New study shows how small-donor matching funds can help reduce influence of big money

Today, the Campaign Finance Institute released a new study analyzing the potential impact if New York state reforms its campaign finance legislation to include tighter contribution limits, a ban on limited-liability companies (LLCs) from making contributions, and a small donor matching fund program modeled on the one in New York City. The Institute concludes that “[l]owering the contribution limits, closing the LLC loophole, and instituting a system of matching funds, would in fact substantially increase the importance of small donors to candidates across the board while decreasing their dependence on large donors.”

That conclusion is similar to the impact of Seattle’s democracy voucher program, passed by voter initiative in 2015 and first used in the 2017 city council election. Our empirical analysis of the Seattle program shows an additional benefit: decreased candidate dependence on non-resident donors. As we showed in our report The Impact of Seattle’s Democracy Voucher Program on Candidates’ Ability to Rely on Constituents for Fundraising, before the voucher program (and after it, for candidates who did not participate in the program) Seattle candidates were dependent on out-of-town donors for about 30% of their funds. With the voucher program, candidates received only 2-12% of their funds from non-resident donors. (Unfortunately, Seattle’s voucher program has been challenged by opponents of campaign finance reform. Free Speech For People, along with Demos and local partners, is helping to defend the program in court.) In other words, boosting the influence of small donors while limiting the influence of big money can help improve both political equality and democratic self-government.

To read the Campaign Finance Institute’s study in full, click here.

 

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