The Good News for Democrats About 2004 Was that Lots of Small Donors Gave Money. The Bad News Was Why They Gave

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Mr. Mutch is the author off Campaigns, Congress, and Courts (Praeger 1988), a political history of federal campaign finance law.

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In last year’s campaign, people who gave less than $200 were bigger news than the $2,000 donors and the Rangers, Pioneers, and Trustees who rounded them up. Is the rising number of small donors just a blip? Or does it mean long-term change in the way we pay for election campaigns?

Nearly everyone agrees that small contributions would be the best way to pay for campaigns. But no presidential campaign -- no winning campaign, anyway -- has ever been funded this way. Why not? If so many people think small money is such a good thing, why haven’t we seen more of it? It’s not entirely for lack of trying.

In 1908, Democrats used a method that seems familiar nearly a century later -- enlisting Democratic newspapers to encourage small contributions from their readers. The Republicans started their own small-donor program in 1912, and both parties launched ambitious programs in 1920.

These efforts did increase the number of contributors. What they didn’t do was raise enough money to pay the bills.

But if these contributions never counted for much on the bottom line, their public relations value was huge. People across the political spectrum see small donors as the way to make our campaign finance system more “democratic.”

One way to achieve this democratic goal has been tax incentives, which were supposed to set off a surge of middle-class giving. That didn’t happen. The people who applied for tax benefits tended to be the same wealthy donors who would have given anyway, but saw no reason to pass up the credit or deduction for the first $100-$200 of their larger contribution.

In the wake of Watergate, Congress offered another incentive for small donations. The new laws offered public funds to candidates in presidential primaries as matches for contributions of $250 or less. Public money was by far the most important source of funds in 1976.

Both parties have also used direct mail appeals. This has worked better for the Republicans, who have traditionally had a smaller, better-defined social base and been more ideologically cohesive. Because direct mail targets people who are already on mailing lists that help identify them by political leaning and socioeconomic status, the GOP could reduce the financial risk of this kind of fundraising by sending its appeals to people who were likely to be in its core constituency. The direct mail program was a valuable supplement to the national web of business organizations that constitute a ready-made fundraising organization for the GOP.

The Democrats didn’t rouse themselves to launch an equally serious program until 2000, and it’s true that direct mail is a riskier enterprise for them. It’s always been harder for the more diverse and fractious Democrats to keep their various constituencies together. That was true even when the labor movement was at its peak, and the job has only gotten harder as the party moved from economic to social liberalism.

Some candidates have attracted small donors, too. In 1980, John Anderson launched his outsider campaign for the Republican presidential nomination by taking out a full-page ad in the New York Times to appeal for small donations. When televangelist Pat Robertson tried for the GOP nomination in 1988, he won support from plenty of new contributors -- albeit most of them from the list of donors to his television show. The 1992 presidential primaries produced more examples: Tom Harkin and Jerry Brown in the Democratic race -- Brown set up an 800 number and refused to accept contributions of more than $100 -- and Pat Buchanan’s challenge to George H.W. Bush on the Republican side.

In 2000, small donors helped Senator John McCain win his upset victory against George W. Bush in the New Hampshire primary. The most stunning example to date was the torrent of small donations that fueled Howard Dean’s 2003-04 challenge to the Democratic party establishment.

All these candidates probably pulled in lots of small donors who had never given before. But studies of past campaigns found that first-time donors tend to be one-time donors. Unlike big contributors, who keep giving year after year whether they’re passionate or not, small, first-time donors tend to give only when they’re excited by a cause or a candidate.

What made 2004 different was that small donors weren’t simply responding to targeted appeals or tax incentives. They were volunteer donors, searching the Internet for politicians they liked. It was also different in that small donations poured into the coffers of two establishment politicians. Small donors were important to the bottom line for the first time.

But the recent campaign was especially rancorous. What looks like the long-desired democratization of campaign finance more likely reflects the less-desirable passions of a bitterly divided electorate. If the rancor continues, small donations probably will, too.

