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Eye On Candidates
February 4, 2016

Carson Has Financial Woes Despite High Fundraising Numbers

The Iowa caucus results have received the bulk of the media attention this week, overshadowing the release of campaign finance reports on Sunday by all of the campaigns. But the reports still provide valuable information on the candidates, and one report in particular foreshadowed the drastic slashing of campaign staff reported in the media this morning.

Retired neurosurgeon Ben Carson hasn’t had trouble bringing in significant amounts of money this cycle, raising more money in 2015 than all of his Republican rivals. But reports have also shown he has been spending at a brisk pace, in large part because so much of his fundraising is through expensive direct mail operations.

The Atlantic detailed Carson’s fundraising numbers earlier this week and the problem of his high “burn rate” of campaign funds:

Ben Carson's Campaign Is Spending Like Crazy

The outsider candidate was starting to surprise political observers with his strong performance and especially his exceptional fundraising numbers—some of the strongest in the field, beating the long-established GOP bigwigs. The huge hauls were driven by small-dollar donations, not big checks. On the one hand, people outside the campaign were impressed. On the other hand, they looked at the huge amounts Carson was spending on direct mail and telemarketing and wondered whether the strategy was sustainable, or even ethical….

…then-spokesman Doug Watts gamely explained that the point was to build up a fundraising list. Carson, as a first-time politician, had to build up a database of supporters. Sure, many of the campaign’s donors were small-dollar givers identified by telemarketers, but once they were in the system, they’d keep giving, Watts promised….

Carson’s year-end FEC report, released Sunday, suggests that far from decreasing its reliance on these methods, the campaign has only become more reliant on them. The campaign raised $22.6 million, but it spent $27.3 million, and closes out with just $6.6 million cash on hand…. Among the largest spending areas, a couple stick out: fundraising phone calls ($2.4 million), and postage and printing ($7.3 million).

Rapid expenditure of his funds hasn’t been the only problem, as Politico details in a piece on candidates struggling with their finances:

Ben Carson’s filing also showed a campaign in distress, with fundraising that fell off a cliff after concerns about the retired neurosurgeon’s foreign policy knowledge took hold.

Eighty-five percent of the campaign's $22.6 million haul came before Nov. 13, when the Paris terrorist attacks brought national security to the fore of the 2016 race. Only $3.6 million came in during the last month-and-a-half. And the campaign spent a stunning $27 million in the fourth quarter, $5 million more than it took in, leaving itself with only $6.6 million heading into a critical juncture of the campaign.

The campaign’s financial woes have apparently led to the Carson campaign laying off more than 50 staffers, as reported by The Washington Post this morning:

Ben Carson, the famed neurosurgeon whose bid for the Republican presidential nomination has struggled to keep pace with rivals, will cut more than 50 staff positions Thursday as part of an overhaul and downsizing of his campaign.

Salaries are being significantly reduced. Carson’s traveling entourage will shrink to only a handful of advisers. And instead of flying on private jets, Carson may soon return to commercial flights.

The employees being released — about half of Carson’s campaign — mostly work in field operations and at his headquarters in Northern Virginia.

The Atlantic piece also suggests his campaign’s path to the nomination will only get more difficult from this point:

In Iowa, he won three delegates, at a cost of $47.5 million so far. It’s hard to see what sort of future it has after the Hawkeye State. Carson came in fourth in Iowa, and things only get rougher from here. In New Hampshire, he’s a distant eight in the RealClearPolitics average, and while he does a little better in South Carolina, it’s still a long way back and will drop if he has two weak showings. Nationally, he’s also down to fourth in a no-man’s-land between the triple leaders Donald Trump, Ted Cruz, and Marco Rubio and a peloton of also-rans.

Carson’s campaign raised $53.7 million in 2015, better than runner-up Texas Sen. Ted Cruz, who raised just under $47.9 million last year. If his campaign had managed to retain a greater share of the funds it brought in, Carson might well be positioned to challenge the three currently considered the frontrunners. Without those funds and after slashing his campaign staff, however, it’s difficult to see Carson climbing back into the race.