A Closer Look At Political Giving

‘Tis the season. No, not Christmas, but rather, the election season. We are 56 days out from the US federal election on November 5th, and come January, a new or returning President will occupy the Oval Office. And before you click away, I want to be clear that this newsletter is not about who you should vote for. (Although I encourage you to show up to vote!) This is a financial newsletter, and therefore this month, I want to put a financial lens on elections. More specifically, I want to take a closer look at political giving.?

At SheMoney, GIVE is one of our 7 Money Moves. While charitable giving is most commonly associated with this particular move, GIVE actually encompasses all forms of financial gifts, including political giving. Political giving is not talked about nearly as much as charitable giving, but there is an argument to be made that it really should be. If, like me, you believe that who holds elected office truly matters, as well as the fact that money plays a crucial role in determining election outcomes, then it’s essential to not only recognize the impact of money on elections, but also develop a thoughtful strategy for your political giving. So let’s get started.

First up, let’s begin with an overview of political giving. Most countries have rules and laws when it comes to this practice, which is a very good thing. However, for the purposes of this article, I’m going to be focusing on the rules and realities of political giving in the United States, which has the highest per capita political spending in the world. Political giving is often known as political contributions, which refers to the giving of any gift, amount of money, property, or any other items of value for a political purpose, often to a political campaign or party. Political contributions can be given at any time, but people most often associate these contributions with elections, otherwise known as campaign finance.??

Campaign finance is, perhaps unsurprisingly, a major industry, mostly because it costs so much money to run for office in the US. Big or small, all elections require some level of funding, and the bigger the role, the bigger the amount of money that is needed. Take a moment to really sit with that. If running in an election costs money, then the greater access a candidate has to funders, and especially to big funders, the more likely they may be to win. This means what you think it means, in that candidates who don’t have big personal networks and/or access to funders are at a clear disadvantage. Unfortunately, like so many things in life, more money often equates to more success in politics.?

Back in 2016, I wrote an article titled “If You Know How to Ask for Money, You’ll Have a Job for Life”, and while at the time I was talking about the nonprofit sector, this is also true when it comes to politics. Fundraising is a skill, and to be successful, politicians and their teams need to master it. Ask any candidate how much time they spend on fundraising, and you’ll likely be shocked at the answer. This report, titled Life In Congress, estimates that it may take up to 17% of the time, and that number is most certainly on the low side for those running for office for the first time and/or for highly competitive races. Being able to ask people for money is a necessary part of the job, which is often the reason why so many people choose not to do it.?

All candidates and politicians face a wide range of expenditures, including advertising, outreach, staffing, and legal compliance. Running a campaign is, in many ways, like running a business, and I have come up with the term “politicalpreneurs” to describe how running for office is like running YOU as a business. Thankfully, there are companies dedicated to making it easier and more cost efficient to run for office, including Proximity, a Utah-based company with an amazing founder, Becki Wright. Per Becki: “Money should never be a barrier to running for office, but for so many it is. We need candidates who are more representative of you and me—not just those who are part of existing power brokers. The reality is it takes some money to pay for yard signs, events, mailers, and more. And there are so many campaign tasks and operations to complete. Instead of expecting that candidates make things happen out of thin air, technology that simplifies the operational process gives everyday candidates the tools they need to be more effective and efficient—and ultimately, spend less money to win!”??

However, even with these new resources for candidates, running for office in the US is a challenging and expensive proposition. And no campaign is more costly than the race for the Oval Office. For example, in 2020, the presidential race cost was $5.7 billion. Yes. That’s right. $5.7 billion was spent trying to convince people to vote for Joe Biden or Donald Trump. According to reporting from the BBC, $200 million of that was spent on digital ads, while another $70 million was used to pay the salaries of the campaigns’ various staff members. But there’s also television ads, printed materials, merchandise (those MAGA hats cost $8 million alone), pollsters, office space, and countless other expenditures that drove the final price tag of the 2020 Presidential election to over twice what was spent in 2016. And that’s on top of the $8.7 billion that was spent on congressional races, for a total of $14.4 billion spent on US federal elections in 2020. It’s important to note that this does not account for all of the state and county level races, all of which cost billions more. So far, 2024 looks poised to break the records set in 2020, with estimates saying that the 2024 election will cost an upwards of 30% more than 2020.

By comparison, total charitable giving in the United states in 2023 was just over $557 billion, given to approximately 1.5 million nonprofit organizations. Given these numbers, political giving represents a relatively small slice of the overall US giving pie. Additionally, the billions that go to political causes often go to a very concentrated number of campaigns. Running for a senatorial or congressional seat costs millions, and less than 10% of non-profits have budgets that large. Furthermore, there is evidence that political giving, especially from smaller donors, can sometimes come at the expense of charitable giving, and this may be especially true in 2024 because of issues like reproductive rights, environmental protection, and immigration policy being highly politicized. These are all areas that attract a lot of charitable dollars, and it is reasonable to assume that at least some of those funds will be redirected towards candidates that are fighting to uphold positive change in these areas. A high-level policy change can easily undermine and even undo the ongoing work of non-profit organizations, and yet the relationship between charitable giving and political giving is not that well studied, or, frankly, even talked about. But I believe it should be.?

Financial decisions more often than not involve trade-off thinking, which is the idea that when making a choice you must give up something in order to gain something else. This is why we need more data around the link between charitable and political giving. $557 billion might seem like a lot of money to give to charity in a year, but it is often the case that the largest organizations get the majority of that money. In fact, it is estimated that one million of the 1.5 million nonprofit organizations in the US have annual revenues of less than $50,000, meaning any loss or diversion of their small donors to political giving could potentially be devastating for these organizations.

