Posts Tagged ‘Donor Contribution’

Is it a Problem that the Vast Majority of our Electoral System is Financed by Men?

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mad_men_cover_1

A significant amount of journalistic attention is devoted to examining how campaign contributions influence who we elect to the U.S. Congress.  Such concern over the potential for “special interests” to exert inordinate amounts of power on our elected officials is clear; it is  antithetical to the notion of the “common interest” that underlies the foundation of our democracy (previously discussed here).   However, while it is often the case that special interests are presumed to be narrow interests  (i.e. “big oil,” unions, corporations, etc.), there is relatively less attention paid to how our campaign finance system affects groups that are too broad or cross-cutting to be called “special interest,” but may nevertheless be significantly impacted by the current campaign finance system. Specifically, the question I address here is whether it is possible that the campaign finance system is contributing to the gender disparity in Congress.  Is it a problem that the vast majority of our electoral system is financed by men?

Why the Gap?  How does the campaign finance system contribute to the problem?

Those that argue overt discrimination against women is a thing of the past note that women perform just as well as men in general elections. For example, no one was shocked this past April when Robin Kelly was elected in a special election to fill the seat previously held by Jesse Jackson Jr. in Illinois.  However it is also true that women generally have to raise more money to perform as well as men at the polls, while at the same time women perceive fundraising to be more difficult than men.  But why?

I suggest two reasons.  The first is the undisputed gender gap in resources: men make up a larger percentage of the work force and earn a higher income on average.  They therefore have more resources at their disposal to contribute to campaigns than women do.  The second, less obvious reason has to do with a particular FEC regulation governing the rules of “Separate Segregated Funds”  (SSFs), which comprise the vast majority of PACs that contribute to candidates and include corporations, membership organizations, unions, etc.  The regulation specifies that the only members of a company or organization that can be limitlessly asked to donate to the PAC are its executives, stockholders, and notably – their spouses.

While the 2012 Fortune 500 “boasted” a record number female CEOs, the grand total came to 18, just 3.6%.  The reality is that the majority of executives and stockholders are male, that in essence, are able to make contributions on their own accord as well as on behalf of their spouses. Taken to its furthest logical extent, the result is that a greater number of men enjoy de facto doubled contribution limits.

Gender of Contributor and Preferences Toward Male/Female Candidates

Of course for any of this to matter to gender fundraising disparity, it must be the case that women prefer female candidates and men prefer male candidates. To see whether there was any evidence for this, I took a sample that included 2975 individuals who made contributions to a subset of eight pairs of freshman candidates (one male and one female in each pair) within the critical first 100 days of the start of their respective campaigns.[1]

The table below presents the results of a quick analysis. I classified contributors that do not have employers and that list occupations such as “homemaker,” “self-employed,” “mother,” and “volunteer” as “working inside the home.”  Unsurprisingly, males constitute a higher proportion of overall contributors. When I exclude contributors (both male and female) that work inside the home, the average contribution for females declines substantially while the average contribution for males increases just slightly.  It also results in a decrease in the percentage of female contributors to 26%.  It is interesting to note that this percentage roughly corresponds to the percentage of women in Congress. (While this does imply causal relationship, it is nevertheless a fun number…not unlike Romney getting 47% of the popular vote in 2012).   Lastly, it is evident that females seem to prefer female candidates and males seem to prefer male candidates.

Does the Discrepancy Matter?

Arguably, the gender imbalance in Congress is only relevant insofar as it has an independent effect on legislative output that cannot be explained by other factors, such as partisanship.  In other words, if gender has no impact on an elected official’s behavior, then an imbalance, however disproportionate, may be functionally irrelevant.  Yet studies show female legislators devote more time and energy to what are informally referred to as “women’s issues,” including healthcare, children and families, women’s rights, gun control, and others.  Stylistically, women demonstrate more cooperative legislative strategies and collaborative approaches, while men tend to prefer more competitive, hierarchical tactics.  Thus it is reasonable to posit that a change in the proportion of women in Congress would have an impact on the nature and type of legislative output.

