Establish Small Donor Public Financing

February 4, 2016

Millions of small donors now participate in campaigns online, giving citizens of modest means the ability to wield tremendous power over elections and government. Yet the same is true of wealthy contributors, and they have much more money to spend. In the “race” between the small donors empowered by the Internet and the big money empowered by the U.S. Supreme Court, the big donors are winning, particularly at the congressional level. As the amount raised from a relative handful of wealthy donors has risen dramatically in recent election cycles, the amount winning congressional candidates receive from small donors has shrunk.[1]

Meanwhile, the presidential public financing system, designed to decrease candidates’ reliance on big money donors, has disintegrated. From 1976 through 2004, most qualifying candidates participated, meaning they had to collect a certain amount in funds from small donors and had to limit their spending.[2] But in 2008, President Obama made history by declining to take public funds, and by 2012 no major party candidate joined the system.[3] By now, the program provides such a low amount of money that there is little hope of its revival without significant improvements.

Federal public financing should be improved and renewed as a way of countering the tremendous inequality of influence. The most effective public financing systems match small contributions with public funds, thereby lessening candidates’ reliance on big money donors, while also expanding and diversifying the donor pool.

Proposal

Congress should enact a federal public financing system that encourages small contributions. This approach should be used to revitalize the dormant presidential public financing system. And it could be extended to Congress as well.

The Brennan Center supports the Empowering Citizens Act, introduced by Reps. David Price (D-N.C.) and Chris Van Hollen (D-Md.), which would amplify the voices of small donors by matching contributions up to $250 with public funds at a 6-1 ratio.[4] The measure encourages congressional and presidential candidates to run grassroots-oriented campaigns by cutting contribution limits in half for those who accept public funding. The bill also combats loopholes created by Citizens United by making it harder for super PACs and political non-profits to function as arms of candidates’ campaigns.

The system is modeled on New York City’s successful matching system, which provides qualified candidates with $6 for each $1 contributed of $175 or less. Participation in the city’s system is high. Candidates now “reach out to their own constituents rather than focusing all their attention on wealthy out-of-district donors.”[5] The program has also encouraged greater donor diversity: Contributors to city candidates are much more racially and economically diverse than donors to candidates for New York’s state legislature, which does not have a small donor matching system.[6]

Matching small donations at the federal level could allow a wider spectrum of candidates to run competitive campaigns with contributions from average citizens.

There are other valuable methods of public financing that can let candidates run without relying on big money. Recently there has been a strong push for a voucher system, in which every citizen (or voter) would be given a small voucher to give to a chosen candidate. Last fall, Seattle became the first city to adopt such a program. Starting in the next election, the city will provide every voter with four $25 vouchers to give to city candidates.[7] Other states and cities, such as Minnesota[8] and Virginia, have given citizens rebates or tax credits if they make a small contribution to a candidate or party. And there is another set of states and cities that give qualified candidates block grants.   

Several types of public financing can be combined to provide incentives for candidates and donors to participate. For example, the Government by the People Act, by Rep. John Sarbanes (D-Md.), would create a voucher pilot program, provide a tax credit for small contributions, and institute a matching system.[9]

Why This Can Be Achieved

Unlike some other common-sense reforms, small donor matching systems are permissible under Citizens United and other Supreme Court decisions. Those cases principally invalidated limits on expenditures (by individuals and corporations), and generally do not prevent the government from offering candidates incentives to rely on small donors or limit spending. In fact, by 9-0, the Court recently declined to reverse the longstanding constitutionality of these voluntary systems.[10] Public financing laws cannot prevent expenditures by super PACs, but they can ensure that candidates who face high-spending opponents or outside groups can fight back without relying on big checks from a small group of wealthy funders.  

Public financing is the best and most promising method for giving the American people more power over their government. A majority of Americans also favor using small donor matching in elections.[11] With many success stories in federal, state, and local elections, and several new and creative systems proposed, candidates can access a wealth of data and experience when assessing how to encourage participation by small donors and discourage elections that are dominated by wealthy individuals and corporations.

Resources

  • Empowering Small Donors in Federal Elections: Proposal showing how small donor matching funds, used successfully in New York City, could work in congressional elections.
     
