Small Democratic donors have an online pal

Ben Rahn and Matt DeBergalis aren’t fat cats, and they don’t operate from a smoke-filled room. But they funneled $17 million to Democratic candidates in 2006, making them among the largest political players in the country. They expect to handle a lot more in 2008.

Activists and entrepreneurs, they are writing the latest chapter in the Internet’s transformation of political fundraising.

The concept of their venture, ActBlue, is simple. Most groups that raise money on the Internet take stands and endorse candidates, and urge their followers to e-mail money for the cause.

ActBlue (www.actblue.com) does not endorse. Rather, it’s an online platform where anyone can send money to candidates of their choice, so long as they are Democrats.

It’s the PayPal of political giving, and nearly all the gifts are less than $200. Now Republicans are copying it.

“We’re trying to make political participation a normal part of people’s lives,” said Rahn, 30, who, with his partner, works in a musty office above a tavern here.

In a campaign expected to shatter all spending records, presidential hopefuls are racing across the country, lining up dinners at $2,300 a ticket -- the individual contribution limit -- and enlisting moguls from Hollywood to Wall Street to host million-dollar galas. Nominees will raise $500 million apiece, experts believe.

But increasingly, thanks to the Internet, federal campaign money comes in $10s and $20s.

“With the great amount of money being sought early this year by some high-profile presidential candidates,” said Stephen Weissman of the nonpartisan Campaign Finance Institute in Washington, “we will have a better test than ever before of what the Internet can produce from small and other donors.”

It’s impossible to know the amount donated online. Laws don’t require disclosure of donors’ methods. But Internet donors tend to give less than $200, and amounts collected in small slices are rapidly growing.

Sen. John F. Kerry (D-Mass.), the 2004 Democratic presidential nominee, raised 37% of his money in bites of $200 or less. Four years earlier, 20% of Vice President Al Gore’s money came in increments of less than $200. In 2004, President Bush raised 31% of his money in slices of $200 or less, up from 16% in 2000.

In a study completed last year, the Institute for Politics, Democracy and the Internet at George Washington University found that less than 10% of all campaign donors were younger than 35. But almost all young donors used the Internet to give.

“While most donors are older, the trend is clear. Online fundraising will be central to the future of campaign fundraising,” says the study, “Small donors and online giving.”

Republicans in general have made less use of the Internet than Democrats, said Michael Turk, 36, who has worked for the Bush-Cheney campaign and the Republican National Committee. Because Republicans controlled Congress until recently, they were less motivated to tinker with their formula of direct mail and telemarketing.

Turk is among Republicans trying to change that. Taking a page from ActBlue, he and others created ABC PAC (www.abcpac.com) to channel money to Republican candidates. The GOP version is an election cycle behind Democrats. ABC raised a modest $320,000 last year.

“Democrats take it a lot more seriously than Republicans,” Turk said.

A prime illustration is MoveOn.org, the liberal website that is one of the most aggressive Internet-based campaign organizations. MoveOn raised $27 million in 2006, giving $3.6 million to congressional candidates and the rest to campaign efforts independent from candidates.

“Candidates are wasting their time with rubber chicken donors,” said Eli Pariser, MoveOn’s 26-year-old executive director, referring to traditional fundraising dinners. “If they can catch fire with small donors, they can raise much more in a much cleaner and democratic way.”

Individual candidates continue to refine and expand their Internet efforts. To attract “I-donors,” major candidates have “e-campaign” gurus.

“It is no longer is an add-on. It really is the hub,” said Becki Donatelli, who oversees online fundraising for Republican Sen. John McCain’s 2008 presidential run, and heads Campaign Solutions, a consulting firm in Virginia.

On Thursday, McCain hosted a virtual fundraiser in midtown Manhattan. For $4,200, couples would get preferred seating for an “exchange of ideas” with McCain at the Hudson Theatre. For people who couldn’t attend, or afford it, McCain sold “e-tickets.” People paying $100 received a password allowing them to view the event online.

On the day that conservative pundit Ann Coulter attacked former Sen. John Edwards by using a slur against gays, the Democratic candidate launched an e-mail: “Help us raise $100,000 in ‘Coulter Cash’ this week to show every would-be Republican mouthpiece that their bigoted attacks will not intimidate this campaign.... Just click here.”

But ActBlue is the new model, registered as a political action committee and launched with seed money from venture capitalists and the Democratic Party.

Rahn is a Harvard graduate who was en route to a doctorate in theoretical physics at Cal Tech when, unhappy with the nation’s direction, he decided he should “do more than yell at the newspaper.”

DeBergalis, 29, after receiving a master’s in computer science from MIT, had jumped into politics in 2003 when he ran for one of nine seats on the Cambridge City Council. His platform included encouraging restaurants to stay open late.

He placed 10th but says students can now get late-night pizza.

After a slow start in the 2004 elections, ActBlue caught on. Its users include the candidates themselves, individuals who want to donate to a particular state or national candidate, and up-and-coming “bundlers” mimicking, on a more modest scale, wealthy fundraisers who squeeze tens of thousands of dollars from friends and associates.

“It is all transparent. It’s all small donations,” DeBergalis said.

Sen. Barbara Boxer (D-Calif.) used ActBlue to raise $900,000 in 2006, doling it out to Democrats nationally. Candidates also use ActBlue to operate their online fundraising. Edwards makes heavy use of ActBlue, having raised $1.07 million so far in his quest for the Democratic presidential nomination. New Mexico Gov. Bill Richardson has raised more than $288,000.

In many instances, individuals set up pages on the ActBlue site and recruit friends to contribute, via credit card, to candidates they tout. ActBlue transmits the money to the selected candidates.

Nate de la Piedra, 24, a political science student at George Mason University in Fairfax, Va., is one such bundler. He figures he has raised $70,000 for state and federal candidates.

“It allows anybody to become a bundler,” de la Piedra said. He envisions the potential: Rather than have a handful of wealthy people raise money for a candidate, “why not have a finance committee of 1,000 people each raising $1,000?”

Florida Democrat Tim Mahoney saw the power of the Internet last year when he campaigned to replace Republican Rep. Mark Foley, who resigned after his suggestive e-mails to congressional pages became public. Mahoney, running in what had been a safe Republican district, was the beneficiary of $510,000 funneled through ActBlue.

“It is a great indicator of the momentum your campaign has,” Mahoney said, adding that online money helped “create the buzz” that he could win.

Rahn and DeBergalis make money when donors leave “tips.” They also have angels, including the Democratic Party. Author Andy Tobias, treasurer of the Democratic National Committee, has given it $40,000. Democratic donors Andrew and Deborah Rappaport of Woodside have given $70,000.

Rappaport is a partner at August Capital in Palo Alto, Calif. He talks about ActBlue as if it were a start-up, albeit not one he expects will ever provide him with a monetary return.

“For a relatively small investment,” said Rappaport, “they’ve had an amazing impact.”

dan.morain@latimes.com