The Rise of the Political Donor Class

As congressional elections become more and more expensive, a handful of wealthy ZIP codes are increasingly picking up the tab.
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As of this writing, the 2008 congressional candidates have already raised close to $1 billion for their campaigns (about $700 million in the House and $300 million in the Senate). By November's election, that total could top $2 billion.

It's a lot of money, and given the geographical distribution of wealth in America, an oddity emerges: many candidates who represent places in the United States without much disposable income raise the millions necessary to run for office these days.

Increasingly, they’re not bothering to ask the folks whom they are actually paid to represent for campaign cash. Instead, they are flocking to a handful of super-wealthy ZIP codes in places like Hollywood; the Upper East Side of Manhattan; Greenwich, Conn.; and suburban Washington, D.C. - the "political ATM's" of the campaign trial.

While one can find occasional media coverage of these kinds of high-dollar fundraisers, a recent study by three political scientists is the first to document the extent to which congressional candidates of both parties now depend on out-of-district donors to help them finance their campaigns.

According to an analysis by University of Maryland political science professors James G. Gimpel and Frances E. Lee and graduate student Shanna Pearson-Merkowitz, as of 2004, more than 2 out of 3 U.S. House campaign contributions (70.2 percent) came from somewhere outside the district. That’s a steady increase from 54.5 percent in 1996 and 63 percent in 2000.

Moreover, as of 2004, only 1 in 5 congressional districts provided the majority of contributions for the candidates seeking to represent that district. And in 18 percent of congressional districts, more than 90 percent of money now comes from out of district.

The professors write in their analysis that the new donor class is “disproportionately wealthy, urban, highly educated, and employed in elite occupations.”

“I think people in favor of an elitist interpretation of American political power would be very pleased with these results,” Gimpel said. “There is a concentration of wealth, elites are close together and that is across parties. They share a lot of the same values, not just culturally but even politically, and maybe one reason you don’t have any socialism in the U.S. is because there is a consensus among the donor class that is classically liberal.”

Gimpel and Lee are currently working on a paper exploring in more detail the political beliefs of this donor class.

Craig Holman, legislative representative for Public Citizen’s Congress Watch, also notes that the donor class is a very small percentage of U.S. citizens. In 2004, for example, he says that less than 0.6 percent of voting-age Americans contributed more than $200 to a campaign. And 86 percent of those $200 or more campaign contributions came from households earning $100,000 per year or more.

The donor class is also extremely white. “Neighborhoods of African Americans and Latinos are particularly underrepresented when it comes to making campaign contributions,” Holman said. He points to the difference between ZIP code 10021 — Manhattan’s Upper East Side — which provided $4.2 million in contributions in 2004, and ZIP code 10035 — just a few miles north in Harlem — which provided just $3,750 in campaign contributions. Put another way, that’s a per-citizen contribution of $41.15 per Upper East Side resident versus a per-citizen contribution of 11 cents in Harlem.

Holman, like many in the campaign finance reform community, supports public financing of elections.

These findings come as spending on campaigns has exploded. In 1996, for example, the average U.S. House campaign cost $673,739. But in 2004, the average winning U.S. House campaign was $1,034,224, and by 2006 it was up to $1,253,031. At the same time, the percent of money coming from out of district has increased from 54 percent in 1996 to 70 percent in 2004.

That’s probably no coincidence. As costs continue to skyrocket, the importance of that small donor class keeps growing.

Gimpel notes that as the party committees and individual candidates build up and share their donor lists, they know that there are certain ZIP codes they can count on for contributions over and over again. In these ZIP codes, fundraisers are also increasingly social events that the politically conscious of the community feel like they can’t afford to miss. Often, they are held at the home of some celebrity, which is an event in itself.

“We think there is a lot of sociology involved,” Gimpel said. “These folks are status-seeking, and they want to be part of the donor base, to go to these events to see and be seen. I’ve been to some of these fundraisers, and what you observe is people coming together who know each other, and it is a major social event.”

Gimpel, Lee and Pearson-Merkowitz also found that the donor class is, not surprisingly, much more interested in funding competitive elections. They conclude from this that “inter-district funding flows are guided by partisan networks” — in other words, donors are contributing mostly because they want to see a particular party in power. Ideologically extreme candidates also seem to do better with out-of-district donors, suggesting that, as the scholars note, “nonresident contributors donate for expressive purposes.”

But while the coasts and a few major metropolitan areas in between are awash in campaign fundraising events, there are large swaths of land in the middle of the country that are generating virtually no political money.

“We were quite astonished to see that there are major sections of the country that give almost nothing,” Gimpel said. “There are a great many congressional districts where there just isn’t much wealth.”

So far, however, there has yet to be much of a backlash in what coastal elites tend to refer to as “flyover country.” While the professors do write that Alaska, Vermont and Oregon have all made attempts to restrict out-of-district funding, the issue has yet to gain wide attention.

As Gimpel noted, “I’m not quite sure it’s sunk in how extensive these flows are and where they come from.”

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