  • Donor Diversity Through Public Matching Funds: Analyzes how small donor matching programs can boost public participation, change the way candidates campaign and raise money, and engage a much broader array of citizens in the political process.
     
  • Small Donor Matching Funds: The NYC Election Experience: Examines the ways that New York City’s small donor matching system changed the dynamics of money in politics in the City.
     
  • New York City Small Donor Matching Program: A voluntary public financing program that matches contributions up to $175 at a 6-1 ratio.
     
  • Seattle Voucher System: The city recently passed a ballot initiative that will provide every voter with four $25 vouchers they can use to donate to some local campaigns.
     
  • Government by the People Act: A bill sponsored by Rep. Paul Sarbanes (D-Md.) that would provide citizens with a $25 tax credit for campaign contributions, amplify small donations with a six-to-one match, and allow candidates to earn additional public matching funds within 60 days of the election.
     
  • EMPOWER Act: A bill sponsored by Reps. David Price (D-N.C.) and Chris Van Hollen (D-Md.) that would increase public matching funds, provide six-to-one matching for donations under $250, eliminate spending limits on participating candidates, and require publicly-funded candidates to accept contributions of no more than $1,000.
 

[1] Public Campaign, Small Donor Solutions for Big Money: The 2014 Elections and Beyond (2015), http://everyvoice.org/wp-content/‌uploads/‌2015/‌04/‌2014SmallDonorReportJan13.pdf.

[2] Presidential Election Campaign Fund, Federal Election Commission, http://www.fec.gov/press/bkgnd/fund.shtml (last updated Apr. 9, 2014).

[3] Shailagh Murray & Perry Bacon Jr., Obama to Reject Public Funds for Election, Wash. Post, June 20, 2008, http://www.washingtonpost.com/wp-dyn/content/article/2008/06/19/AR2008061900914.html.

[4] Empowering Citizens Act, H.R. 424, 114th Cong. (2015).

[5] Sundeep Iyer et al., Brennan Ctr. for Justice, Donor Diversity Through Public Matching Funds 13 (2012), available at http://www.brennancenter.org/sites/default/files/legacy/publications/DonorDiversityReport_WEB.PDF.

[6] Sundeep Iyer et al., Brennan Ctr. for Justice, Donor Diversity Through Public Matching Funds (2012), available at http://www.brennancenter.org/sites/default/files/legacy/publications/DonorDiversityReport_WEB.PDF, Adam Lioz, Demos, Stacked Deck: How the Racial Bias in Our Big Money Political System Undermines Our Democracy and Our Economy (2014), available at http://www.demos.org/sites/default/files/publications/StackedDeck2_1.pdf.

[7] Russell Berman, Seattle’s Experiment With Campaign Funding, The Atlantic, Nov. 10, 2015, http://www.theatlantic.com/politics/archive/2015/11/seattle-experiments-....

[8] While Minnesota’s program has been seen as successful, the program has been suspended through at least 2017. Political Contribution Refund program suspended, Minnesota Revenue, http://www.revenue.state.mn.us/individuals/individ_income/Pages/whats-new-PCR.aspx (last visited Jan. 14, 2016).

[9] Eliza Newlin Carney, Sarbanes Bill Aims to Draw in Small Donors, Roll Call, Feb. 4, 2014, http://blogs.rollcall.com/beltway-insiders/sarbanes-bill-aims-to-draw-small-donors/.

[10] Ariz. Free Enter. Club’s Freedom Club PAC v. Bennett, 131 S. Ct. 2806, 2827 (2011).

[11] One recent survey by Public Policy Polling found that 62 percent of respondents would support a small donor matching system. National Survey Results, Public Policy Polling, Sept. 22-23, 2015, https://mayday.us/data/20150925_gop_polling_results.pdf. A 2014 Every Voice poll showed that 70% of respondents favored a proposal to match small donor contributions through public financing. Adam Smith, New Poll: Voters Think Congress Doesn’t Listen to Them, Support Campaign Reforms, Every Voice, Nov. 10, 2014, http://everyvoice.org/press-release/november2014poll