Sticking Up for the Small Donor

Can anything be done to reduce the power of mega-donors over elections and, ultimately, over government itself? This proposal would go a long way.


There's a growing sense in America that our campaign finance system is in shambles. Mega-donations from wealthy individuals, large corporations, and special interest groups are pouring into elections. Ads paid for by multi-millionaire-funded super PACs and shadowy tax-exempt organizations are flooding the airwaves. Politicians, other than those who are themselves super-wealthy, are increasingly financed by and indebted to a small pool of very big givers -- not the 1 percent but the top 1 percent of the 1 percent. Their dependence on these large donors inevitably influences the policies they support, much as the fear of triggering a torrent of spending against them can cause them to run away from certain issues and not cast certain votes.

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Given the current Supreme Court's unyielding resistance to campaign spending limits, can anything be done to reduce the power of mega-donors over elections and, ultimately, over government itself? Yes. We can create an alternative system of small-donor democracy fueled by small contributions from ordinary citizens and reinforced by public matching funds. Although the Supreme Court will not allow big money to be limited, the addiction of elected officials to large donations can be controlled, if not completely cured, by making another, more "small-d" democratic source of funds available to them -- the small contributions of millions of non-wealthy voters.

How would this work in practice? A candidate who collects a threshold amount of money in small contributions would qualify for public dollars that would be a multiple of the small donations collected. Of course, each of these terms --"threshold amount," "small contribution," "multiple"-- would have to be defined. And the definition could vary according to the type of election: presidential, statewide, congressional, state legislative, etc. For example, in a congressional district, a "small contribution" could be $50; the "threshold amount" might be $100,000; and the "multiple" could be five, with the result that a candidate who raised $100,000 in contributions of $50 or less would qualify for a public matching grant of $500,000. That is surely enough, even without super PAC support, to launch a credible campaign. And if the candidate continues to attract the support of additional small givers, those donations would continue to leverage more public support. An additional $100,000 in small donations -- which could be obtained from just 2,000 donors -- would give the candidate another $500,000. Even in today's superheated political atmosphere, $1 million will be enough in most districts to enable a candidate to be competitive.

A small-donor campaign finance system would have several great benefits. First, it would give candidates an alternative to the mega-donors who increasingly dominate our elections. As a result, elected officials would have greater freedom in practice to pursue the policies they think are better on the merits or that benefit their constituents, not the programs pushed by their donors. Second, it would close the yawning gap between fundraising and campaigning. Candidates are now forced to spend large amounts of time away from voters while they dial for dollars or hobnob with donors at high-dollar fundraisers. Under the small-donor system, every meeting with voters would be a fundraiser. Instead of having separate constituencies of donors and voters, the donor and voter constituencies would be the same.

Third, voters would be able to take into account how a candidate finances her or his campaign in deciding how to cast their ballots. Under the current system, nearly all candidates are to some extent tied to major donors. Many wealthy individuals and special interests hedge their bets by giving to competing candidates so that they have some access to whoever wins. If some candidates choose the small-donor system while others prefer to stick with the mega-donors, the voters can decide whether the way a candidate raises money matters to them.

Should small-donor candidates actually win office, the public would finally be represented by legislators and executives free to pursue their public duties without conflicting obligations to financial backers.

Finally, the small-donor system can make our political system more competitive. The big-money system favors incumbents, who dispense the favors and cast the votes the special interests need. Because it is harder for challengers and political newcomers to raise money, many incumbents effectively run unopposed. By enabling challengers and newcomers to leverage small donations with matching funds, the small-donor system will force more incumbents to face real opposition.

Isn't a small-donor system really a form of public funding, and hasn't that failed? No, not exactly. The only federal public funding program is for presidential elections, but that system -- created in the early 1970s -- is severely flawed. In the general election, presidential nominees cannot get small donations matched, but instead receive only a modest flat grant that is hopelessly inadequate to cover the costs of a modern campaign. The primary funding program does match small donations, but only on a dollar-for-dollar basis--far less than the multiple match needed for the program to work. Moreover, both parts of the presidential program impose unrealistically low spending caps, which make public funding politically unattractive.

Unlike the presidential and many state and local public funding programs, the small-donor program I propose does not have spending caps. The more money a candidate can attract in small donations, the more public money she or he will get. Whatever the merits of spending caps in the abstract, in the current legal and political climate--with super PACs, tax-exempt organizations, and privately funded candidates able to collect and spend as much as they want--imposing a spending cap on a small-donor candidate is a form of unilateral disarmament. No serious candidate would opt for small-donor financing if doing so would put her or him in danger of being seriously outspent by her opponent or the opponent's super PAC supporters.

Small-donor democracy will cost taxpayer dollars, but the cost is affordable. True, it is unlikely that the public match of small donations would cover the full expense of elections. But even if it did, the estimated $8 billion that this year's campaigns will cost is modest in light of the stakes -- political control over a nearly $4 trillion federal budget, with all the economic consequences that entails. The Afghanistan war is currently costing about $300 million a day. Less than one month of the war would easily cover the small-donor system this year; one year of this 10-year-old war would carry us through the next 12 elections. Nation-building in Afghanistan may be justified by national security needs, but a little nation-building at home would be an appropriate use of public funds, too.

Small-donor democracy is no panacea. Many candidates may choose to stick with a big-donor system that has worked for them in the past. Casino-owning billionaires and hedge-fund magnates who want to influence elections through super PACs and tax-exempt organizations will remain free to do so. Some candidates will be unable to raise enough in small donations to qualify for matching funds.

But small-donor democracy does provide an opening. Any candidate able to build a grassroots following and inspire supporters to make a modest contribution will be able to get a hearing from the voters -- and the opportunity to win still more financial support, get more funding, and run a campaign not dependent on mega-donors and super PACs. And should small-donor candidates actually win office, the public would finally be represented by legislators and executives free to pursue their public duties, unconstrained by conflicting obligations to their financial backers.