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How New York State’s New Small Donor Public Campaign Finance Option Will Boost Democracy

Large individual and entity donors in the 2020 New York legislative elections drowned out small donors. But the state’s new small donor public financing program, launching in 2022, could transform fundraising to make everyday New Yorkers a much more important source of support for candidates.

Last Updated: March 30, 2021
Published: March 30, 2021

New York’s new small donor public finan­cing law prom­ises to be remark­ably effect­ive in trans­form­ing the state’s big donor–­dom­in­ated elec­tions to empower every­day citizens, a new analysis shows. Had the program been avail­able for last year’s state legis­lat­ive elec­tions, small donors (giving $250 or less) could have made up 61 percent of all funds raised by candid­ates, instead of just 13 percent. foot­note1_l8bu3pe 1 The Campaign Finance Insti­tute, a divi­sion of the nonpar­tisan National Insti­tute on Money in Polit­ics, performed the data collec­tion and analyses discussed through­out this writ­ing except where other­wise noted. As it was, small donors were far outweighed by large indi­vidual donors and entity donors such as corpor­a­tions.

Lawmakers enacted the volun­tary program last year to launch in Novem­ber 2022. They will need to include modest funds to build the program’s infra­struc­ture in this April’s budget to deliver the reform on time.

The reform will boost the polit­ical influ­ence of a greater diversity of New York­ers and enable candid­ates with strong public support to raise compet­it­ive sums by rely­ing on their constitu­ents rather than big donors. It will do so by multiply­ing small dona­tions from New York­ers to qual­i­fied candid­ates who choose to parti­cip­ate with public match­ing funds. As elec­ted offi­cials confront crises from hous­ing to health­care to educa­tion, the need to amplify more New York­ers’ voices in the polit­ical process is greater than ever.

Combined with recently enacted voting reforms, includ­ing auto­matic voter regis­tra­tion, New York’s adop­tion of small donor public finan­cing puts it at the fore­front of expand­ing parti­cip­a­tion just as a national battle rages over the very ques­tion of who counts in Amer­ican demo­cracy. A similar pack­age of voting and campaign finance reforms passed the U.S. House of Repres­ent­at­ives this March and awaits a vote in the U.S. Senate.

As Ekow Yankah, chair of the new board over­see­ing New York’s public finan­cing initi­at­ive, has said, “Together, these reforms will give New York­ers a greater stake in their demo­cracy, regard­less of back­ground or means, and deepen candid­ates’ commit­ment to their constitu­ents.”

The Poten­tial Effic­acy of Small Donor Public Finan­cing in New York State

Analysis based on dona­tions to New York state candid­ates in 2020 by the nonpar­tisan Campaign Finance Insti­tute (CFI), a divi­sion of the National Insti­tute on Money in Polit­ics, shows the trans­form­at­ive poten­tial of the new law, as the follow­ing figures 1 and 2 show.

Under the current campaign finance system (figure 1), small donors are drowned out by large indi­vidual donors and entity donors. Small donors giving $250 or less to candid­ates for the New York State legis­lature in 2020 made up only 13 percent of total fundrais­ing.

Apply­ing the new public finan­cing law (figure 2), small-donor New York­ers become nearly five times more import­ant than they were under the status quo system. With the reform, small donors account for 61 percent of funds raised by legis­lat­ive candid­ates rather than just 13 percent.

This projec­tion makes two sens­ible assump­tions. foot­note2_xkgc­ssw 2 For more details about the meth­od­o­logy of these projec­tions, please see Michael Malbin and Brendan Glavin, Small Donor Public Finance in New York State: Major Innov­a­tions – With a Catch, Campaign Finance Insti­tute, National Insti­tute on Money in Polit­ics, Janu­ary 2020, 20, http://cfinst.org/pdf/state/ny/Small-Dono r-Public-Finance-in-NY_Jan2020.pdf. First, it assumes that all candid­ates in 2020 who would have raised as much money as they did, or more, using public finan­cing — the vast major­ity raised more under the reform — would choose to parti­cip­ate. foot­note3_opqhzcx 3 Apply­ing the public finan­cing model, 84 percent of senat­ors and more than 90 percent of assembly members would have raised more using the reform than they did without the reform, even without find­ing new donors, accord­ing to a new analysis that the Campaign Finance Insti­tute provided to the Bren­nan Center.

