Melanie Batley on new technology that allows a campaign's supporters and donors to raise money through their online social networks

Internet technology is transforming every area of campaigning, and political fundraising is no exception. In 2004 in the US, Howard Dean made history during his presidential bid by raising at least $3m online. By 2008, Barack Obama managed to raise $500m online, 92 per cent of which was donations of $100 or less.

Before 2004, cynics laughed at the idea that small online donations (sometimes of just a few dollars each) could make any tangible difference to a campaign. But after two presidential cycles and plenty of success stories from congressional, state and local races, these days it's the candidates who are laughing, and they're laughing themselves all the way to the... well, White House, as it turns out.

Raising money online through campaign websites is mainstream in politics now, but where do we go from here? Say hello to BlueSwarm. It's the Web 2.0 innovation for political fundraising - a new technology that allows a campaign's supporters and donors to tap their online social networks to raise money. It is democratising the fundraising process, not just by pulling in a wider base of donors, but by empowering those donors to start fundraising as well.

Here's how it works. A supporter or donor gets an invitation from the campaign to join BlueSwarm and start raising money for their favourite candidate. The supporter can either go to the website or download BlueSwarm as a Facebook application.

Once logged in, the software enables the volunteers to run their own mini fundraising operations. This includes sending fundraising emails to lists of family and friends, keeping track of pledges received over the phone or in person, organising and tracking fundraising events, recruiting new people to fundraise, collecting all the donor details needed to comply with finance regulations and even processing donations on Facebook.

Participants can see a graphic representation of their progress called ‘a downline' which is a sort of fundraising family tree showing which friends have donated, and, for the ones who go on to become fundraisers themselves, how much they are pulling in.

All the data entered by the volunteers goes straight into the campaign's database, and the cash raised rolls into the campaign's bank account. Meanwhile, the campaign can track or manage fundraiser activity to maximise results. Since it's web-based, it works anytime, anywhere, enabling more busy people to get involved who otherwise wouldn't. Plus, it can be scaled up or down, so local campaigns can use it too.

Raising money online has opened new streams of previously untapped donors for political campaigns. BlueSwarm takes the next leap by enabling campaigns to empower their donors and supporters to become fundraisers, hence exponentially increasing fundraising capabilities.

According to stats from the company, when friends ask friends for support, a positive response is 10 times more likely and the gift is 52 per cent higher than through other mediums, such as direct mail, for example. Meg Whitman - the former CEO of eBay and candidate for governor of California - gathered 150 people to fundraise using the platform in April 2009, raising $2.5m in a day. Latest figures suggest 50 per cent of US Senate races are using the technology, 30 per cent of gubernatorial races and scores of congressional, state and local campaigns.

Some may wonder whether the UK would want to bother with all this fancy fundraising technology. After all, candidates for Parliament are limited to a spend of just over £25,000, which is easily raised in traditional ways. However, BlueSwarm complements traditional fundraising techniques, with the added bonus of broadening a candidate's sources of financial support (thereby reducing the influence of special interests or a handful of major donors), plus energising a candidate's supporter base.

And, lest we fool ourselves, big money in politics is not just an American phenomenon, as the controversy over Lord Ashcroft money proved. UK political parties are heavily funded by major donors and special interests, with no limit on donations, but this may soon come to an end.

If the Conservatives follow through with their manifesto commitment to introduce a cap on donations, parties will have to find new ways to generate funds. By making political fundraising a populist activity, BlueSwarm is in keeping with the public mood for more accountability and transparency in politics. In the UK, it could just be the answer if parties need to adapt to survive.

Melanie Batley has worked as a US campaign adviser and was a researcher for the Conservative Party

This article was first published in Total Politics magazine.