Loaning money to the Quebec Green Party
According to CBC’s As It Happens the Quebec Green Party is asking voters to loan the Party money. The party will pay that money back at 8% interest in a years’ time. According to the Party’s leader, Scott McKay, the high rate of return is necessary because of provincial legislation.
Raising money during an election is never easy. There’s stuff a party needs at the start, like signs, brochures, advertising, rent for offices, etc. Money usually does get donated, but it isn’t donated until later in the campaign, after the party shows the electorate that they’re serious about getting elected. So we’re left with a catch 22: the party can’t get money unless it has money, but it doesn’t have money so it can’t get money.
I can’t decide how I feel about this tactic. On the “pro” side we have:
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It gets the Party media attention
It gives revenue to Party supporters instead of big banks who hold an effective monopoly
It solves the Party’s immediate need for money
The “con” side is also well populated:
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It’s expensive. 8% of the principle is a lot.
It seems to be predicated on the Party getting enough votes that it gets 50% of campaign expenses back. I’m not sure what the thresholds are in Quebec, but federally, each riding needs to get 10% of the popular in that riding to get 50% of the expenses spent in that riding paid back.
If the Party can’t raise enough money to repay the loans after the election, they will have to default, screwing over their supporters, and making a bad, bad media story.
Greens are supposed to stand for fiscal responsibility. Asking supporters for large loans at short notice seems to be at odds with our philosophy.
If all goes according to plan, this will be a nice love-in between the Party and its supporters. If the Party can’t raise enough money to pay back the loans, however, there will be a whole lot of pie1 on the Party’s face.
- Yum! (back)
As much as I love the Green Party this is a crappy investment. Based on your comments, the likelihood they’ll default it pretty high, moving it into junk-bond and penny stock areas. I’d want a 15-20% return on that investment at least. If you can’t get money from a Bank or a business investor you’re probably a high risk.
I like it because it’s creative in a “try anything” type of way. Sometimes surprising things work. That’s fine for startups but if they fail, they’re gone. A failure of this will look bad for the Green Party across Canada and lead to an overall decrease in Party goodwill.
I don’t like it because it mixes donations and loans together. I *give* money to the Green Party, that’s a sunk cost. Loaning them money at high risk and a low interest rate is giving them money and assuming risk of losing a lot more. A bad mix, and as you say, likely to lead to bad feelings and a cost to Green Parties across Canada.