Friday, October 30, 2015

Donna Edwards is Running Out of Cash for US Senate Race // Will Campaign Depend on Outside Spending to Keep It Viable?

By Matt Verghese

The headline of Josh Hicks’ article in the Washington Post on October 25 - Donna Edwards ahead in polls but far behind Van Hollen in fundraising - accurately summed up the emerging consensus among observers of Maryland’s US Senate race. Congresswoman Edwards' support with the state's sizable African American community gives her an early lead in the race, but it remains to be seen whether she has the resources to wage a winning campaign with less than 6 months to go until the April 26 Democratic primary.

A deep dive into the Donna Edwards for Senate FEC reports suggests, and some Edwards supporters admit, that Rep. Edwards could soon be out of money - and time.

While the $638,000 Rep. Edwards raised in Q3 may seem respectable (though once again far short of Van Hollen, and other Senate contenders across the country), her campaign managed to spend more than she raised and ended with a paltry $369,000 in the bank (with almost $20,000 in debt). Her third quarter “burn rate” was 107.9%

This gives Edwards less than a tenth of the resources Van Hollen currently has at his disposal, and puts her behind and a handful of CD4 and CD8 candidates. Without airing a single TV spot or sending a piece of persuasive mail - where did all the money go?

STAFFING: $311,460 (45% of Q3 Spending)

Staff Salary/Stipends $186,259
Payroll Taxes/Fees $105,188
Health Insurance $10,530
Reimbursements $9,483

The bulk of Edwards spending came from staffing up her campaign. In the first half of September, Edwards had 24 people receiving either a salary or stipend - more than the Van Hollen payroll during the same period. Edwards report also does not include paychecks for the second half of September. This is another $60,000 expenditure against the campaign’s cash on hand.

While it is impossible to run a statewide campaign without people on the ground - payroll becomes a monthly cost that could become increasingly burdensome over time as more organizers are brought on board closer to Election Day. If cash becomes tight, we may see the Edwards camp decide to take a page out of the Jeb! Bush playbook and reduce salaries and downsize, or try and outsource field operations to an externally run paid canvass.

FUNDRAISING: $160,819 (25% of Q3 Spending)

Direct Mail $82,499
Fundraising Consultants $64,000
Credit Card Fees $12,772
Postage $8,726
Fundraising Expenses* $1,548
* Doesn’t include other line-itemed costs for catering, facility rental, travel and lodging

It costs money to raise money, and it is costing Rep. Edwards at least $0.27 per dollar raised. That is not insignificant for a candidate who has historically struggled with fundraising. These expenses will likely increase as her campaign tries to raise even more money, especially from more out-of-state donors.

In addition to Jeremiah Pope, Amie Kershner and Ann Lewis - Edwards added Greg Kalik as one of her fundraising consultants in Q3.

CONSULTANTS AND SERVICES: $105,583 (15% of Q3 Spending)

Polling $53,000
Research $20,554
Compliance $16,047
Campaign Consulting $6,250
Mail Consultant $5,314
Legal $4,418

At the time of the filing deadline, the Edwards campaign had yet to pay some of these expenses. At least $15,749 of unpaid bills is noted on her FEC reports including $8,066 to Evans & Katz for Compliance, $5,820 to her mail vendor Mission Control Inc, and $1,863 to the firm Perkins Coie.

While it is certainly possible - though unlikely - that the Edwards camp won’t spend any additional money on polling or opposition research, compliance and legal both are ongoing costs. A substantive persuasive direct mail program to a statewide universe, will likely cost six figures.

DIGITAL: $35,612 (5% of Q3 Spending)

Website Services $16,289
Online Advertising $15,257
Software $4,066

There was a sharp drop (64% reduction) in digital spending by the Edwards camp in Q3, as they pared back their online program. Rising Tide Interactive - the campaign's digital consultant - performs a number of services including list acquisition, email programs, fundraising and persuasion, so it is difficult to determine exactly what was specifically cut and whether this level of spending is sustainable for the duration of the campaign.

The campaign ended with $3,950 in unpaid bills ($1,250 to Blue State Digital and $2,700 to NGP VAN for website related services).

OVERHEAD: $57,729 (8% of Q3 Spending)

Office Rent $17,638
Catering/Facility Rental $13,425
Travel $10,354
Printing $5,495
Office Supplies $5,444
Phones/Internet $2,783
Lodging $2,590

Nearly 45% of these costs seem associated with fundraising events. Including these would raise the campaign’s cost to $0.31 per dollar raised.

Other overhead expenditures are related to Edwards’ headquarters in Prince George’s. These costs will undoubtedly increase as field offices are opened in different regions of the state. At least one more is open now.

DONNA EDWARDS NEEDS FRIENDS IN HIGH PLACES : It is hard to make a case that the Edwards campaign is financially viable and equipped to compete as we approach the new year. Not only is Edwards starting the home stretch with effectively less money than her FEC report suggests, but her ongoing monthly expenses is a growing drain on her limited resources.

And the Edwards campaign hasn't spent a dime on paid media. Spending in the expensive and inefficient DC media market looks completely out of the question, while even a small ad buy in Baltimore seems cost prohibitive. Try to budget in a statewide mail program, more online advertising and a radio buy - and one must wonder how the cash strapped Edwards campaign will get any real exposure to voters especially those outside Prince George's County. Van Hollen, on the other hand, is already on the air in the Baltimore-media market and will likely run several thousand points worth of advertising before 2016.

What Rep. Edwards desperately needs is a campaign bailout - some outside group to prop up her candidacy. This realization may have dawned early on Edwards when she rejected a proposal to keep outside money outof the race. Aside from Emily's List the the Edwards campaign likely is relying on Labor for significant outside spending - making the recent decision of the the AFL-CIO to sit on sidelines  a significant blow.

But how big does Edwards' bailout have to be to keep her viable? And who is willing to part with millions of dollars to defeat progressive Van Hollen, when Democrats may have the opportunity to put the first woman in the Oval Office, and see a competitive path to a Senate majority through strong female candidates in GOP-held Illinois (Tammy Duckworth), New Hampshire (Maggie Hassan) and Pennsylvania (Kathleen McGinty)? Plus, how will anti-superPAC pro-campaign finance reofrm progressive Maryland voters feel about this?

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