Particularly in a political time in which fundraising continues to grow in importance, it is important to be aware of how seemingly non-discriminatory formal institutions, such as the campaign finance system, may nevertheless result in discriminatory outcomes.

Contribution Statistics by Gender

Recipient Candidate

Male

Female

Total

Proportion

Average

Contributor

Male

1165 (58%)

870 (42%)

2035

68%

$899

Female

448(47%)

492 (53%)

490

32%

$920

Excluding Contributors Working Inside  Home

Recipient Candidate

Male

Female

Total

Proportion

Average

Contributor

Male

1150 (57%)

867 (42%)

2017

74%

$911

Female

336 (46%)

382 (54%)

718

26%

$799

Gender and Work Status of Contributor and Gender and Party of Recipient Candidate

Total

Mean

Work Inside

Average

Work Outside

Average

Males

To Male Democrats

801

$869

15

$582

786

$875

To Female Democrats

598

$857

3

$1525

595

$852

To Male Republicans

364

$1091

0

$0

364

$1094

To Female  Republicans

272

$901

0

$0

272

$901

Females

To Male Democrats

316

$1028

70

$1493

246

$874

To Female Democrats

379

$791

82

$972

297

$727

To Male Republicans

132

$1219

42

$1591

90

$942

To Female  Republicans

113

$795

28

$1019

85

$692


[1] The eight pairs, or sixteen total candidates, consist of individuals competing for Congressional office for the first time.  All chosen candidates won their elections in 2008 and subsequently were sworn-in during the 111th Congress.  The pairs were chosen based on the similarity of their ideology, district qualities, and partisan orientation.

 

By Erinn Larkin, Compliance Director, PACs and Parties

Choosing the Right Lt Gov can be a Game Changer

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game changer

Over the next 17 months, there will be 37 governors who will either be elected or reelected. In many of these states the candidates running for governor will have to choose a Lieutenant Governor candidate. One of the key factors to consider is the fundraising support they can add to the ticket.

Here is my analysis of what kind of candidates might exist out there for a gubernatorial candidate to help maximize his or hers’ fundraising potential heading into a general election.

  • The Millionaire – any candidate who has the ability to self-fund can instantly change the fundraising ability of a gubernatorial candidate and his ticket. This would likely be the best match for a candidate who needs cash fast in order to level the playing field. Any Lt Gov who can quickly infuse a few hundred thousand into a close race could be a game changer.
  • The War Chest – some politicians have been around for years stockpiling huge sums of cash. Anyone that has done this would be a great person to add to the ticket as instantly bring cold, hard cash ready to be used. Only a few potential candidates have significant war chests that could make them a good candidate.
  • The Instigator – in recent years we have seen many politicians become very successful fundraisers by always being at the center of controversy. “Wingnuts” as many of them are referred to as; usually make great fundraisers but terrible candidates. Think Michelle Bachman, Alan Grayson, or even Sarah Palin.

While there are many, many ways for a good Lieutenant Governor candidate to add to their tickets fundraising successes these are just a few categories that they might want to consider before deciding on who to slate with them for next election.

By Nick Daggers, Vice President, Fundraising

 

Campaign Finance Regulation Needs a Home

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The Federal Election Commission can no longer be considered the sole federal agency tasked with regulating federal campaign activity.  As a recent New York Times article suggests, the Securities and Exchange Commission may soon require publicly traded corporations to disclose the names of individuals who contribute to various so-called Super PACs.  Not surprisingly, the measure is strongly opposed by business organizations such as the Chamber of Commerce, which argue that such measures would infringe on the group’s right to free speech. The Internal Revenue Service has also been highlighted recently for its alleged overreach in targeting tax-exempt 501(c)(4) organizations associated with the conservative Tea Party.

These latest events highlight just how thorny of an issue campaign finance regulation has become.  Agencies that are not normally tasked with any kind of campaign regulation have found themselves forced to overcompensate for a seemingly ineffectual FEC.

