Small donors, big debt: how Bosworth outraised Rounds

For the past year, Mike Rounds has been the fundraising king in the race for South Dakota's U.S. Senate seat.

Does the fundraising battle now have a new monarch -- a queen?

Even as Rounds had his best fundraising quarter ever by taking in $730,000 for his campaign, his rival Annette Bosworth shockingly topped him with $772,000.

But the story of how Bosworth, a first-time politician running a long-shot campaign, raised more money than the frontrunner Rounds, is more complicated than the side-by-side comparison suggests. And while the haul is good news for Bosworth, it doesn't mean she's the new favorite in the race for Senate.

"The fact that she outraised the presumptive nominee is good for press," said Joe Garecht, a fundraising consultant based in Philadelphia. "But the truth is, what really matters for a campaign is cash on hand."

By that standard, Rounds is still wearing the crown. At the end of March, Rounds had $1,019,000 in his campaign war chest and no debt. Bosworth had $348,400 in her account -- and owed a whopping $541,800, mostly to the same companies that helped her raise money in the first place.

That disparity emerged because Bosworth has followed an unusual fundraising path for a U.S. Senate race in South Dakota: bombarding thousands upon thousands of conservative donors around the country with letters and postcards asking them to give to her campaign. Most of those letters end up in the trash. But by sending out so many letters, even the small percentage who do give can add up to big sums.

Most of Bosworth's donations have come in very small amounts. Three quarters of her total the past quarter came from donors giving less than $200, which candidates can report as a lump sum rather than breaking out the names and addresses of each donor. Rounds, in contrast, had more than 90 percent of his money from large donors.

While campaigns vary, it's typical for candidates to raise far more money in large donations than they do from smaller donors. One person giving the legal maximum of $2,600 is equivalent to 13 people giving $200 each. John Thune, for example, has raised just 20 percent of his money the past year and a half from small donors. Rick Weiland, the Democrat who has based his U.S. Senate campaign around attacking the role of "big money" in politics, took in 25 percent of his money from small donors.

Of course, sending out as many letters as Bosworth has is expensive. From January through March, Bosworth spent $523,000 on direct mail and fundraising, while accumulating another $450,000 in fundraising and direct mail debt.

Rounds, by contrast, has raised his money the more traditional way: hours each day on the phone with potential supporters, and more time on the road around South Dakota and the country attending fundraisers with wealthy donors.

The former governor's campaign team was contemptuous this week of Bosworth's prodigious fundraising.

"Generally speaking, raising money and an ability to manage those contributions are two very different things," said Rob Skjonsberg, Rounds' campaign manager. "If I raise a dollar and blow 85 cents, what good is that? Having debt and unpaid bills and questionable press releases is a smokescreen, and it's not a good situation for any campaign."

Bosworth's campaign manager said her fundraising strategy is both deliberate and successful.

"We've spent a little over $672,000 getting Annette Bosworth's name out there and getting people to know who she is, and it's working," said Patrick Davis. "Her name ID is up and her favorability is up."

Garecht said it's not necessarily a problem if candidates have inefficient direct-mail fundraising -- at first.

If a massive fundraising mailer barely even pays for itself, the real reward for the candidate isn't the money -- it's the names of the people who donated, Garecht said.

"The reason a candidate would do this is because they're trying to build a list of people they can then solicit from over and over again," Garecht said.

But as the election draws closer Garecht said candidates need to pivot to more efficient styles of fundraising. With South Dakota's Republican primary fast-approaching on June 3, Garecht said would "hope" Bosworth has begun to focus her fundraising on proven donors rather than casting a wide net.

Davis said that he's "very happy with where we are at this point in the election" and expected to have enough money to be competitive in April and May.

While Bosworth's fundraising may work out for the candidate, Garecht said that's a different issue for whether it's fair to the donors who write a check to support a candidate only to see most of that go to a direct mail company.

"One of the biggest issues is, as donors realize that they're giving $50 to a candidate, but the candidate's really not getting any of it, what does that do to the donor and what does it do to the donor's perception of political giving?" Garecht said.

But however Bosworth's fundraising compares to Rounds, she's elevated herself above the other three Republicans running for the U.S. Senate nomination, at least in money. Stace Nelson has $33,432 in the bank and no debt. Jason Ravnsborg has $3,964 and owes $20,000 to himself. Larry Rhoden has $78,097 and owes $6,982.

Rounds and Bosworth have been the only two Republican candidates to air television ads in the campaign.

"The argument that these companies make, and it's not an invalid argument, is... if they're taking 85 percent, they tell the candidate 15 percent of $2 million is better than 100 percent of $10,000," Garecht said. "They'll make the argument that with our expertise, you'll be able to raise far more money than you would on your own."