Many on the left plus John McCain continue to claim that campaign finance reform is needed to combat big money in political campaigns and reverse the results of the Supreme Court’s weakening of their previous legislation. Between court rulings and super-PACs, contributors who are so inclined can give huge sums of money—$2700 directly to a candidate for both the primary and the general election, up to that limit to an unlimited number of candidates, more money to the political party of their choice, and then whatever amount they wish to a super-PAC. However, the fears that a few rich supporters can buy elections are being publicly disproved by the 2016 election fundraising results to date.
According to the most recent fundraising reports, from July through September Bernie Sanders raised almost as much money as Hillary Clinton and more than any Republican candidate. We also learned that Ben Carson raised the most on the Republican side. What both Sanders and Carson had in common is an almost complete reliance on hundreds of thousands of small donors.
While more than half of Clinton’s fundraising total came from donors giving her the $2700 maximum and only 17% came from those giving less than $200, 88% of Sanders’ donations and 74% of Carson’s came in amounts of $200 or less.
Yet these very different approaches led to similar results: Clinton raised $29.9 million, Sanders raised $26.8 million, and Carson raised $20.2 million in the third quarter. While Secretary Clinton did maintain a slight lead in cash on hand, the important thing here is that both Dr. Carson and Senator Sanders show that candidates without deep-pocketed supporters can still compete on a relatively even field in today’s campaign finance arena.
In fact, the advantage probably goes to the candidates with a large base of small donors. Because “establishment” candidates like Hillary Clinton and Jeb Bush rely so heavily on large donors, they must continually find new ones; once somebody gives you the maximum donation, they can donate no more money to that candidate. Yet when a donor gives $30 to Bernie Sanders (roughly his average donation), they can continue to give on a recurring basis.
That makes the cost of securing future donations much lower for candidates relying on a base of small donors. Sending out email appeals is almost free. As the campaign drags on, candidates like Sanders and Carson, with databases full of perhaps a million confirmed, donating supporters, can bring in money from those donors over and over again.
Big money donors still have some value: they may contribute early so a candidate can get started and gain name recognition, and at least the media and political establishment still believe backing from such donors gives a candidate credibility. However, it is very unclear if those advantages come close to balancing out the long-run dependability of a large base of small donors.
The small-donor model was invaluable to President Obama back when he was campaigning in 2008. Hillary Clinton had most of the big donors locked up back then, too, but Obama was the first national candidate to take full advantage of the internet’s ability to counteract big money with his huge base of small donors. Now a number of 2016 candidates are attempting to mimic his small-donor fundraising success and at least Carson and Sanders appear to be succeeding.
Additionally, the internet presence and collection of email addresses that comes with it provides an inexpensive way to reach your supporters. Internet commercials incur only the production costs to post on your own website and even paying for placement on other sites is much cheaper than television advertising. Even better, supporters can share your messages through social media and television may play your ads for free as part of a news or political talk show
If the 2016 primary elections prove to be long, drawn-out affairs, I suspect that the possession of a large base of small donors will become increasingly advantageous. If Hillary Clinton cannot knock out Bernie Sanders early on, she will find much of her donor base is maxed out while he can keep the money flowing with simple email appeals that cost him little more than the processing fee on the credit cards.
As more and more campaigns realize the value of the internet for messaging and fundraising, campaign finance reform will become a less and less important issue. Politics is yet another industry where the internet is disrupting the old business model.
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