Will increasing small dollar donations polarize Congress?

The costs of mounting a successful congressional campaign have increased exponentially over the last three decades. In order to win in this environment, members of Congress must increasingly rely on a small pool of donors that is older, whiter, wealthier, and disproportionately male, relative to the general population.

After big gains in the 2018 midterms, Democrats pledged to advance broad-ranging election reforms. Last month they unveiled an ambitious piece of legislation, the For the People Act of 2019 (HR 1), which, in addition to tackling ethics and voting rights issues, proposes sweeping campaign finance reforms designed to “end the dominance of money in politics”. Specifically, HR 1 includes a public matching program to “increase and multiply the power of small donors” by awarding congressional candidates $6 in public funds for every $1 they raise from small donors.

In principle, there are compelling reasons to believe campaign finance reforms that expand the donor base will diversify the pool of candidates and improve responsiveness in government. However, some evidence suggests that small dollar donors have extremist preferences and may have a polarizing effect on politicians.

In a forthcoming Election Law Journal article, we ask, Do Small Donors Polarize Politicians? We evaluate three competing explanations of the relationship between small dollar donations and legislative polarization in the context of the U.S. Senate. We use campaign finance records and a dynamic measure of roll call voting behavior–Nokken-Poole scores–in the years between 1989 and 2015 to evaluate whether senators who receive more support from small dollar donors tend to be more extreme in their vote positioning. We find that the answer is complicated.

Our findings do not support the claim that small donors “polarize” politicians; we find no correlation between a senator’s behavior and the amount of small dollars raised in previous elections. However, we do find evidence that senators who polarize before Election Day tend to raise more money from small donors. This suggests that politicians posture strategically to small donors for support, and that the reforms included in HR 1 may well alter the strategies that members of Congress use to raise money.

Underlying the argument that small donors polarize legislators is the assumption that donors influence the future behavior of politicians through their gifts. If small donors indeed “polarize” legislators, then senators who enjoy generous support from small donors will tend to be more extreme in their behavior in the congresses that follow, until the next reelection.

A second, related, explanation is that ideologically motivated small donors “select” candidates who are like-minded. Thus, politicians who make it to the Senate with small dollar support will tend to be more ideologically extreme. If this explanation holds, we should be able to observe polarization after a senator is first elected, throughout their career.

We found no support for either of  these explanations. First, senators who raise more money from small donors during a given election cycle tend to behave no differently than their peers, all else equal, in the congresses that follow. Second, when we consider the small dollars raised in a senator’s first election to the Senate, we similarly find no correlation. Candidates who entered the Senate with small dollar support appear to behave no differently in subsequent two-year congressional sessions than those who did not raise money from small donors.

While our first two analyses cast doubt on the claim that small donors impact the future behavior of senators, we also considered the possibility that politicians posture strategically to small donors for support–that senators adopt extreme positions before Election Day in order to mobilize small donors. This explanation reverses the causal arrow, suggesting that politicians drive the behavior of donors, rather than the opposite.

Our findings support this view. We find a strong correlation between a senator’s positioning before election and the small money raised during the two-year election cycle at the end of their six-year term. Senators who shift to the extremes before Election Day tend to receive a modest boost in small donor money. Indeed, we find moving from a median ideological position to a polar extreme nets an additional $1.2 million in small donor dollars. After Election Day, this effect disappears.

How do these findings inform the debate over campaign finance reform? First, our findings do not support the claim that small donors “polarize” candidates. Rather, legislators appear to influence the behavior of campaign donors–they behave strategically in order to raise money and win elections in the future.

Does this mean that encouraging participation by small donors will incentivize strategic polarization by members of Congress? Not necessarily. Under the current campaign finance framework, in the context of increasingly costly campaigns, strategic polarization by members of Congress may represent a viable strategy for raising money from ideological donors.

However, with the introduction of campaign finance reforms, politicians will likely adopt new strategies. The small donor matching system outlined in HR 1 includes incentives that lower the costs of donating to campaigns, which will presumably expand and diversify the pool of donors and improve responsiveness in representation. While it is difficult to predict the precise effects of the bill as proposed, we find no evidence that polarization is an inevitable outcome.