Republican Party leaders are opposed to a proposed price hike by the online donation-processing company, WinRed, stirring debate about the company’s future.
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The Republican Party has faced a persistent digital fund-raising deficit against Democrats.
A battle over a threatened price increase has exposed growing tensions between top Republican Party officials and the company with a virtual monopoly on processing Republican campaign contributions online.
Party leaders have risen up in opposition to the proposed price increase, which would siphon millions of dollars from G.O.P. campaigns less than 20 months after the company, WinRed, had said its finances were robust enough to forego an extra fee on every transaction.
In a series of private meetings in recent weeks, Gerrit Lansing, the president of WinRed, has told the leaders of the Republican National Committee, the House and Senate campaign arms and former President Donald J. Trump’s campaign that WinRed’s prices needed to go up.
The Republican officials all objected.
Mr. Lansing’s company, a private for-profit firm responsible for processing almost all online Republican political donations, charges 3.94 percent of almost every donation made online. But he said it wasn’t enough, citing an unforeseen slowdown in online G.O.P. giving last year and also plans to broaden WinRed’s suite of services. He moved to impose a 30-cent transaction fee on each of the tens of millions of coming contributions in the 2024 race, according to several people directly involved in or briefed on the conversations.
The price hike appears to have stalled over fierce G.O.P. objections, according to people involved in the talks. But the episode has accelerated conversations at the party’s highest levels about the decision four years ago to clear the way for WinRed to dominate the online donation-processing field, and about whether the for-profit company’s model needs to be reassessed.
Democrats process most online donations through ActBlue, which, unlike WinRed, is an independent nonprofit. ActBlue charges a flat rate of 3.95 percent per donation and does not charge an additional per-transaction fee.
“WinRed is constantly evaluating what it takes to compete against and leapfrog ActBlue, combat the Democrats’ campaign to attack us by all means available, and still make the necessary investments to provide our customers with the features they need to win,” WinRed said in a statement. “At this time, WinRed has no announcements to make regarding pricing.”
Representatives for the party committees declined to comment.
ImageGerrit Lansing, the president of WinRed, has told officials about a plan to charge an extra fee on every transaction.Credit…Tom Williams/CQ Roll Call, Getty Images
Mr. Lansing’s pursuit of outside investors to expand WinRed’s digital footprint and offerings — including talks with advisers to Paul Singer, a major Republican financier — has spurred further discussions about the company’s ownership structure.
The obscure industry of processing donations online is deeply consequential for Republicans because the party has faced a persistent digital fund-raising deficit against Democrats. WinRed has been held up as the linchpin of the party’s plans to help close that gap.
Huge sums are involved. There were nearly 31.2 million donations made on WinRed during the 2022 federal elections, worth nearly $1.2 billion. The upcoming presidential cycle could easily double that.
The creation of WinRed in 2019 was supposed to be one of Mr. Trump’s enduring legacies within the Republican infrastructure, a bold bid to unify the party around a single platform to help shrink the G.O.P. fund-raising gap with ActBlue. Mr. Trump, his son-in-law Jared Kushner and Mr. Trump’s campaign manager at the time, Brad Parscale, were all personally involved.
The site has largely been a success, achieving near-universal adoption among G.O.P. campaigns.
WinRed originally had charged 3.8 percent of contributions with an additional 30-cent transaction fee. That amounted to an especially steep share of smaller contributions — 68 cents, or nearly 7 percent, of a $10 donation, for instance.
ImageA Trump rally in Waco, Texas, in March. As president, Donald J. Trump was among those personally involved in the creation of WinRed in 2019.Credit…Christopher Lee for The New York Times
In late 2021, Mr. Lansing trumpeted the removal of the 30-cent transaction fee, saying the company had been able to “achieve and maintain scale.” But the decision by credit card companies to hike their own fees not long afterward made WinRed’s move unsustainable, according to a person close to the company, as most of its processing fees are quickly spent on credit card costs.
In recent weeks, Mr. Lansing told party officials that WinRed had suffered financially in 2022 as a result of diminished Republican giving and that he needed to reimpose a per-transaction fee ahead of 2024 to continue broader investments in technology.
Because WinRed is a private firm, its executive compensation and the state of its finances remain mostly hidden from public view. Records show that federal candidates and committees paid WinRed at least $64 million in the 2022 election cycle; those funds were not all from processing fees but also included significant vendor fees, according to a person close to WinRed.
Its Democratic counterpart, ActBlue, has faced a financial pinch too, announcing in early April plans to lay off 17 percent of its work force. ActBlue discloses more of its finances than its counterpart does, including the amount of donors who volunteered to add “tips” on top of their donations. Those tips go directly to ActBlue and have built a $68.7 million balance in ActBlue’s federal account as of the end of 2022.
Mr. Lansing has begun discussing adding the option to make tips to the Republican site as well, according to people involved in the conversations.
WinRed faces other unique pressures, including an investigation by multiple state attorneys general into the firm’s use of prechecked boxes that automatically signed up donors to make recurring donations unless they opted out. A New York Times investigation in 2021 revealed how the extensive use of those boxes — known internally as “money bombs” for withdrawing more than one donation at a time — spurred an enormous wave of demands for refunds and complaints of fraud to credit card companies at the end of the 2020 campaign.
WinRed sued to block subpoenas but lost a key legal battle in February when the Eighth Circuit Court of Appeals ruled that the investigation could proceed in Minnesota.
In New York, a December filing from the state attorney general, Letitia James, that demanded compliance with a subpoena gave a glimpse into the internal documents her office has already obtained.
The filing cited an internal WinRed memo as saying that, at one point in June 2020, donors who were opted into multiple donations through pre-checked boxes had caused a surge of phone calls and “a 10,000 message deep queue over one weekend.” Recurring donations were dropping over time, the memo theorized, because “as donors get used to or go through the process they become more savvy.”
One Republican candidate who saw a surge of refund requests from people who were unwittingly opted into recurring donations was Kelly Loeffler, a senator who lost her runoff in Georgia in January 2021 and who found the experience of working with WinRed jarring.
“It absolutely was a red flag,” Ms. Loeffler said in an interview, referring to the deluge of refund requests.
Ms. Loeffler, a former co-owner of the Women’s National Basketball Association team in Atlanta, has since bought donation-processing technology from a Republican firm that stopped its business after the creation of WinRed. She has rebranded the technology and now uses it in running RallyRight, another company that processes online donations.
“We have seen a need for a competitor in this market,” Ms. Loeffler said.
So far, she is undercutting WinRed on price — charging 3.5 percent of donations — and ensuring that “no campaign can automatically check a recurring payments box.” She declined to name specific Republican groups that she has spoken with but said the price could go even lower — down to 3 percent — with “the scale of some of the organizations we are talking to.”
Ms. Loeffler said that she was in the business not for personal profit but to direct more money to campaigns. “It’s absolutely not about me making millions of dollars,” she said. “I’ve done that.”
Source: nytimes.com
