Obama wins the First Quarter financial race

What? All the media report that Hillary Clinton raised a record amount and is clearly in the lead? Oh, who ever said that journalists know how to calculate? You know, math is hard. But let me explain. Point by point.

This, the first quarter, is absolutely the most important because it is the ONLY one that gets reported by the media. All the money that comes in later is important for the functioning of the campaign, but if the 1st quarter brings in a lot of media attention that emboldens more donors to give more money - it is a feed-forward system. Those who underperform in the 1st quarter cannot sustain their campaigns (unless they run vanity campaigns with no real effort).

Of course, the financial pictures will change over the next year or so, but really say nothing about who the eventual nominee will be. The whole 1st quarter hullabaloo of reporting is meant just to weed out the non-contenders. The top 3-4 will be able to continue fundraising and campaigning unencumbered and will be able to pay for their staff, travel, advertising, ground organization, etc., thus getting their message out.

The media reports ONLY ONE number for each candidate. According to that calculation, Hillary Clinton is first with $26 million, Barack Obama second with around $22 million, and John Edwards third with $14 million, while others are pretty much nowhere (to the point some may be forced to quit as they will not have enough dough - or chances of getting any in the future - to actually pay staffers, travel, etc): for instance Richardson $6 million, Biden $1.5 (?) million, I don't have the numbers for Dodd, Kucinich and Gravel, but those are likely to be even smaller.

However, and this is IMPORTANT, that one number is misleading as it is composed of three very different kinds of money:
a) primary election money
b) general election money
c) additional money

Primary money - up to $2300 per donor can be used immediatelly and all the way up to the Convention. This is the first fund that donors give to.

General money - additional $2300 per donor can be used ONLY by the eventual nominee and ONLY after the Convention. Until then, it is in an escrow account, useless, yet it can be used to make the 1st quarter number look (inflatedly) bigger. All the non-nominees have to return these funds to the donors. They cannot pocket them, invest them, donate to charity, give to the nominee, give to the DNC or anything else - every check goes back to the individual donor who sent it.

Additional money - this time around only Hillary has it - about $11 million left over from her Senate campaign. Nobody else in the field has any leftovers from other campaigns and, as far as I know, no other candidate intends to put in personal money into it. I think that they are all refusing matching public funds as well.

A few days ago, in an e-mail, I wrote:

Thus, even if all three top-tier candidates collect the same amount right now, Hillary will look much more impressive with that additional $11mil. and will be touted by the media as a big winner and "frontrunner".

And I think I was right, but it is unclear if the Clinton campaign included the $11mil in the total or not. Even when an article is specifically about the Edwards fundraising it touts Clinton as the big winner.

But, according to some back-of-the-envelope calculations, she did even worse. As much of her fundraising was from Big Donors who attended the fundraising dinners for a ticket-price of $46,000 (primary + general maximum), a huge proportion of that $26 mil is in the escrow account that she can use ONLY if she becomes the nominee and only after the Convention. That diarist estimates that only about $14.5 million of the money she has is from the Primary donations.

In contrast, less than $1 million of Edwards' donations are for the General, which leaves him with $13 in Primary donations (and yes, he does not have the additional $11 mil HIllary has, but $13 is still $3mil more than his budget and $6mil more than the expectations that he'd be only able to repeat his 2003 fundraising numbers).

This also means that Hillary's big donors have now maxed out and she cannot expect much more money to come from them any more. And the netroots despise her, so she is unlikely to come anywhere close to the amounts that Obama and Edwards have raised so far and will continue to raise in small donations, especially online small donations.

Edwards raised almost $3.3million online! He got donations from more than 40,000 contributors from across the country and 80 percent of contributions were $100 or less. Obama's campaign has not yet released the detailed numbers, but it is expected that his online contributions will be quite big as well, although his General election fund will also be bigger due to his numerous Hollywood fundraisers.

These numbers are huge! This shows that Internet is becoming a much greater force in campaigning than even the last time around. In 2003 Edwards was in top three in fundraising (#1 in the first quarter, sliding down a bit later in the year) and on the day before Iowa caucuses he only had about $100,000 collected from online donors, raking in about $200,000 per day over the next few days after his surprising surge into the second place there. We are now talking about millions raised online by three candidates a year ahead!

This means the top three candidates have each raised about fourteenish million in the first quarter for the primary run and have clearly ran away from the second tier of candidates. But this also means that Clinton is in the worst position regarding her ability to sustain those fundraising levels for the remainder of the year.