Next, the projec­tion assumes that a modestly greater number of small donors would contrib­ute under public finan­cing than without public finan­cing. foot­note4_rdsjy58 4 Malbin et al., Small Donor Public Finance, 9. It makes sense to assume greater parti­cip­a­tion by small donors, because the reform is designed to incentiv­ize candid­ates to seek more support from their constitu­ents and because areas where similar programs oper­ate have seen more people parti­cip­ate as small donors. But even assum­ing zero addi­tional small donors parti­cip­ated, which is unreal­istic, small donors still would account for a signi­fic­antly greater share of fundrais­ing under public finan­cing than they did without public finan­cing: 42 percent instead of 13 percent. foot­note5_zt3bq9x 5 Campaign Finance Insti­tute projec­tion of candid­ate fundrais­ing for New York State legis­lat­ors under the enacted public finan­cing program, assum­ing the same number of donors.

Why Ampli­fy­ing Small Donors Matters to Demo­cracy

The relat­ive influ­ence of small donors versus large indi­vidual or corpor­ate donors has import­ant socioeco­nomic equity implic­a­tions. Research shows that donors enjoy greater access to elec­ted offi­cials than nondonors do. foot­note6_222qjim 6 Joshua L. Kalla and David E. Broock­man, “Campaign Contri­bu­tions Facil­it­ate Access to Congres­sional Offi­cials: A Random­ized Field Exper­i­ment,” Amer­ican Journal of Polit­ical Science 60, no.3 (2016): 553, https://onlinelib­rary.wiley.com/doi/pdf/10.1111/ajps.12180. This access may influ­ence policy decisions to align more closely with the policy pref­er­ences of donors than the policy pref­er­ences of the major­ity of constitu­ents. foot­note7_odp5nbh 7 Brandice Canes-Wrone & Nathan Gibson, “Does Money Buy Congres­sional Love? Indi­vidual Donors and Legis­lat­ive Voting,” Congress & the Pres­id­ency 46, no. 1 (2019): 14–15; Martin Gilens and Benjamin I. Page, “Test­ing Theor­ies of Amer­ican Polit­ics: Elites, Interest Groups, and Aver­age Citizens,” Perspect­ives on Polit­ics 12, no. 3 (2014): 572, 575, https://scholar.prin­ceton.edu/sites/default/files/mgilens/files/gilens_and_ page_2014_-test­ing_theor­ies_of_amer­ican_polit­ics. doc.pdf. Yet large donors as a group are unrep­res­ent­at­ive of constitu­ents, gener­ally, as they over­whelm­ingly tend to be wealthy, white, and male. foot­note8_bmajmzq 8 See also Abhay Aneja, Jacob Grumbach, and Abby Wood, “Finan­cial Inclu­sion in Polit­ics,” Center for Law and Social Science Research Paper Series No. CLASS21–3, Legal Stud­ies Research Paper Series No. 21–3 (2020): 18, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3767092.

Small donors tend to be much more repres­ent­at­ive of the general elect­or­ate. Public finan­cing programs serve to boost that repres­ent­at­ive­ness. Small donors to New York City coun­cil candid­ates under public finan­cing were more likely to be racially and econom­ic­ally repres­ent­at­ive of the city’s popu­la­tion than small donors to state candid­ates who did not have a public finan­cing program. In Berke­ley, Cali­for­nia, donor parti­cip­a­tion increased in every zip code after the enact­ment of the city’s public finan­cing program. Donors from more neigh­bor­hoods parti­cip­ated in Los Ange­les’s first muni­cipal elec­tion with public finan­cing than before public finan­cing.

Our study of congres­sional fundrais­ing shows that small donor public finan­cing is also a tool to over­come barri­ers for socioeco­nom­ic­ally disad­vant­aged candid­ates. Candid­ates who are women and people of color — groups under­rep­res­en­ted in Congress — rely more on small donors than their white and/or male oppon­ents. Women of color in partic­u­lar face a persist­ent fundrais­ing defi­cit compared to other candid­ates, due to systemic barri­ers to access­ing wealthy donors. A small donor public finan­cing program in the U.S. House general elec­tions from 2012 to 2018 would have enabled women of color candid­ates to shrink their fundrais­ing defi­cit by 34 percent in 2018 alone, while enabling all candid­ates across the entire period to raise compet­it­ive sums based on the support of every­day constitu­ents.

