Canada’s federal political parties will begin receiving less money from Elections Canada starting on April 1 as the government’s plan to start winding down per-vote subsidies comes into effect. While the five major parties will continue receiving subsidies until 2015, they all will have to adapt to the new political financing regime, say political observers, including the majority governing Conservatives who garner the most money from fundraising but also stand to lose about $10-million a year in subsidies.

Although the Conservatives will absorb the financial loss much easier than the other parties, they still need to ramp up fundraising to make up the difference if they want to continue having the upper hand when it comes to advertising, conservative pundit Gerry Nicholls told The Hill Times last week.

“I think one of the secrets to the Tories’ political success has been their overwhelming advantage in fundraising. This has allowed them to really hammer the other parties in terms of advertising—they can always put more ads out there for a longer period of time and I don’t think that’s an advantage they want to give up,” he said. “They really have to keep their base mobilized and interested and agitated. One way to do that is through constant fundraising. … You really have to keep pestering people, so I don’t think they’re going to let up, I think they’re going to keep the pedal to the metal as much as possible.”

The Conservative Party is the only party that has consistently raked in more money from fundraising than from the per-vote subsidies since the per-vote public financing system came into effect in 2004 under Jean Chrétien’s government.

Between 2004 and the first three quarters of the 2011 calendar year, the Conservatives raised, on average, $17.4-million each year from an average of 104,074 donors. That’s approximately $167 per donor. This is in comparison to the average $9.6-million the party receives in public funding on average annually.

In comparison, between 2004 and 2011, the Liberals have only raised more money than they received from per-vote subsidies in 2006, 2009, and so far in the first three quarters of 2011.

None of the parties’ 2011 fourth quarter financial returns have been filed with Elections Canada as of yet.

Between 2004 and the first three quarters of 2011, however, the Liberals raised on average $6.9-million annually from 32,412 donors. That’s $213.92 per donor. In the same time period, the Liberals received $8.1-million from per-vote subsidies.

Per-vote subsidies were instituted to replace lost revenues from the cap on corporate, union and individual donations.

The Elections Act was changed so that if a party received more than two per cent of the vote nationally and five per cent in the riding in which it ran candidates, they would get a $1.75 subsidy for each vote it obtained. The amount was adjusted for inflation each year, and currently sits at just above $2.

When the Conservatives won power in 2006, they eliminated all corporate and union donations outright and reduced the individual donation even further, to $1,000, adjusted for inflation. Individuals can currently give up to $1,200. The Conservatives tried to eliminate the per-vote subsidy in 2008 in their fall economic update after returning from an election campaign which caused a near constitutional crisis when the government prorogued Parliament because it did not want to face losing a confidence vote on the matter.

But today, armed with a majority government, the Conservatives introduced measures to eliminate it in the most recent budget, which was outlined and passed in the second budget implementation bill, C-13.

The per-vote subsidy will be eliminated in three phases. Starting April 1, 2012, the subsidy will be decreased to $1.53 per vote; in 2013, it will be decreased further to $1.02 per vote, and in 2014 it will be reduced to $0.51 per vote. At the end of that fiscal year, on March 31, 2015, parties will cease to receive the per-vote subsidies.

But parties are not waiting until then to change the way they fundraise.

Summa Strategies vice-president Tim Powers, a former Conservative political Hill staffer who has worked on several election campaigns, said money will be the key factor in winning elections and the Tories will not let down their guard.

Despite having a tremendous advantage over the other parties when it comes to fundraising at the grassroots level, the Conservatives “are moving full steam ahead of any future changes,” Mr. Powers told The Hill Times in an email.

“They are exceptionally diligent and determined to have regular contact with supporters or potential  supporters on issues that might elicit financial support. That is the way that business works. It is a case of sell, sell, sell. They’ll just kick it up as it appears they have to address any potential shortfall brought on by the phasing out of the per-vote subsidy,” Mr. Powers said. “You need money to win campaigns in this era. There are no ifs, ands or buts about that. Parties who don’t find ways to make up the difference will have trouble.”

