That’s OK, they can sign up anytime up until the day-of, it really doesn’t matter, as long as they get their pledge in by the deadline.
So, please discuss. I’m a very experienced software developer, I wish I had time to build this site myself but I don’t. Once there’s been a lively exchange and the best ideas rise to the top, my hope is that this project is taken up by real pros. This is the kind of project where solid execution is really important, as is making sure you’ve got all the legal aspects of a site like this straightened out.
Hope something good comes from this. Sorry if I sound overconfident that this is a “big idea” – I think it is but I’m not trying to be self-important. I trust the value of this idea will be assessed by the people in this thread