In international relations, the term “proxy war” is used to describe a situation in which two opposing parties utilize a substitute, or a third party, as an alternative to fighting each other directly.  What Citizens United seems to have engendered, is a proxy war between liberals and conservatives in which government agencies are being used as reluctant battlegrounds.   As we have witnessed this past week, the results are at best messy, and at worst, damaging to the overall legitimacy of the federal government.

The longer both sides continue to battle one another over procedural matters in multiple agency arenas, the more distant they become from their purported fundamental purpose for being, which is to engage in political advocacy.  Not to mention, of course, the more contributor money they waste in the process. But is there any alternative?

These organizations might benefit from looking back to 2004 and the similar issues brought forth by so-called “527” organizations and their apparent exemption from the recently passed Bipartisan Campaign Reform Act of 2002 (also known as McCain-Feingold).  The crucial similarity between the battles being waged today, and those of the past, boil down to one thing: the definition of a “political committee” as defined in the FEC Act.

The difference between the strategies implemented today versus 2004, is that in the latter, watchdog groups and political parties funneled all their complaints and fought all their battles in one arena – the FEC.  Both sides filed complaints and the FEC came down hard on 527’s, primarily for failing to register as political committees.  As a result, America Coming Together was fined $775,000, the Media Fund was fined $580,000 and the Swift Boat Vets and POWs for Truth were fined $299,500.

A strategy that devotes resources to one specific arena (namely, the FEC) could be particularly beneficial for liberals and other proponents of increased disclosure.  The Supreme Court unambiguously upheld disclosure laws as constitutional.  If disclosure is the bottom line, then liberals and supporters need to bring the fight back to the FEC where they maintain a home turf advantage. Otherwise, they risk undermining their cause by fighting procedural battles in agencies that have little interest in regulating campaign activity and little incentive to become enmeshed in a political battle as contentious as campaign finance.

 By Erinn Larkin, Compliance Director, PACs and Parties

 

Hulu, YouTube, and Campaign Finance Laws

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A recent article in the New York Times titled “Technology Leaders Endorse Effort to Overhaul Campaign Finance,” reports that a group technology leaders and venture capitalists have come together to endorse an overhaul of the State of New York’s campaign finance system.   The group is urging Governor Cuomo to pass public financing legislation modeled after the current program in NYC .  The system provides matching funds to candidates that attract small dollar donations.  The authors argue elections are “dominated by a small group of affluent campaign donors, professional influence-peddlers and deep-pocketed vested special interests” and “more often than not, big money gets its way.”

The rhetorical denouncement of “special interests” is popular in both parties, and the reason is clear: it is antithetical to the notion of the “common interest” that underlies the foundation of our democracy.   Walter Lippmann once said that in American politics, the “public interest” can be likened to an all-powerful, “god-like” conception.   In this case, the authors seek to strengthen the public interest by implementing a system they argue will reduce undue influence of big business, enhance participation, and strengthen democracy.

The reality is that the average person will never contribute to a political campaign, even if their funds are matched.  The percent of Americans that do contribute is quite small.  While the intent among reformers is to balance some of the disparities that exist between the wealthy and less wealthy in society, what they will in fact be doing is balancing the disparity within one small part of society: the universe of political contributors.  A matching system would grant “enhanced representation” to a specific group, in this case, politically-motivated yet resource-poor contributors.

The example they note is NYC system, and yet in the most recent mayoral election of 2009, NYC witnessed the lowest voter turnout its had since the 1960’s.  Still, there may be inherent value in decreasing the wealth and power disparity within the universe of contributors by empowering small dollar donors.  What effect will this have?  One key characteristic that distinguishes high dollar donors from low dollar donors (in both parties) is that low dollar contributors are more ideological and partisan.  Thus it is not unreasonable to question whether empowering the universe of small donors could lead to higher levels of polarization.  Polarization of course, is one of the main reasons why public confidence in government among Americans is so low, as the authors note.

