July 2007, Page 2 Archive

We’ve talked a lot about how you can use ActBlue effectively, where you can run into us at trainings and events, and what’s coming next.  Today’s topic is a little different, but no less important.

I want to start talking about how it all works.  In particular, I want to talk about sustainability: how we built ActBlue to last forever.

Some quick history to start.  Ben and I launched ActBlue in June 2004 and shepherded just shy of $1 million to 150 Democrats that year — a success in its own right.  We always treated 2004 as a two-front experiment, though: one, will the ActBlue model for funding candidates work (yes!); and two, can we build the organization itself in a sustainable fashion.

Raising funds for infrastructure like ActBlue instead of campaigns is always a challenge.  Some of the best advice Ben and I got in the early going was to create a *sustainable* organization — one whose operations provide all the necessary internal funding.  (Companies that aren’t sustainable go bankrupt and are considered failures or Internet startups, and yet this is all too common in the political world.)  Our answer was the tip request that we ask of each contributor using the website.  What excited us about 2004 is that over half our donors left a tip for ActBlue.  We thought we were on to something.

There was only one problem.  We were still broke.

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I suspect every new organization goes through a rough period.  Ours was the start of 2005.  With so little happening on the website at that time of year, we didn’t have any operating capital.  And yet, bursts of activity around Howard Dean’s election to the DNC and Paul Hackett’s run in Ohio stressed our system to the breaking point.  Without a bigger technology budget, we were on the verge of collapse.

Prodded by some excellent advice from many advisors, we adopted a novel solution to the challenge.

Friends, meet Auburn Quad.

Those of you who work with campaigns have seen AQ on your finance reports for a while, but we’re probably news to most of our readers.  In 2005, Ben and I formed a company called Auburn Quad to develop and operate the technology that powers the ActBlue service and established an independent ActBlue board to eliminate conflicts of interest.

AQ’s product is called "Indigo" — it’s the software you employ as you contribute and fundraise with ActBlue.  Indigo processes online contributions, bills credit cards, tracks progress on fundraising pages, prints each week’s checks, provides financial statements to campaigns and fundraisers, and reports every last penny to Uncle Sam.  It may sound simple, but the story becomes interesting when millions of dollars flow to thousands of candidates in 22 states, each governed by a different set of rules.

Ben and I had two motivations for forming Auburn Quad.  First, ActBlue’s focus lies squarely in our political mission.  We empower individuals, informal groups, and established organizations to raise money for Democrats.  We have already helped to raise over $24 million online and aided in Democratic gains both in the House and Senate as well as in state chambers across the country.  In short, ActBlue’s staff is dedicated to political matters.  Under ActBlue’s roof, technology priorities would compete with political priorities, and usually lose. Auburn Quad can do a far better job running technology than ActBlue can in-house.

I know you saw it coming: the second reason is sustainability.

Moving political money properly takes a lot of gear ($) and staff ($$).  As ActBlue grows into the premier fundraising platform for Democrats up and down the ballot, Auburn Quad’s responsiblity to maintain and scale the system grows as well.  These things are anything but cheap.

Here’s how it all works.  Auburn Quad charges a service fee of 3.95% against gross contributions.  Most of that fee ends up going to the credit card companies; about 1.5% stays at AQ.  That 1 1/2 cents on the dollar pays for pretty much everything behind the website: computers, the programmers, and the coffee; or in specific terms, all the additional transactional costs borne by AQ to receive and remit contributions on your behalf.

Meanwhile, the real action still lies inside ActBlue.  Your tips and other generous contributions to the PAC allow us to extend our operations into new states, assist thousands of campaigns with their online fundraising, hold training events across the country, share best practices with our partners, and most importantly, offer these tools and top-flight customer service *for free to everyone*.  ActBlue is working to empower a new class of active Democrats who can reshape the country’s political dynamic and grow our party for generations to come.  Every last bit of this work is funded with your contributions.  Freed from the financial responsibilities of the payment platform, ActBlue spends every last political dollar on politics.

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There’s one more reason to talk about our structure, though.  We believe *this model itself* is a strategic advantage to our political movement, and we offer it as a template for how to build a future generation of Democratic organizations.  We want to promote the model in its own right, and indeed you’ll see me and others call out its benefits here on this blog.

Our approach isn’t without its challenges.  There can be a real tension between ActBlue and AQ, whose goals are certainly similar but not precisely the same.  This is good.  It keeps us moving forward and honest to our mission.  ActBlue has a phenomenal Board of Directors (a majority of whom have no role in Auburn Quad) who help us negotiate the natural conflicts of interest and make sure that ActBlue’s political goals are never compromised.

As I said, we’ll be writing much more about ActBlue and Auburn Quad over the next months.  In the meantime, there’s more information in ActBlue’s FAQ, and don’t shy away from asking questions here.