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Expert Brief

The Benefits of Public Financing and the Myth of Polarized Small Donors

The evidence doesn’t support the notion that small donors are more polarizing than the big donors that currently dominate election spending. Amplifying small money with public funds is the best reform to counter the problems of big money in politics.

Published: February 12, 2020

In recent public­a­tions, Professor Richard Pildes, a lead­ing scholar of the law of demo­cracy, tries to temper the enthu­si­asm of campaign finance reformers for small-donor public finan­cing. He mistakenly argues that small donors espe­cially prefer ideo­lo­gic­ally extreme candid­ates, and so programs that match small dona­tions with public funds, like the one passed by the U.S. House in 2019, will worsen the polar­iz­a­tion of Amer­ican polit­ics. On the contrary, there is good evid­ence that small donors are not more polar­ized than others who give to campaigns. And we don’t have to guess whether small donor public finan­cing will increase polar­iz­a­tion. Programs that have been in effect for many years have not done so. 

All donors, great and small, tend to have partisan pref­er­ences. But in the post-Citizens United system, a small hand­ful of megadonors increas­ingly over­shadow millions of small donors. In the last decade, an era of mount­ing polar­iz­a­tion, the total share of elec­tion spend­ing coming from megadonors who gave $100,000 or more stead­ily increased; they contrib­uted the major­ity of federal elec­tion fund­ing in 2016. In contrast, the total share of money coming from small donors has declined.

Empower­ing these millions of small donors who, unlike the super wealthy, come from all walks of life is the best way to address today’s soar­ing domin­ance of wealthy interests. While the polar­iz­a­tion of polit­ics is certainly a press­ing concern, public finan­cing would not make it worse. In fact, match­ing small dona­tions is the best solu­tion for a prob­lem that is at least as grave a threat to our demo­cracy: the outsized abil­ity of the very wealth­i­est interests to influ­ence govern­ment policy through massive elec­tion spend­ing.

Small donors aren’t more polar­ized than big donors.

Although Pildes offers anec­dotal examples of candid­ates at one or the other end of the ideo­lo­gical spec­trum who have had success with small donors, he also acknow­ledges that there are other ways to attract small money. Any notori­ety can be good for fundrais­ing. Candid­ates with name recog­ni­tion, or those in close contests that are being watched, will do well. Steve Scal­ise (R-LA) attrac­ted large numbers of small donors not because of his ideo­logy, but because of news cover­age of him getting shot. Former Pres­id­ent Obama proved the power of pursu­ing small donors in 2008 with a unify­ing cent­rist message. Many of the most success­ful small dollar fundraisers in the current crop of new House members are also cent­rists with compel­ling life stor­ies. If they have any defin­ing char­ac­ter­istic, it is that they are the members most likely to face compet­it­ive reelec­tion races.

Of course, Pildes does not rely only on anec­dotes. But most of the stud­ies he cites did not actu­ally find small donors to be more polar­ized than large ones, and at least one came to the oppos­ite conclu­sion.

Two stud­ies Pildes leaves out find that small donors are not more ideo­lo­gical than big donors. An exam­in­a­tion of congres­sional candid­ates in 2012 found that party lead­er­ship and being in close elec­tions targeted by national organ­iz­a­tions, in addi­tion to ideo­logy, explained small donor success. And “the top 5% of all incum­bents in small-donor receipts (i.e., the 28 incum­bents above $250,000) were randomly distrib­uted within their own parties ideo­lo­gic­ally.” A study of 2008 survey data found that “major donors (giving excess of US$200) appear some­what more ideo­lo­gical than small donors.”

To be sure, one of Pildes’s sources finds that both large and small donors cluster at the ends of the ideo­lo­gical spec­trum, with small donors (defined as giving $500 or less) some­what more ideo­lo­gical than the top 0.01 percent of donors.

But other stud­ies Pildes points to do not support his argu­ment. One, in fact, stands for the exact oppos­ite posi­tion: a set of surveys conduc­ted by the Campaign Finance Insti­tute from state elec­tions in 2006 found that “the policy views and prior­it­ies of small donors some­times corres­pond more closely with those who give no money than do the views and prior­it­ies of large donors.” The authors mused that “bring­ing more small donors into the campaign finance system could improve the repres­ent­at­ive qual­ity of the donor pool.”