All this is not to suggest that reform should be abandoned, or that small dollar contributors should be marginalized; quite the opposite.   It is a call to abandon rhetoric that depicts money in politics as inherently evil, and public financing solutions as inherently good.  Lippmann was on to something when he referred to the public interest as god-like, because like a god, the public interest is not an empirical entity.  It is impossible to know what an unbiased system would look.  The group noted  here, for example, includes venture capitalists and CEOs of companies including Foursquare, Gilt, Etsy, Meetup, Twitter, Tumblr, and others. Ironically if they are successful, they will have provided one more data point to their key complaint, which is that big money tends to get its way.

In order to avoid these inevitable contradictions, reformers should focus their efforts on procedure, and on actual effects that reform will have on how campaigns operate.  They need to clearly link how rule X leads to outcome Y and has Z detrimental implications.  Without concrete examples, no amount of decrying “the evil of money in politics,” even after a substantial change in the dynamics of money in politics like Citizens United, is going to incite public support.

Links:

(1) http://www.brookings.edu/research/books/1999/new-liberalism

(2) http://www.press.uchicago.edu/ucp/books/book/chicago/L/bo6683614.html

 

Super PAC Money: Did it make a difference?

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The media and political talking heads spent a lot of time thinking about and discussing the potential effects the Citizens United decision would make on this year’s elections. Now that the votes are in and the victors announced, we can finally determine how big of an impact the one billion dollars in independent money had on Election Day results.

It didn’t seem to make much of one.

More than two-thirds of the one billion dollars spent throughout the election cycle went toward losing candidates. Groups who supported Republican Senate candidates pumped $100 million into seven races, and the Republican candidate lost in each of them. In House races, 24 Democrats and eight Republicans won their elections despite being outspent by their opponents.

Even though “dark money” didn’t play as large a role in winning elections as some originally thought, the Citizens United decision did make the 2012 election cycle different from any past year. Over one million television commercials – the majority of which were overtly negative – aired throughout the year, and candidates were forced to spend an unprecedented amount of time fundraising just to keep up with their opponents.

President Obama, who once again relied on his “small-donor army” and raised more than a billion dollars in campaign contributions, held twice as many fundraisers as rallies during his campaign, and Romney’s camp was still in fundraising mode in late October, mere weeks away from Election Day.

So even if it seems as though money didn’t make a difference, it’s never mattered more in the minds of candidates and campaign teams.

What’s next?

Leader of Super PACs and other nonprofits have proven they have no problem finding wealthy donors and convincing them to write large checks to support certain candidates or issues. But now, since it’s clear that their spending wasn’t enough to win an election, they’ll need to rethink their strategies.

In 2008, President Obama outdid his opponent in the world of social media. His presence on sites such as Twitter and Facebook was more prominent that that of John McCain, and the Internet is one of the primary reasons he was able to surpass $1 billion in campaign contributions.

This year, his campaign found a way to innovate campaign finance once again. Weeks before the election, pro-Obama messaging – complete with a “Paid for by the Obama Victory Fund” disclaimer – encouraged visitors of video websites such as Hulu and YouTube to vote on Election Day.

It’ll be interesting to see if third-party groups follow President Obama onto YouTube and Hulu, hoping that they can make a bigger impact in the next Election cycle.

Obama for America goes mobile

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Even in election years marked by multimillion dollar donations to a new brand of political action committees–better known as Super PACs – President Obama continuously shows that he understands the value of small-money donors. The Obama campaign took grassroots fundraising to a historical level in 2008, raising 45% of their overall funds in small contributions. Now, four years later, grassroots fundraising has been given a new weapon. They’re going mobile.

Three months after the FEC unanimously approved a rule allowing text message contributions, Obama’s team is days away from wrapping up agreements with Verizon, Spring and T-Mobile to begin fundraising via text by the end of this week.

How will it work?

Text to donate campaigns have typically been used in large-scale charity movements. They made their first big splash during the aftermath of the earthquake that tragically devastated Haiti. In just two weeks, Americans contributed $30 million through text message donations.

