Small dollar democracy

Changing the way UK parties are funded would cut out the need to find donations from millionaires, a

Forget meeting millionaires. Reform political party funding, rely less on big donations, and the issue of who does or doesn't meet up with super-wealthy Russians is immaterial.

In the UK, the spectre of sleaze has once again reared its ugly head, when Shadow Chancellor George Osborne was accused of attempting to solicit a £50,000 donation from Russia's richest man Oleg Deripaska.

Although Osborne strongly denies any wrong doing he admitted on Monday: "To be honest this didn't look very good and that's something I regret."

And it is hard not to see this event as the latest in a long list of perceived campaign finance scandals which have greatly undermined the public’s faith in the funding of party politics.

This is a real contrast to an event last week across the Atlantic where Barack Obama’s campaign manager, David Plouffe, announced the campaign had raised a staggering $150m in September.

Most impressively, this money came from 3.1 million American citizens, each, Plouffe claimed, giving an average of $86. This approach to fundraising is known as small-dollar democracy, and it relies on a combination of citizen activism, the internet and the careful cultivation of a campaign donor base.

Could small dollar democracy provide a sleaze-free answer to the funding woes of British parties, and put an end to stories like the one we saw this week? Admittedly it is unlikely that British parties can replicate the scale of Obama’s success. However, this does not mean they cannot learn important lessons from his campaign’s approach to fundraising. Three important ideas stand out as being especially significant.

Firstly, British parties should resist the temptation to find an easy answer – namely, rushing headlong into the continental European model of state funding. While this might cure any cash shortages, it does not, as Germany has discovered, end the problem of campaign finance scandals. Additionally, such a move would be very unpopular with the public, especially at a time of economic crisis and increased national debt.

Secondly, the whole notion of small dollar democracy demonstrates that it can get more people involved, and feeling positive about politics. This contradicts much perceived wisdom in the UK, which assumes that money will have a pernicious impact on politics. However, the British problem is not so much money, but where that money has come from. Parties have become reliant on too few people and organisations. The solution to this problem must include political parties replicating the technology and ideas used by Obama and democratising the fundraising process. For example, a system where either existing patrons or the state matched new contributions would greatly incentivise parties to seek out small donors.

Thirdly, and perhaps most controversially, the success of Obama campaign in galvanising individual donors might provide a model for the future of Labour’s financial links with the trade unions.

This issue is especially apposite, since disagreement over trade union funding was one of the issues which led to the collapse of the last round of talks on campaign finance reform.

Conservatives argued that unions should be subject to the same £50,000 donation cap that was proposed for individuals.

Labour claimed that trade unions represented millions of people, so the two were not comparable. It is clearly fatuous to compare a trade union with a single millionaire donor, as the Conservatives do.

This is a flagrantly political attempt to sabotage Labour’s historic links with the union movement.

Nonetheless, it is also hard to argue that the convoluted mechanisms through which trade unions make political contributions are analogous to millions of individual donations.

The relationship between the unions and Labour could be remodelled, learning the lessons from Obama’s campaign.

While he had millions of individual givers, his donors were certainly not isolated – they were part of a complex network, based on their communities, workplaces and online. Labour could learn from this; the union movement is a huge ready-made network, ripe for activation.

In the future, unions could campaign for political donations among their members in a manner similar to progressive Political Action Committees in the US, such as MoveOn or ActBlue. This model of union-based funding would be grassroots driven, relying on the support of ordinary members.

Instead of managing highly institutionalised political funds, the role of the union leadership would be to mobilise its membership to actively support progressive causes through choice. This approach would also end the debate over institutional donation caps, since every penny given could be traced back to a completely willing and engaged individual.

The British campaign finance system needs to change: our parties are constantly short of resources and over extended, the public lack confidence in the system, and a small number of large donors appear to have a huge impact over the course of events.

The success of the Obama campaign, where technology and a sense of community have been used to such phenomenal success, offers important lessons for campaign finance reform in the UK. By widening the pool of fundraisers and reducing the average contribution, cynicism about political finance in the US has diminished. Domestic reform along similar lines is possible and, correctly conceived, can bring about powerful and positive effects on our body politic.

Nick Anstead is the co-author with Will Straw of Yes We Can: How the Lessons from America Should Change British Politics, published by the Fabian Society on 30 October, on www.fabians.org.uk.