Skip Navigation
Analysis

How to Change Incentives for both Politicians and Donors

The public campaign financing reforms in the For the People Act would magnify the power of everyday Americans.

February 4, 2021

In a recent blog post, law professor and elec­tion law expert Richard Pildes raised a concern about the For the People Act (H.R. 1/S. 1), the major demo­cracy reform pack­age moving through Congress. He notes that the campaign finance reform provi­sions would provide match­ing funds to multiply the value of small dona­tions to candid­ates at a rate of six-to-one.

This program, which also dramat­ic­ally lowers contri­bu­tion limits for candid­ates who parti­cip­ate, would amplify the voices of regu­lar people and allow more diverse candid­ates to run compet­it­ive campaigns without having to raise large amounts of money from special interests. Recent elec­tions have shown how much it is needed — even as we’ve seen massive increases in the number of small donors in 2018 and 2020, the amount of money coming from big donors was still far greater.

Pildes’s issue, however, is “whether small donors tend to fuel the ideo­lo­gical extremes of the parties.” It’s an under­stand­able ques­tion, and the evid­ence is that it does not.

To the contrary, we have shown that the weight of social science evid­ence does not support the notion that small donors are uniquely polar­iz­ing. For example, one study from 2016 finds that states with higher limits on indi­vidual contri­bu­tions have more ideo­lo­gic­ally extreme legis­lat­ors. The obvi­ous takeaway is that large donors are polar­iz­ing. The study says noth­ing about small donors.

Big donors’ prac­tice of inject­ing millions of dollars through vehicles like super PACs and dark money groups to influ­ence elec­tions is far more polar­iz­ing than anything small donors can accom­plish. Our current campaign finance system offers plenty of examples of moneyed interests spend­ing moun­tains of cash to elect hard­line partis­ans. Several of the most expens­ive congres­sional races ever were in 2020, and megadonors to candid­ates and super PACs boos­ted strong conser­vat­ives Senate candid­ates like David Perdue in Geor­gia and Joni Ernst in Iowa. Perdue raised over $100 million, with only 23 percent coming from small donors.

Stor­ies about corpor­ate Amer­ica paus­ing dona­tions to members of Congress over the Janu­ary 6 insur­rec­tion are note­worthy, but it is quite prema­ture to expect that corpor­a­tions will act as a moder­at­ing force on Congress. Indeed, prior to the insur­rec­tion, many corpor­a­tions had suppor­ted candid­ates who seemed will­ing to bring us to the brink.

AT&T, for example, reportedly gave $2 million in recent years to members of Congress who later objec­ted to the elec­tion results, and Comcast, UPS, and Deloitte gave more than $1 million each. Mean­while, Rep. Marjorie Taylor Greene’s embrace of the Big Lie that the elec­tion was stolen has increased the loyalty of some of her biggest finan­cial support­ers. One busi­ness owner who had previ­ously given $125,000 to a super PAC affil­i­ated with Greene gave another $2,800 to her campaign and pledged to give more. We have every reason to believe that big money, includ­ing corpor­ate money, will support extreme candid­ates in the future.

Pildes provides a list of nine repres­ent­at­ives who raised most of their money from small donors, but the list does not show a correl­a­tion between small donors and extrem­ism. Accord­ing to DW-NOMIN­ATE, a commonly used metric of ideo­logy that polit­ical scient­ists use to show how similar legis­lat­ors’ roll-call voting records are to each other, most of these nine members are closer to the ideo­lo­gical center than the median member of their party.

In fact, if we look at the House members at the farthest ends of the ideo­lo­gical spec­trum, there’s no evid­ence that they are espe­cially reli­ant on small donors. Take the 20 congresspeople at the two ideo­lo­gical extremes of the DW-NOMIN­ATE rank­ing. With one excep­tion, all of these 20 members are farther to either the left or right than the nine members from Pildes’s list who rely on small donors the most. All but one raised far less than half their money from small donors, and nine took less than 10 percent from such donors.

So what explains the grass­roots success of the nine congresspeople who raised more than half their funds from small donors? Dona­tions of all sizes can be driven by factors like prom­in­ence, the compet­it­ive­ness of the elec­tion, and the candid­ate’s choices as to fundrais­ing strategies.

The repres­ent­at­ives who rely on small donors the most are all, to some degree, house­hold names. Rep. Nancy Pelosi (CA) has been speaker of the House and minor­ity leader. Middle-of-the-road Demo­crat Rep. Adam Schiff (CA) made a name for himself as a leader in the drive to impeach Pres­id­ent Trump (the first time).

Sen. Josh Hawley (MO), who has made national head­lines as an elec­tion denier and encour­ager of the capitol riot, announced an increase in dona­tions in Janu­ary that the campaign char­ac­ter­ized as a “surge in grass­roots support.” Hawley actively cour­ted these dona­tions, and he was helped by a support­ive super PAC, the Senate Conser­vat­ives Fund, which inves­ted almost $400,000 on texts and emails soli­cit­ing dona­tions for Hawley.

To be sure, it is distress­ing that Hawley’s endorse­ment of the Big Lie attrac­ted donors. But this is one of count­less examples of politi­cians taking advant­age of their prom­in­ence in a news cycle to boost fundrais­ing. Other events that led to an increase in dona­tions include Rep. Steve Scal­ise (LA) getting shot, Sen. Eliza­beth Warren (MA) being scol­ded with “never­the­less she persisted,” and Sen. Mitt Romney (UT) voting to convict Trump in the first impeach­ment trial.

Another key way to attract notori­ety — and lots of small donors — is some­thing most politi­cians would prob­ably rather avoid: run in a close race. The four Senate candid­ates who raised the most from small donors, in terms of dollar amounts, were all relat­ive moder­ates in compet­it­ive races: Sens. Lind­sey Graham (SC), Mark Kelly (AZ), Mitch McCon­nell (KY), and Martha McSally (AZ). All had massive fundrais­ing efforts soli­cit­ing small dona­tions.

The most import­ant prob­lem with the worry about polar­iz­a­tion, though, is that it rests on the way small dona­tions work now. The point of the profound reforms in the For the People Act is to change the way campaigns are funded. The public-fund­ing match would make it easier for candid­ates to entice small donors with constitu­ent connec­tions and retail campaign­ing. The program would bring large numbers of new donors into the system, ones who could be more moder­ate than those who give now.

In the current broken system, a small number of megadonors spend millions to influ­ence elec­tions and expect some­thing in return from the offi­cials who benefited. Many Amer­ic­ans have lost interest in civic parti­cip­a­tion because they don’t have confid­ence in our polit­ical system. Reform can restore that confid­ence and make people more likely to engage with the polit­ical process, includ­ing through small dona­tions. With public finan­cing, politi­cians would have a greater incent­ive to seek broad support from all of their constitu­ents, not just the rich ones.