Which could be a good thing in the short run if it helps give the Democrats enough backbone to stop the rightward drift of government and get us back to a two-party system. In the long run, though, we need less rancor. And that means finding another way to persuade small donors to keep on giving the way big donors always have. That will be the hard part.

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Bob Harper - 2/15/2005

I'm with Mr. Rodriguez. Prof. Heisler cannot possibly exist. His existence would violate the First Amendment...er, I mean academic freedom....or some first principle of the academic universe. Why, he might even believe that objective truth exists, and we can't have that, can we?

Gonzalo Rodriguez - 2/15/2005

Mr. Heisler,

You must be lying. From what I've heard, there are no "conservative and Republican academics." You don't exist. You know, because 1) they are too stupid and/or 2) they only care about making money and don't get into academics. Something doesn't compute here.

Charles Edward Heisler - 2/15/2005

What is it about history that makes it so much more attractively arrayed thru a prism turned to the left??
I would think that history is, after all, history but then what do I know, being a conservative and Republican academic? I only seek the destruction of mankind while lining my pockets to be able dance on the graves of the downtrodden wearing expensive boots!

John H. Lederer - 2/14/2005

"Which could be a good thing in the short run if it helps give the Democrats enough backbone to stop the rightward drift of government and get us back to a two-party system. In the long run, though, we need less rancor. And that means finding another way to persuade small donors to keep on giving the way big donors always have. That will be the hard part."

HNN tends to be a partisan web site, but perhaps it is best to at least maintain a curtain of hypocrisy?

Charles Edward Heisler - 2/14/2005

"Which could be a good thing in the short run if it helps give the Democrats enough backbone to stop the rightward drift of government and get us back to a two-party system."

I am curious, did the two party system disappear for the author when the Republicans won the House, when they won the Senate, or when they won two Presidential Elections?
Funny how the party system was healthy all those years when the Democrats were in charge.

Andrew D. Todd - 2/14/2005

Political fund-raising is practically inseparable from political advertising. Advertising is subject to a law of diminishing returns. The more advertising you fling at the target, the greater the probability that it will be ignored, or tuned out. The price of internet hosting is in free fall. So is the cost of other relevant technology, eg. CD burners. The limiting factor from a technical standpoint is usually the internet surfer's subscriber loop. Not everyone has broadband, and the best way to make yourself user-friendly is to keep your graphics to a functional minimum. The proven way to distribute large datasets economically is to give permission for anyone who wants to make copies to do so. The principle would be the same for campaign videos as for Linux distributions. There is a comparatively small sum, perhaps five million dollars or so for a presidential election, beyond which further advertising is pointless.

Experience with internet commerce has shown that viral marketing is the best kind of marketing: put all your money into giving the customer a good experience, a good deal, and spend only a token sum on advertising. That, of course, applies to the early-growth stage. At a mature stage, the golden rule becomes one of not losing customers. If you have a fifty percent or greater market share, the customer you lose is one you never get back. If there is any sizable body of disgruntled former customers, they will dis-advertise you far more effectively than you can advertise yourself.

Of course political campaigns are not the same as business marketing. Still, I think there will be the same tendency to "depreciate" the role of advertising. Sufficient funds and advertising are a byproduct of other things running properly. An effective block-captain system will generate abundant quantities of cash as an incidental byproduct, because the block captains will chip in, and this will serve to reinforce their commitment. However, fund-raising is not the point of a block captain system, which is basically to get voters to the polls on election day. If you view a political donation as essentially a component of recruiting a volunteer organizer, and not the other way around, then you apply a whole series of different tests. For example, would a particular donation tend to demoralize the local party organization, given the particular donor's character and reputation? For example, the movie industry, which is overwhelmingly concentrated in Southern California and generates little employment in other states, donates to practically all the senators and representatives, at the rate of $100,000-$200,000 per congresscritter, in exchange for favorable legislation. This works only because the senators and representatives assume that money for advertising is more important than someone cross-referencing their voting record with their contributions, and asking their party workers: "how can you work for that cheap crook?"