Another source finds that indi­vidual donors are more polar­iz­ing than PACs but says noth­ing about small donors. In fact, it concludes: “Higher indi­vidual limits lead to more ideo­lo­gic­ally extreme legis­lat­ors hold­ing office,” imply­ing that larger indi­vidual contri­bu­tions are polar­iz­ing. As for the idea that PAC money is less polar­iz­ing than indi­vidual contri­bu­tions (whether large or small), that ignores the fact that busi­ness PAC money is always pro-busi­ness. PACs may not choose a side in the culture wars, but they consist­ently prefer their industry’s profits to regu­la­tion in the public interest.

Finally, Pildes cites an article that seems to offer mixed find­ings based on dona­tions to congres­sional candid­ates from 2006 to 2010. It concludes that more small donors would help demo­crat­ize campaign fund­ing since they come from all income levels, and compet­it­ive races tend to see a lot of small dona­tions. It also finds that “the most ideo­lo­gic­ally extreme incum­bents raise more small contri­bu­tions.” But the fact that certain candid­ates do well with small donors does­n’t tell us what all the millions of other small donors — and poten­tial new small donors — will do. As noted, extrem­ism is one way to raise small dona­tions, but it’s not the only way; small donors have shown enthu­si­asm for moder­ates over and over.

Where it’s in effect, small donor public finan­cing has not increased polar­iz­a­tion.

Given that there is little evid­ence that small donors are more polar­ized than big ones, it should come as no surprise that, contrary to Pildes’s critique, long­stand­ing small donor match­ing programs in places like New York City and Los Angeles have not exacer­bated polar­iz­a­tion. The same goes for the pres­id­en­tial public finan­cing system, which used match­ing funds in the primar­ies. For decades, main­stream candid­ates like Ronald Reagan, George H.W. Bush, Bob Dole, and Bill Clin­ton won their party’s nomin­a­tion while rely­ing on the small donor match. 

If anything, match­ing fund programs are likely to reduce polar­iz­a­tion by encour­aging candid­ates of all kinds to seek new donors, many living in their own districts. The program in New York City has brought more diverse and more demo­graph­ic­ally repres­ent­at­ive donors into polit­ical parti­cip­a­tion. Publicly financed city coun­cil candid­ates in New York City rely more on contri­bu­tions from within their own districts than other candid­ates, even though the match applies to dona­tions from people that live anywhere in the city. In other words, rather than appeal­ing to ideo­lo­gic­ally extreme donors from across the city, public finan­cing has encour­aged elec­ted lead­ers to rely more on ordin­ary constitu­ents to fund their campaigns. 

Public match­ing is the power­ful reform we need because it will empower candid­ates to rely on their constitu­ents.

Not only will small donor public finan­cing not make polar­iz­a­tion worse, it is the most effect­ive solu­tion to a prob­lem just as worri­some as polar­iz­a­tion: the consol­id­a­tion of elec­tion fund­ing by wealthy interests. Since Citizens United, the influ­ence of wealthy donors has contin­ued to skyrocket. In 2016, just 400 donors of more than $1 million each gave $1.5 billion, 31% of the cost of the whole elec­tion. That’s more than at least 5 million small donors, who together accoun­ted for only 21%. Match­ing small dona­tions gives candid­ates the choice to run people-powered campaigns instead of making prom­ises to big donors. 

Pildes does­n’t neces­sar­ily oppose public finan­cing; he writes that systems that replace private fundrais­ing alto­gether with block grants of public funds have bene­fits “without the down­sides” of small donor match­ing. But match­ing has several advant­ages over block grants. For one, it increases the repres­ent­at­ive connec­tion between elec­ted offi­cials and constitu­ents by reward­ing retail fundrais­ing: candid­ates don’t simply stop fundrais­ing as they do under block grant systems, but they fundraise by talk­ing to voters instead of host­ing ritzy dinners.

Match­ing systems also calib­rate public funds better than block grant systems, where every candid­ate gets the same amount, regard­less of how compet­it­ive or expens­ive their race is. Possibly due to concerns about being outspent by big money, candid­ates in recent years have been more likely to opt out of block grant systems in some of the elec­tions where they are avail­able. Parti­cip­a­tion in match­ing systems like New York City’s remains high. 

In a world of unpre­dict­able outside spend­ing, small donor match­ing systems put dollars where they’re needed because candid­ates can work harder for public funds by earn­ing more match­able small dona­tions. And candid­ates are allowed to keep rais­ing private dollars if they need to, even if they have received the maximum avail­able amount of public funds. The system as a whole empowers the voters and candid­ates left out by the dizzy­ing heights of big donor spend­ing under the status quo.

The best way to respond to the radical imbal­ance in elec­tion fund­ing we see today is to use match­ing funds to empower regu­lar people to have more of a voice, which will allow candid­ates to run compet­it­ive campaigns without chas­ing wealthy special interests.