In Elections, Donor Size Matters

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This year’s national elections—for members of Congress and the president of the United States—may have relatively less to do with ideas, platforms, and policies than money. In fact, we’re sure of it. Due to Buckley v. Valeo and Citizens United v. FEC, national elections are now little more than auctions. The highest bidder wins. And the highest bidders are the biggest donors, the corporate moguls who deal with political candidates trolling for promises of political favors. One can almost hear the behind-the-scenes auctioneer: “Do I hear one favor for me and my industry? One, one? Okay, do I hear two? One bill, one regulatory sidestep? Two favors, will ya’ give me three?”

Sadly, the nonprofit sector is handmaiden to this political auction, as 501(c)(4)s act as intermediaries between secret political donors and the so-called independent political committees through which a large portion of political donations will flow during this election cycle. A distinctive class of political donors loses in this dynamic: small donors.

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Small Donors Rule: The Much-Loved Story That Isn’t True

Both presidential candidates have been making feints toward small donors. Republican candidate Mitt Romney’s campaign reported that $25.7 million of its $101.3 million fundraising total in July came in donations of less than $250. In June, the percentage of Romney’s donations from small donors was roughly equivalent to that of President Obama’s reelection effort, though for all presidential campaign fundraising to date, Romney sharply trails Obama in small donors. The New York Times revealed that a large part of the Obama campaign’s record rate of political spending has been geared in part to testing out fundraising requests that would appeal to small donors.

Small donors translate, so the thinking goes, into a measure of voter enthusiasm and grassroots support for a political campaign. Crowing about Romney’s newfound strength with small donors, Republican media consultant Charlie Gerow called small donor contributions “the most tangible piece of evidence of voter enthusiasm you have.”

It’s a little like the role of small donors to charities. A 2005 study [PDF] prepared for the Kettering Foundation and Independent Sector documented the enthusiasm of small donors for human service organizations—in fact, for charities overall—particularly local nonprofits. Small donors described local nonprofits as “a manifestation of the health of their community.”

Small donors may be part of the catechism of voter enthusiasm in political campaigns and grassroots commitment in charities, but in the political realm, enthusiasm doesn’t trump the need for money. Politico just ran a devastating report by Kenneth Vogel titled “The Myth of the Small Donor” suggesting that small donors may get good press from political fundraisers, but don’t add up to much in the reality of modern political campaigns.

Vogel describes one small donor, a librarian from Lexington, Ky., who donated $100 to the Obama campaign because “she wanted to fight the flood of million-dollar checks supporting Mitt Romney.” Offering a dose of realpolitik on campaign economics, Vogel said that it would take 100,000 “giving $100 apiece just to match the $10 million that billionaire casino mogul Sheldon Adelson and his wife dropped into the super PAC boosting Romney on a single day in June.”

Vogel’s numbers are compelling: Although 2.5 million people have made contributions of less than $200 to the two presidential campaigns during this election cycle, their combined contributions comprise only 18 percent of the money to the candidates’ various campaign committees. To put that in perspective, the top 0.07 percent of political donors gave more to the campaigns than the bottom 86 percent. For all of the $830 million raised for the presidential committees to date, “just 14 percent of the donors account for 82 percent of the total take.”

Who’s Investing Big in the Next President?

Some of the big-time Republican presidential campaign donors have been well covered in the press. They include:

  • casino owner Sheldon Adelson and his wife Miriam, with total contributions of $36.3 million, including $15 million to Newt Gingrich’s Winning Our Future and $10 million to Romney’s Restore Our Future;
  • business investor Harold Simmons and his spouse Annette, giving a total of $15.8 million, including $11 million to Karl Rove’s American Crossroads;
  • Texas homebuilder Bob Perry and his wife Doylene, donating $12.8 million, including $6.8 million to Restore Our Future and $4.5 million to American Crossroads;
  • and others such as Pay Pal co-founder Peter Thiel ($3.8 million), Foster and Lynette Friess ($2.8 million), the major donor to Rick Santorum’s primary campaign, and $2.7 million from former co-owner and CEO of Univision Jerrold Perenchio.

Across the aisle, the big Democratic donors include:

  • media mogul Fred Eychaner with $3.7 million in donations;
  • philanthropist and horticulturist Amy Goldman, contributing $2.8 million, including $1 million to Planned Parenthood Votes and $1 million to the pro-Obama Priorities USA Action;
  • DreamWorks executive Jeffrey Katzenberg and his wife, Marilyn, donating $2 million to Priorities USA Action;
  • and others like hedge fund manager James Simons ($2.2 million), Qualcomm founder and Giving Pledge signer Irwin Jacobs with his wife, Joan ($2.2 million), hedge fund executive Donald Sussman ($1.5 million), and financier George Soros ($1.2 million).

As the list above indicates, it isn’t only the Republicans courting large donors. Just last week, for one dinner with the president at the W Hotel in Washington D.C., 20 donors paid $40,000 a head, and a day earlier, the president raised $2 million in one dinner at media executive Harvey Weinstein’s Westport, Conn. house, where donors paid $35,800 to participate.

Do you want to flood the swing states with a tsunami of attack ads? It takes big money to spend what the Obama campaign is spending early in the campaign or what the Romney campaign hopes to spend in the months closer to the election. One contribution from Sheldon Adelson counts for a ton of small donors, and remember that, due to secret contributions flowing through 501(c)(4) “social welfare organizations,” we really don’t know how much these guys or their associates have really contributed in this political cycle and we may never know.

Meanwhile, no one seems particularly surprised that the Romney campaign favors a tax policy that reduces taxes on the very wealthy. And few are likely surprised that Wall Street donors that backed Obama in 2008 have turned against the president’s reelection in 2012 due in part to Obama’s support for the Dodd-Frank financial regulation legislation. Money talks.

The Window Dressing of Democracy?

Political democracy and philanthropic democracy may be more connected than anyone might suspect because of the dominance of large donors to electoral campaigns and public charities. Like political donors, big charitable donors have different charitable priorities than middle-income donors. As in political campaigns, big donors wield undue influence with charities, simply because of their economic power. Working class donors may comprise the bulk of charitable volunteers and, based on income and wealth, they may be unduly generous, but they don’t have the economic wherewithal to exercise huge influence over the nature and direction of America’s charities. The same dichotomy holds true for political donors.

There are some people who believe, with good reason, that in this election year, charitable donors would be well advised to redirect their 2012 charitable giving to donations to the political candidates who would make the biggest difference in achieving donors’ and charities’ goals—more so than donations to underfunded charities whose funding capacity doesn’t compare to the fiscal resources that government can devote to social needs. But most donors to nonprofits who might heed this advice would be small political donors, dwarfed by the Sheldon Adelsons and Bob Perrys of the world of campaign finance.

Is this nation devolving toward a state where both charitable giving and political donations by regular Americans—the amazingly generous and committed American middle class working families—is becoming window dressing for the outsized influence of a handful of millionaire and billionaire donors?

  • Doris Jean Heroff

    Having participated in many political campaigns, primarily for progressive women candidates, I find this analysis to be perceptive and way too depressing. I was once a firm believer that each person could make a difference, but now I am either too old, too wise, or too poor to believe it. The change in the electorate and the American culture as depicted in the media sends a chill through me. I once believed in the power of the single vote and the general wisdom of the electorate. I am very doubtful now, but maybe it is just cynicism of one particular person in decline toward death.