“In this primary season, a paradigm shift has taken place where grassroots donors are much more important to a candidate’s success,” says Robert Wolf, a major Wall Street fundraiser for Barack Obama who founded
32 Advisors, a strategy and investment firm. Elizabeth Warren and Bernie Sanders, both of whom have
spurned donations from private, large-dollar fundraisers, together raised about $50 million in the third quarter, with tech entrepreneur Andrew Yang adding $10 million more, 99% of it in increments of $200 or less. That’s more than the total
brought in by the six other candidates who’ve qualified for the Nov. 20 Democratic debate, all of whom have followed the standard fundraising playbook. (One of them, billionaire investor Tom Steyer, is largely self-funding his campaign.)
The populist money bonanza—chiefly propelled by Warren and Sanders—has put a scare into people accustomed to being sought after for their ability to write large checks. “This is pretty straightforward,” Warren
told CBS News on Oct. 8. “Either you think … electing a president is all about going behind closed doors with bazillionaires and corporate executives and lobbyists and scooping up as much money as possible. Or you think it’s about a grassroots, let’s build it from the ground up.”
Well-heeled Democrats have plenty of reasons to oppose Warren and Sanders on policy, from their calls for tighter bank and business regulations to their
proposed wealth taxes, including a new 6% levy on billionaires Warren has put forward to fund her “
Medicare for All” plan. But some of the party’s biggest fundraisers also say donors are acutely aware that their money may not get them what it once did. “The value of the donation goes down,” says Marc Lasry, the billionaire co-founder of
Avenue Capital and co-owner of the
Milwaukee Bucks, who raised money for Hillary Clinton in 2016. “What that means is that donors or Wall Street will have less influence.”
Anxiety among the large-donor class has grown alongside Warren’s rise in the polls, which her campaign attributes partly to her pledge to forgo big money. “Ninety-seven percent of the people I know in my world are really, really fearful of her,” says Michael Novogratz, a former Goldman Sachs partner who now invests in cryptocurrency as founder of
Galaxy Investment Partners. Much of that fear is
overblown, he says, at least as it pertains to big hikes in high-end tax rates, which face long odds in Congress. But Novogratz, too, is bothered by Warren’s sharp attacks on the rich. “I’m hoping she pivots,” he says. “She’s such a good politician. She’s so smart. She’s witty. I’d rather have someone more centrist.”
One reason well-heeled donors are nervous is that the grassroots-focused approach is working much the way Warren and Sanders anticipated: democratizing access to power. “The small-donor money is not just putting bundlers and big donors to shame,” says a top Obama bundler who requested anonymity because he still raises money for Democrats. “It’s actually taking power away from the traditional three, four, five markets that have disproportionately funded campaigns: New York, Los Angeles, the Bay Area, D.C., and Chicago. It democratizes everything, when all the contributions come from online.”
There are advantages to eschewing wealthy donors besides building grassroots support. One veteran Democratic operative notes that managing big donors can be incredibly time-consuming for a campaign. They often demand face time with the candidate and want a voice in strategy and hiring decisions, and when they’re feeling frustrated—or self-important—they leak to the press. “There are real transactions involved that you don’t see,” he says. “Why do Hare Krishnas give you a flower? It’s Psychology 101: If they give you something, you have to listen to their spiel. It’s no different in politics. When someone raises $100,000 for you, it’s human nature to listen to what they have to say.”
But while Warren’s and Sanders’s attacks on the traditional fundraising system have helped boost their candidacies, bundlers say they’ve hurt the Democratic National Committee, which
trails the GOP in fundraising and spending by a huge margin. The Republican National Committee finished September with $59 million in the bank, seven times more than the DNC.
Three more Democratic Party fundraisers who requested anonymity because they’re not authorized to speak on the party’s behalf say Warren’s rise has hurt their efforts to close that gap. In September, when fundraising typically picks up after the summer doldrums, the DNC raised $1 million less than it had in August.
Not everyone worries about a fundraising cataclysm. Wolf, the former Obama fundraiser, thinks things will change once the Democratic nominee faces the prospect of being outspent by the Trump campaign and his Republican allies. “When we come to the general [election], that candidate has to make sure that we can compete,” he says. That must involve political action committees and other outside groups that rely on big-dollar donors, Wolf adds. “We cannot be at a disadvantage, and we won’t be.”
In recent weeks, Warren has made minor concessions to worried Democrats, including by headlining a high-dollar fundraiser in Washington for the DNC. On Oct. 15 she emphasized in a Medium
post, “I will continue helping the Democratic Party and Democratic candidates so we have the resources not just to beat
Donald Trump but also to win back Congress and state legislatures all across the country.”
Many donors are waiting to see who wins the nomination before they cut a check to the party, the bundlers say, and some have held back for fear of being frozen out if it’s Warren. Still, federal election law limits donations to parties on an annual basis, meaning money withheld in 2019 can’t be given in 2020 after the primaries are settled. That money may be sorely missed in battleground states, where the RNC is already
spending heavily.
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