Of the largest indi­vidual donors in New York’s 2020 state legis­lat­ive races (those who gave $5,000 or more, each), nearly 90 percent hailed from areas with better employ­ment rates than the state aver­age. foot­note9_27wahn2 9 Of these biggest donors, 88 percent were from counties where the unem­ploy­ment rate was lower than the Janu­ary 2021 statewide aver­age for New York State of 8.8 percent. To produce this find­ing, we aggreg­ated dona­tions made during the 2020 elec­tion cycle by each indi­vidual donor, to identify those indi­vidu­als who gave $5,000 or more in total. We cross-refer­enced county-level loca­tion data of these biggest donors as provided by the National Insti­tute on Money in Polit­ics with county-level unem­ploy­ment rate stat­ist­ics for Janu­ary 2021 from the U.S. Bureau of Labor Stat­ist­ics. See United States Bureau of Labor Stat­ist­ics “Local Area Unem­ploy­ment Stat­ist­ics,” accessed March 23, 2021, https://data.bls.gov/PDQWeb/la. These largest donors made the major­ity of their contri­bu­tions during the Covid-19 pandemic, while every­day New York­ers exper­i­enced a sharp increase in jobless­ness, hunger, and hous­ing insec­ur­ity. foot­note10_ljose0m 10 These biggest donors, of $5,000 or more each in aggreg­ate, made 57 percent of these dona­tions after March 11, 2020, the day the World Health Organ­iz­a­tion declared a global pandemic. See Bill Chap­pell, “Coronavirus: COVID-19 Is Now Offi­cially A Pandemic, WHO says,” NPR, March 11, 2020, https://www.npr.org/sections/goat­sands­oda/2020/03/11/814474930/coronavirus-covid-19-is-now-offi­cially-a-pandemic-who-says. This analysis was completed by disag­greg­at­ing the contri­bu­tions for each indi­vidual donor giving $5,000 or more in total by date of contri­bu­tion. Dona­tions that were dated after March 11, 2020 were then totaled.

Back­ground on New York’s New Small Donor Public Finan­cing Program and Its Current Status

New York’s new small donor public finan­cing law is the most power­ful legis­lat­ive response by any state to the Supreme Court’s 2010 Citizens United decision, which super­charged big money in polit­ics. The law signi­fic­antly reduces contri­bu­tion limits for all candid­ates, whether or not they choose to parti­cip­ate in public finan­cing. It enables candid­ates for state legis­lature and statewide offices to receive a multiple match on small contri­bu­tions they raise from constitu­ents, if they first prove a suffi­cient level of public support and agree to the program’s rules. The size of the match and maximum amount of public match­ing funds a candid­ate can receive vary by office. The program imposes certain cost-controlling meas­ures to ensure public funds are not wasted.

Innov­at­ive features of New York’s new program respond to special concerns of fundrais­ing in the super PAC era. From the candid­ates’ perspect­ive, the abil­ity to keep rais­ing unmatched contri­bu­tions if they reach their public finan­cing maximum frees them to respond, if neces­sary, to inde­pend­ent spend­ing while still draw­ing most of their support from constitu­ents. From the perspect­ive of New York­ers who struggle to be heard along­side big donors, the program’s higher match for the smal­lest contri­bu­tions to legis­lat­ive candid­ates is an import­ant boost.

(See our Guide: New York State’s New Small Donor Public Finan­cing Program for specif­ics about contri­bu­tion limits, require­ments for candid­ates to be able to earn match­ing funds, match ratios, maximum public funds per office, and other details.)

Lawmakers have taken the first steps to ready this progress­ive demo­cracy reform. Legis­lat­ive lead­ers of both major parties have appoin­ted members to the newly created Public Campaign Finance Board. Those members have declared their bipar­tisan commit­ment “to prepare the program for a success­ful launch in Novem­ber 2022.” The board has the neces­sary number of members to act even with a vacancy to be filled by the governor. And the exec­ut­ive and legis­lat­ive budget propos­als all included the agency’s request for imple­ment­a­tion funds.

This new analysis shows that New York’s small donor public finan­cing law will be effect­ive in increas­ing repres­ent­at­ive­ness in the state’s elec­tions. Lawmakers need to deliver on their propos­als to fund the program’s creation in time for parti­cip­a­tion to begin next year.

End Notes