09/26/19

A $60 Strategy to Make $1

A recent AP article questioned why several Democratic presidential candidates were spending $60 — or as much as $90, according to some campaigns — to raise one dollar. Yes, you read that right. Many Democratic presidential candidates have been spending millions on social media advertising to collect contributions as small as one dollar per donor. Surely, they’re not that bad at math. 

What’s going on?  

In an attempt to whittle down the enormous field of candidates, the Democratic National Committee (DNC) announced more stringent rules for the third and most recent debate, held earlier this month in Houston. In order to make the debate stage, a candidate had to poll at least two percent in four DNC-approved polls and collect contributions (no matter how small) from at least 130,000 individuals (including at least 400 individual donors in at least 20 states). 

The better question is why would the DNC set these particular standards?

Using a candidate’s ranking in the polls as a criteria certainly makes sense, but since most pollsters completely missed the Trump victory in 2016, it’s no surprise the DNC is looking for a second metric to predict a winnable campaign.  

Why would the additional standard be individual donors? 

Why isn’t the standard total money raised? A popular narrative about money in politics is that winning elections boils down to who has the most money and therefore we should get money out of politics.

Why isn’t the standard which candidate can line up the most PACs and Super PACs

Why isn’t the standard which candidate can announce the most endorsements from billionaires? Another popular narrative about money in politics is that so called mega-donors and billionaires are buying elections.

Maybe it’s because, in spite of all the talking head and water cooler chatter about too much money in politics, fat cat donors, and evil Super PACs, the DNC knows what the data shows to be true: 

One of the strongest predictors of victory on election day is the number of individual donors.

In more than 80% of elections studied, the candidate with the most individual contributions won. The correlation is even stronger when the donations are from inside the candidate’s district (as in a state House or Senate race). 

Of course campaigns are expensive. Every candidate needs funding and will try to ingratiate him or herself with wealthy donors. Super PACs and PACs will coalesce around the eventual nominee. But statistically, those metrics just aren’t as predictive as popular media narratives would have you believe. 

Take, for example, the last election cycle in Texas.  

The top PAC supporting Democrats in Texas in the last election cycle, ActBlue, spent $10,168,604, but that represented only 1.6 percent of the total spent by all Texas candidates and PACs. As for big-spending conservative PACs, Empower Texans spent $5,774,309, a mere 0.9 percent of all spending. Even the top ten PACs combined only spent $110,481,462 or 17.5 percent of the total.

How about donors? The top donor to Texas candidates in the last election cycle, Tim Dunn, gave $4,255,300, but that equaled less than one percent of the total given to all Texas candidates and PACs. The top ten donors combined gave 4.7 percent of the total.

Where did the rest of the money come from? Ninety-eight percent of all donations were for $1,000 or less, and those smaller contributions combined equaled a whopping 33 percent of the total given. 

But it’s not only that the small donations combined make up the biggest chunk of money. It’s what those smaller individual donations mean. One of the strongest predictors of victory on election day is a large number of individual donations. Candidates closely watch their number of individual donations because they know it spells success or defeat. A person who is willing to open up their wallet for a candidate is highly likely to post about that candidate on social media, to tell their friends, and most importantly, to show up and vote on election day.

The Bottom Line:

The DNC knows what it’s doing. Maybe spending $60 to raise $1 isn’t such bad math after all.

Join us, as we bring you the answers you need about the money in Texas politics.

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