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Small Donors, Big Democracy: New York City's Matching Funds As A ELECTION LAW JOURNAL Volume 11, Number 1, 2012 Articles # Mary Ann Liebert, Inc. DOI: 10.1089/elj.2010.0099 Small Donors, Big Democracy: New York City’s Matching Funds as a Model for the Nation and States Michael J. Malbin, Peter W. Brusoe, and Brendan Glavin ABSTRACT Restrictions on speech will not be accepted by the Supreme Court in the name of equality, but this does not rule out equality and participation as legitimate policy goals. It is both constitutional and appropriate to promote these goals without new constraints on speech by using incentives to increase the number and importance of low-dollar donors. The constitutional theory is straightforward. The empirical question is whether this could work. There are few examples of current policies with this specific purpose. One run by the City of New York gives participating candidates six dollars in matching funds for each of the first $175 that a city resident donates. This article asks whether a similar approach could become a model for others. The argument has three parts. The first is an empirical analysis of New York City’s cam- paign finance records since 1997, showing that (a) multiple matching funds do increase the proportional role of small donors; (b) they have also increased the number of small donors; and (c) they help shift the demographic and class profile of those who give. The second part applies a modeling method to the states to show these results could readily be obtained elsewhere. The third section presents broad theoretical, con- stitutional, and policy themes. After arguing the futility of using public financing to reduce spending, it urges participation-based public financing to broaden the base. In making this case, the article also presents reasons for preferring matching funds to flat grants or other forms of public financing. he past few years have not been good for expenditures as do individuals1 and the U.S. Court T some of the assumptions and premises that of Appeals upheld the right of organizations that once underlay campaign finance policy. When the only make independent expenditures to accept U.S. Supreme Court said that corporations have unlimited contributions,2 the two decisions were the same right to make unlimited independent widely editorialized as skewing an already imbal- anced campaign finance system toward concentrat- ing power in the hands of large donors. Whatever Michael J. Malbin is Professor of Political Science at the Uni- one may think about the details of the two decisions, versity at Albany (SUNY) and Executive Director of The Cam- there can be no doubt that the system at least raises paign Finance Institute, a nonpartisan research institute in serious questions about what some have called a Washington D.C. Peter W. Brusoe is a Ph.D. candidate in Polit- 3 ical Science at The American University. Brendan Glavin is the larger equality problem in campaign finance. The Data and Systems Manager at The Campaign Finance Institute. The authors wish to thank the Joyce Foundation, Open Society Institute, Rockefeller Brothers Fund, and Smith Richardson Foundation for supporting the research in this paper, as well 1Citizens United v. Federal Election Commission, 558 U.S. as the journal editors and anonymous peer reviewers whose ___, 130 S. Ct. 876 (2010). questions and comments made this a better article. The title is 2SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. Mar. 26, derived from a forum co-sponsored by the Campaign Finance 2010), cert. denied, 131 S. Ct. 553 (2010). Institute and the City University of New York’s Baruch College 3Daniel P. Tokaji, The Obliteration of Equality in American School of Public Affairs, where some of these thoughts were Campaign Finance Law: A Trans-Border Comparison,5Jour- presented. nal of Parliamentary and Political Law 381 (2011). 3 4 MALBIN ET AL. bulk of the money spent on politics in the United city resident gives to their campaigns. (The match- States comes from a small number of people who ing ratio was four-for-one for the first $250 in can afford to give and spend large amounts. This 2001, 2003, and 2005.) The 2009 formula made a is not surprising. It takes money to give money. $175 donor as valuable to participating candidates But the problem in a democracy is that having the as a $1,225 donor was to non-participants. financial wherewithal produces unequal political This article asks whether a matching fund similar power. Campaign finance reformers in response to New York City’s could and should become a have tried to address this in the past by putting limits model for jurisdictions across the country. The argu- on contributions and spending. But the Supreme ment proceeds in three parts. The first is an empir- Court has cut off this approach. The Court has ical analysis of New York City’s campaign finance upheld contribution limits only for the purpose of system. It shows that (a) multiple matching funds preventing corruption. It has rejected any manda- sharply increase the proportional role of small tory limits on spending at all, including independent donors; (b) in addition to shifting the proportions, spending by corporations. Restrictions on speech the small-donor focus has also increased the number simply will not be accepted in the name of equality, of people who contribute; and (c) by increasing the or even in the name of a broad definition of ‘‘corrup- numbers of small donors, the system is also shifting tion.’’ But this does not rule out equality and citizen the demographic and class profile of those who participation as legitimate concerns of public pol- give, making the system more representative of icy. The requirement is to use policy methods that the population as a whole. do not restrict or inhibit speech. It is both constitu- The second part of the article’s argument tional and appropriate to promote participation and involves a hypothetical modeling exercise in equality by building up instead of squeezing down which matching funds are applied to the states. to increase the number and importance of low-dollar This presents an analysis of state campaign finance donors and volunteers.4 records that uses comparable definitions across The constitutional theory is straightforward. The all of the states—first to measure the current mix- empirical question is whether this is just wishful ture of donors and then to estimate the extent to thinking. Would an approach like this actually which a hypothetical matching funds system work? During the 2008 election, some saw techno- would alter the balance. The hypothetical system logical innovation as enough by itself to accomplish is simpler than New York City’s, but patterned this goal, but that has not been borne out. The Inter- after it. The section shows that in the median net lowers the cost of mobilizing small donors and state, candidates raise about 16 percent of their volunteers. But it is still easier for most candidates contributions from individuals who give them to raise money in large chunks, so they will try to $250 or less. Even without major new restrictions mobilize large donors first. Past students of partici- on large donors, a multiple matching fund system pation have argued that one cannot expect most peo- to stimulate small donors would dramatically ple to give or participate unless they are asked. Mobilization is a necessary, though not a sufficient, condition for participation.5 So the question is 4This point has been argued previously by one of the co- whether public policy can alter the incentives for authors: Michael J. Malbin, Rethinking the Campaign Finance Agenda, The Forum, Vol. 6, No. 1 (2008), available at http:// candidates to mobilize donors who give smaller www.bepress.com/forum/vol6/iss1/art3; Anthony J. Corrado, amounts. Michael J. Malbin, Thomas E. Mann, and Norman J. Ornstein, There are very few examples of jurisdictions with Reform in an Age of Networked Campaigns: How to Foster Citizen Participation through Small Donors and Volunteers functioning policies whose specific purpose is to (Washington DC: The Campaign Finance Institute, 2010), increase participation by small donors. One is the available at http://www.cfinst.org/about/events/2010_01_14 State of Minnesota, which until 2009 offered a .aspx; Michael J. Malbin, Campaign Finance After Citizens The American Interest rebate of up to $50 to donors contributing to politi- United: Expand Democracy, , July– August 2010, 54–57. Another recent article developing the cal parties, or to candidates who participate in the legal and policy theory is Spencer Overton, Matching Political state’s partial public funding system. Another is Contributions, Minnesota Law Review (forthcoming 2012). 5Sidney Verba, Kay Lehman Scholzman and Henry E. Brady, the City of New York, which in 2009 gave partici- Voice and Equality: Civic Voluntarism in American pating candidates six dollars in public matching Politics 15–16 (Cambridge MA: Harvard University Press, funds for each of the first $175 that an individual 1995). SMALL DONORS, BIG DEMOCRACY 5 increase their proportional importance, making elections. From the beginning, however, the city’s small donors the dominant force in most states’ Campaign Finance Board sought to persuade the campaign finance. Council to reconfigure the formula to favor small Finally, the third section of the article presents donors. By the election of 2001 the city had changed both constitutional and policy arguments. After to a four-for-one match for the first $250. This showing the futility of using public financing to allowed $250 donors to trigger the same $1,000 in reduce campaign spending, this section argues for public funds as once had been triggered only by the importance of participation-based policies to $1,000 donors.
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