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The Small Donor Revolution Will Not Be Televised

Jonathan Backer responds to Politico's Kenneth Vogel’s claim that the “small donor revolution” is on the decline and explains how a public campaign finance system, done right, can reshape the federal election landscape.

  • Jonathan Backer
August 9, 2012

Crossposted at Huffington Post.

Shortly after President Obama took office in 2009, Norm Eisen, the White House Special Counsel for Ethics and Government Reform, suggested that the 2008 election’s “small donor revolution” was “like that other great revolution that resulted in our presence here today—the American Revolution.”

While Eisen acknowledged that “a revolution can take a long time to institutionalize and to bear fruit,” on Tuesday, Politico’s Kenneth Vogel declared that the fruits of the small donor revolution had withered on the vine:

[T]he much-ballyhooed small donor revolution appears to be ending before it ever fully took hold. Instead, the explosion of big money is quickly diminishing one of the few avenues—outside of voting — for average folks to shape elections, help determine candidates’ viability and affect the course of the country.

In fact, both perspectives on the role of small donors in 2008 and 2012 miss the mark.

In 2008, small donors played a more limited role than many observers claimed. In fact, in absolute terms, Obama raised more money from large donors than Senator McCain or any of his predecessors. And forecasts of the demise of the small donor in the 2012 election are hyperbolic. So far in the 2012 election, President Obama has raised $112 million from contributions of $200 or less, compared to $165 million at the same point in 2008. Mitt Romney has raised $22 million from small donors, compared to $32 million by Senator John McCain at the same point in 2008. Between the two nominees, that amounts to roughly a 30 percent decrease: a significant development, but perhaps not shocking given that the Democratic Party did not conduct a nationwide, evenly-matched, and grassroots-oriented primary campaign in 2012, as it did in 2008.

The problem with Eisen’s unbridled optimism after 2008 and Vogel’s pessimism today is that neither observer has the right expectations for what small donor democracy looks like.

Several studies have shown that campaign spending is subject to a point of diminishing marginal returns — meaning that at some point, the effort advanced by a campaign to raise an additional dollar exceeds the benefit it derives from spending it. Between the candidates, political parties, and all of the outside groups, surely both the Romney and Obama campaigns will surpass the point of diminishing marginal returns. Whoever loses the election, it will not be for lack of money.

What’s true for the campaigns is also true for small donors. Not only is an arms race between small and large donors an unwinnable contest for small donors, but contributing more money in a race that is already saturated with money will not elevate the importance of the average voter.

For the promise of a small donor revolution to be truly realized, the incentives for campaigns need to change.  In particular, candidates need incentives to orient their campaigns around a more diverse set of donors, and to become agents of civic engagement. 

Given the onslaught of spending by super PACs and secretive political non-profits, creating these incentives may sound like a daunting task.   But it’s actually relatively simple — and New York City has done it. 

New York’s public financing program matches small contributions from City residents — up to $175 — at a 6–1 rate, providing a very strong incentive for candidates to conduct fundraising hand-in-hand with grassroots outreach. To a candidate running under this form of public financing, a small donor is not a small donor—because a $175 contribution is worth $1,225. Candidates in New York City see every voter as a potential contributor and all donors equally. There is no donor class apart from the voter class to which candidates cater. Instead, candidates spend time asking a diverse set of their own constituents for contributions because they stand to gain much from mobilizing the grassroots and little from focusing on large donors to the exclusion of others.

New York City’s program reshapes the landscape of elections. Only 14 percent of funding for candidates who did not participate in the program during the 2009 election came from small donors. By comparison, small donors were responsible for 63 percent of the funding for participating candidates during the same election.

The real small donor revolution in New York City can spread to federal elections as well if Congress enacts a small donor matching fund program. But its impact will not be felt in the form of more television advertisements funded by money from small donors. Studies have shown that making political donations, even small ones, increases the likelihood that voters display lawn signs, volunteer for campaigns, canvass voters, and pass out campaign literature.  The small donor revolution will not be televised. It will happen when candidates find the concerns of each of their constituents equally consequential to their electoral prospects. It will happen when candidates become agents for civic engagement by mobilizing new voters and new donors. The revolution will put average voters in the driver’s seat. The revolution will be live.