Big Money in Politics is Bad. Small Money Might be Worse.
In the 24 hours that followed Donald Trump’s felony convictions in New York last month, his campaign claimed he had raised over $50 million in online donations - crashing WinRed, the payment platform for the Republican Party.
This isn’t the first time he’s used his numerous court appearances to solicit donations. Reporting by CBS News revealed online fundraising for Trump spiked following his arraignment in the aforementioned New York felony case, when his mugshot was released after he was booked in Fulton County, Georgia for allegedly interfering with the state’s vote counting efforts, and when he reached a $454 million settlement in his civil fraud trial, also in New York.
At this point, his best fundraising strategy would be to literally shoot someone in the middle of Fifth Avenue, as the haul from his murder trial would undoubtedly be tremendous.
When the laws governing small-dollar donations were written, it’s doubtful the authors had this in mind. Intuitively, Americans like the idea of small-dollar donations, as it gives the appearance of giving the little guy a level playing field in a world dominated by the ultra-wealthy and special interests.
With the rise in populism over the last decade, small-dollar donors have been used to fuel insurgent candidacies, such as Bernie Sanders’ bid to be the Democratic nominee in 2016.
So it begs the question: Does the rise in small-dollar fundraising really benefit the little guy, or just a certain kind of little guy? And is that little guy getting their money’s worth?
HOW WE GOT HERE
Using online channels to solicit small-dollar donations was discovered accidentally by the campaign of Vermont Governor Howard Dean in 2004, as they leveraged online channels such as MeetUp.com to organize volunteers in his bid to become the Democratic Nominee in that year’s presidential race. While he failed to secure the nomination, he gained visibility for raising around $20 million in online donations from small donors.
Barack Obama’s campaign perfected this strategy in 2008, using social media and other online channels to solicit small-dollar donations and build a fundraising edge against Hillary Clinton, whose campaign relied more on contributions from large donors.
Prior to this, contributions from small donors had been on the decline, with the total percentage of campaign funds generated from donations under $200 falling 50% between 1990 and 2008. With the maturity of online channels, this percentage ticked back up, although not to the levels seen 30 years ago.
Research by Pew showed that around 25% of voters had reported giving to either Trump or Biden in the 2020 election cycle, with about half of those contributing under $100. This lines up with other sources that show the total number of Americans contributing to campaigns floating at around 10%.
So, while the internet has opened the door for the average American to contribute, only a small percentage of Americans do, and the data on the types of candidates they support is anything but average.
MORE EXTREME, LESS EFFECTIVE
In looking at roll call data on the last Congress with VoteView and data on small donor contributions from OpenSecrets, some trends emerge.
The chart below measures how members of the House voted on economic issues, such as tax cuts and federal spending. Members further to the right are more conservative, while those on the left are more liberal.
Among Democrats, the correlation between small-dollar donations and their voting on economic issues is almost neutral, with the top 10% most successful small-dollar fundraisers falling within the party average.
On the Republican side, the top small-dollar fundraisers register 50% more economically conservative than the party on the whole, indicating small-dollar donors on the right prefer more economically conservative candidates, whereas those on the left show no real preference.
VoteView also ranks members of Congress on votes that don’t neatly align under the economic left-right spectrum. While this has traditionally been a measurement of positions on issues like civil rights or abortion, it has lately become a measurement of legislators' anti-establishment/populist leanings and their likelihood to buck their party line to take more extreme partisan positions.
Here we see that small-dollar donors on the left prefer more anti-establishment candidates, with the top 10% of Democratic small-dollar fundraisers registering 30% more populist than the party average. For Republicans, there’s no correlation, although it’s worth noting the most successful small-dollar fundraisers on the right fall on the populist side of the chart.
It should be noted that this is only a snapshot of one Congress when the Democrats were in the majority. This could change with the arrival of a Republican majority, which has seen significant internal conflicts.
But to the second question - are they getting their money’s worth?
No.
In looking at the Legislative Effectiveness Score provided by the Center for Effective Lawmaking, we see the most successful small-dollar fundraisers are also the least effective in drafting, sponsoring, and passing legislation.
WHERE DO WE GO NOW?
Many campaign finance experts argue that laws limiting contributions to political parties and PACs ultimately helped provide a fundraising advantage to more extreme, anti-establishment candidates. PACs and political parties are more interested in winning elections and advancing policy than they are ideologically driven, and research shows they tend to favor more moderate candidates.
This being said, it can’t be understated that the appeal of more anti-establishment, populist candidates came from a growing sense of dissatisfaction with the policies the establishment was producing, and a feeling their interests weren’t being served.
So, rather than looking at a way of broadening the donor base for candidates, we should be looking at ways to broaden the voter base to give more polarized voters less influence over who makes it into office.
Switching from partisan to open primaries would help by requiring candidates to compete for voters from all parties to make it on the ballot in the general election. Whereas partisan primaries favor more extreme candidates who appeal to their party’s base, open primaries favor those with positions more aligned with the median voter.
Instant runoff voting, also known as ranked-choice voting, could also help by allowing voters to rank their candidates in order of preference. Where our current winner-take-all system of elections encourages candidates to compete for their political in-group, ranked-choice voting incentivizes candidates to compete for the second and third-choice votes of voters across the political spectrum, favoring candidates with the widest appeal.
Voters aren’t as concerned with where candidates get their funding as they are about having their interests represented in Washington. In this sense, giving more voters influence over who represents them seems the most logical step.