It’s important to note that unlike charitable giving, political contributions are not tax deductible and are subjected to strict limits. For example, an individual donor is allowed to donate up to $3,300/election, with primary, general, runoff, and?special elections all considered separate elections. Cash contributions are limited to just $100, while anonymous contributions are limited to $50. A full list of rules and limits can be found on the Federal Election Commission website, but it’s important to note that these limits only apply to contributions made directly to candidates. There’s a (relatively new) way around these limits, and it comes in the form of SuperPACs.

SuperPACs are the result of the 2010 Supreme Court decisions Citizens United vs. Federal Election Commission and SpeechNow.org vs. Federal Election Commission. In short, these decisions allowed for the formation of independent expenditure-only committees that in theory do not have any involvement from the candidate they are supporting in how they spend their money. Because of this “independence”, they are exempt from both fundraising and spending limits, allowing individuals, corporations, and associations to give as much as they want to benefit the candidate of their choice. Since then, the amount of money flowing into elections has sharply increased, with SuperPACs alone spending more than $3 billion on federal elections since their creation. Even more alarming is the fact that 66% of all donations to SuperPACs total a million dollars or more, meaning that with each passing election cycle, more and more of the country’s total political spending is being done by the nation’s wealthiest individuals. Just a few days ago, the New York Times published a piece naming both Trump and Harris’ top donors, and some of them gave in excess of $100 million each. ( More on PACS and SuperPACS here)

Let’s frame it in a different way. According to the independent and nonpartisan watchdog OpenSecrets, only 1.44% of all Americans (or 1.87% of the adult population) gave more than $200 in political contributions in 2020. However, that 1.44% gave over 76% of all political contributions. Think about those numbers for a moment. And if you want more numbers, OpenSecrets is a veritable treasure trove of information related to election spending, with filters for election cycles, election races, and demographics. However, what becomes abundantly clear, no matter what filter you use, is that more and more, especially since the creation of SuperPACs, campaign finance is increasingly concentrated in the hands of the ultra wealthy.?

Given all of the above, it is easy to see why people might think that unless they are a big ticket donor, their political giving will not make a difference. But here is the problem. If you think your smaller gifts don’t matter and so you don’t give, the power of the ultra wealthy donors and corporations becomes even more entrenched. There are over 250 million adults in the US, and the simple math is that if everyone gave small donations, it would matter more in terms of overall giving than the mega donors. Furthermore, there are so many races, especially at a more local level, that almost entirely depend on smaller, individual donors. Giving locally can have an outsized impact, because those campaigns are run on smaller budgets. Additionally, local representatives most directly determine how your tax dollars are spent, which will have a direct impact on your daily life.?

Here’s something else to consider. In 2023, it is estimated that 72% of the world’s entire adult population gave their time, money, and/or helped someone they didn’t know. There is power in numbers like that, and it is not the power of the few. In the US, charitable giving is over half a trillion dollars annually, and a lot of this has to do with the fact that giving to charity is normalized and planned for by most people. Sure, the tax deduction helps, but that is not most people’s main motivation. The overwhelming majority of people decide to give due to personal values, belief in a cause, and/or religious reasons, and overall, Americans in general are very charitably inclined. Therefore, a reframe of political giving to be more aligned with charitable giving may be key to engaging more people in the process.?

So after digesting all of this, what are you now thinking with regards to your political giving? Do you have guidelines for your giving? Do you budget for it? Do you engage with it at all? One of the reasons why I wanted to write this article is because I personally really struggle with political giving. And it seems like I am not the only one. A recent study found that only 26% of Americans plan to donate politically in 2024, and fully 66% of all Americans have never donated to a political campaign. The top reasons given include not being able to afford to contribute, feeling that their money would be better spent elsewhere, thinking their donation wouldn’t make a difference, a lack of trust in the candidates, and a general disinterest in politics. The one I identify with the most is the feeling that my money would be better spent elsewhere. I also don’t want to perpetuate the problem of it costing more and more money to run for office. The numbers above make it very clear that there is a huge need for campaign finance reform to help level the playing field and to end this upward spiral of election related fundraising.??

That said, I do feel that so much is at stake at this very moment, and that is why I am bumping up my political spending. And if you still have reservations about your own potential political giving, I have a simple question for you. Do you think that who we elect matters? I hope your answer is HECK YES it matters! Especially when it comes to the President of the United States. Our elected officials are the foundation of our democracy, and the role of the government is to guarantee and protect the rights of its citizens. Now more than ever, we need to remember, and demand, that the people who are elected are there to represent us. They work for us. They are responsible for creating and upholding rules and policies that truly matter and affect our daily lives, not to mention the lives of generations to come. We want, and truly need, people in these roles who are serving because “they want to do something, and not be something” (shout out to one of my dearest friends and CEO, Apolitical Foundation, Lisa Witter, for that quote). We should want elected officials who are there to represent the power of the people, not to power over people.

So with all of that in mind, I invite you to consider your own political giving and how it might fit into your giving plan. Of course, I need to acknowledge that a very large percentage of Americans are struggling to make ends meet right now, and therefore having any additional dollars to give politically may feel impossible. But for those for whom it feels possible, the challenge then becomes to decide what to do at the local, state, and national elections. My suggestion is to set a budget for yourself and divide it up amongst the three. Search out candidates who are aligned with your values and speak to the issues you feel are most important, and then give what you can. And if you have the capacity to do more, then do more. For me, shifting my mindset to think about political giving in the same way that I think about charitable giving is helpful.

I would love to know how you think about your political giving and whether you think it matters. If you have strategies around it, please feel free to share. If you have resources around it, please share. And more than anything else, please vote. Voting is a level playing field. One person, one vote. I truly wish that money did not play such a huge role in our elections, but as my mother is fond of saying, “it is what it is”.? Therefore, let’s be as smart and thoughtful as we can about it.