In order to comply with FEC regulations and protect the interests of the mobile carriers, the approval of text message contributions came with strict rules and conditions.

  • Donations will be capped at $10 per text, $50 per month, and $200 per cycle.
  • The FEC has stated that campaigns are “solely responsible” for ensuring their donations comply with all FEC laws, including laws that prohibit donations from corporations and minors.
  • Wireless service providers may decide to accept donations for certain political committees and not others.
  • Contributions will be assessed a fee. Carriers and other payment processors will likely receive between 30 and 50 percent of the total contribution.

This is how text message fundraising will work. 1) Campaigns will distribute a phone number to a mobile payment processor for their supporters to text in order to donate. 2) Donors text that number, attest that they are legally permitted to contribute, and pledge their contributions. 3) The mobile payment processor and wireless carrier take their respective fees from the contributions. 4) The rest is given to the campaign by the wireless carrier. 5) The donation is added to the donor’s bill at the end of the month. 6) The donor pays the wireless carrier.

How large of an impact will it have?

Donors already have the incredibly easy-to-use option of contributing with credit cards online, so why is text messaging going to matter so much?

Well, simply put, because it’s easier. Almost 80 percent of Americans send or receive at least one text per day. Young college students – a group the Obama campaign has connected with on an unprecedented level – never leave home without a phone in their pockets. To many people, texting a five-digit number doesn’t feel like spending money, so the hope is that they’ll just hit send and not think twice about it.

Imagine being one of the tens of thousands of people who will be at the Democratic National Convention when President Obama accepts his presidential nomination. You’re in the moment, listening to the President of the United States of America deliver an inspired speech to his supporters. Cameras are flashing, flags are waving, and iPhones are recording. People are standing, clapping, screaming, and whistling as Obama thanks his crowd, promises change, and says God Bless America. He exits the stage, and as he’s walking off, a JumboTron flashes a message: Text GIVE to 62262.

Still caught in the moment, close to 70,000 people – the estimated attendance in Denver four years ago – around you pull out their phones and press the buttons to donate ten dollars.

It’d be hard not to do the same, and that’s why it’s going to be important.

Super PACs overshadow armies of small donors

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According to FEC data, over 2.5 million people have made political contributions to the presidential campaign of their choice of $200 or less. That sounds like a large number. That is a large number.

It just doesn’t mean as much as it used to.

Four years ago, President Obama’s campaign made history with their innovative techniques of encouraging small-dollar donors’ involvement. 45 percent of his funds came from individuals who contributed $200 or less. In this election year so far, that percentage has drastically shrunk.

Through June, the 2.5 million people who have made small donations to either presidential campaign represent only 18 percent of the two parties’ total funds. According to Politico, during this election, the top .07 percent of donors is more valuable than the bottom 86 percent. In an election where virtually all we hear from either candidate is the necessity to strengthen our middle class, the fundraising statistics are awfully top-heavy.

Of course, like most things, there are varying opinions on the matter. Some voters think money is money. If both sides are using these Super PACs, there is still a level playing field. Campaign finance directors have no choice but to fall on this side of the argument. In the last election, Obama urged wealthy Democrats not to spend money on third party groups supporting his campaign. Four years later, that message has been forced to change.

But a large amount of voters disagree. They don’t think it’s fair that the fundraising for a general election is being virtually dominated by the super wealthy.

It’s very possible that President Obama won four years ago because he convinced the small-dollar donors – the Average Joe’s, the middle class, the “regular” people – that he would represent their best interest. He developed a relationship with the people, and they showed their appreciation by contributing financially. Yes, the checks were small – five, ten, fifty dollars – but giving money seemed to provide his supporters with an invaluable sense of involvement with the campaign. That connection between candidates and voters may suffer if Super PACs continue financially overshadowing armies of small donors.

The small donor revolution that President Obama’s campaign pioneered four years ago seems to be coming to a sudden halt. Was this inevitable? Will it impact the upcoming election?

Those questions could be answered in the next few months.