Back in 2004, the Conservative Party made its own transition into a modern information database system, facilitating its successful fundraising techniques, when it launched its Constituent Information Management System, known as CIMS.

CIMS is a single, large-scale database with the names, addresses, voting trends, policy leanings, and other relevant information of millions of constituents across the country, gathered over years through modern outreach and fundraising calls.

Unlike the NDP and Liberal systems, CIMS isn’t separated between partisan and constituent data systems.

The potential of the CIMS system to identify and target specific communities has caused some controversy, including back in 2007 when a Rosh Hashanah greeting from Prime Minister Stephen Harper (Calgary Southwest, Alta.) was sent to Jewish households and households with Jewish-sounding names. But despite such incidents, the CIMS system has been credited for giving the Conservatives a strategic, grassroots advantage over other parties.

The NDP, which also already had a strong grassroots fundraising model before changes were made in 2004, raised more money than it received in three calendar years—2004, 2005 and 2008. Between 2004 and 2011, the New Democrats raised on average $4.7-million from 29,618 people for an average donation of $160 per person. On average, the NDP received $4.8-million annually from public financing.

But Brad Lavigne, principal secretary to the NDP leader, said his party is “very confident” that his party will be able to make up the difference “and more with a more comprehensive fundraising strategy.”

Mr. Lavigne said the NDP began professionalizing aspects of their party, including fundraising, just after the late and former NDP leader Jack Layton was elected as leader in 2003.

“We began to diversify the kinds of fundraising activities we did. We invested at an early stage in online fundraising, which we’ve done quite well, and we’ve also invested a tremendous amount on donor acquisition as well as moving one-time donations to monthly givers,” said Mr. Lavigne, who added that those are just a few examples of the party’s strong fundraising foundation, something the NDP is “enhancing even still.”

Moreover, Mr. Lavigne said the party has never relied on one stream of revenue. For example, the party’s headquarters in downtown Ottawa. The party bought the building, located at Laurier West and Bank streets, in 2003 and they’ve been “realizing revenue from it ever since,” said Mr. Lavigne, who noted the 2011 fundraising year will be the party’s best.

Mr. Lavigne said the party is pleased to have had fundraising foresight.

“It takes years to develop a mature fundraising system and we’re relatively pleased that we identified that need many years ago and are not trying to scramble today as other political parties, I’m sure, are,” said Mr. Lavigne.

He may have implicitly referred to the Liberal Party, as it is only starting to change its fundraising methods to mirror the new political financing reality.

Traditionally, the Liberals relied on large corporate donations from relatively smaller pools of supporters. Even though it was the Liberal Party who started the ball rolling on political financing reform, it never adapted its fundraising strategy.

“It was as though the Liberal Party unilaterally disarmed, because we were not ready for them, we did not have a broad base of donors,” said outgoing Liberal Party president Alfred Apps.

The Liberals are turning up the heat on efforts to change their fundraising practices. In 2008, the Liberals purchased the Voter Activation Network system—known as VAN. It is the same system that was used by the American Democrats in Barack Obama’s successful presidential campaign—to bring their information database up to scratch, a vital element of successful fundraising.

The VAN system purchase, named Liberalist by the party, was a step towards modernizing efforts, moving to grassroots fundraising in electronic formats, as well as the old stand-bys.

“We’ve got a long way to go to modernize and rejuvenate and expand our fundraising, but we’ve done a number of things during the course of the last year that demonstrated we were making progress,” said deputy Liberal leader Ralph Goodale (Wascana, Sask.).

Last December, the Liberals held a 12-day fundraising blitz that put into practice a number of new, modern methods and managed to bring in more than $1-million in donations.

A number of proposals discussed at the Liberal Biennial Convention pointed towards continued efforts to improve fundraising, most notably, a $2.5-million national call centre and the abolishment of the National Revenue Committee to be replaced with the National Liberal Fund. Other proposals directly related to building and improving the party’s information database system would presumably have spin-off benefits as a better, bigger database would enable responsive and targeted fundraising.