The Role of Individual Donors in Campaign Finance

Economic inequality in the U.S. has increased dramatically in the last 30 years. Between 1979 and 2007, the top one percent of households claimed about 40% of the gains to overall income in the U.S., while the bottom 30% received only 0.4% of these gains. This drastic increase in inequality not only has economic and social implications, but implications for political inequality as well. The rising costs of political campaigns have made donations increasingly important to political candidates, while at the same time, rising inequality has narrowed the pool of those able to make significant campaign contributions. The majority of political campaign donations to the House and Senate candidates are made by wealthy individual donors, however relatively little has been done to examine these donors or their influence.

Jennifer Heerwig and Jeff Manza propose to examine the role of wealthy individual donors in campaign finance by constructing a dataset that will allow, for the first time, researchers to identify and examine large, repeat donors to political campaigns. The dataset, the Matched Individual Donor Dataset (MIDD), will track unique, large individual contributors within and across election cycles from the late 1970s to the present. The PIs will use Federal Election Commission records of all donations over $200 and use a probabilistic matching algorithm to identify repeat donors.

Once the dataset is created, Heerwig and Manza will conduct a descriptive analysis of large individual donors over the last three decades. They will examine who donates and how these donors vary by occupation, religion and wealth, as well as when and to which races (House, Senate, presidential) they donate. They will also examine long-term changes in three processes: concentration, diffusion and repetition. The first process, concentration, refers to the narrowing of the donor base as an increasing share of campaign funds are derived from large donors. Diffusion is the process by which increasing shares of donations come from outside of a candidate’s state or district, and repetition denotes the rise in repeat donors who contribute during multiple election cycles. These repeat donors will be divided into types based on their donation patterns, most significantly access-oriented donors versus issue-oriented donors.

For the last phase of the project, Heerwig and Manza will use a subset of the contributor data in the MIDD and append contributor variables for voting history, partisan affiliation, location, estimated income and wealth. They will use this information to track differences and movements in the partisan loyalties of elite donor groups and examine how these loyalties have shifted in an era of rising inequality. Just as electoral coalitions of voters have important implications for the policy platforms of the parties, so too may coalitions of major financial donors.