(Illustration by Adam McCauley)
Editor’s Note: This article covers a paper presented in June 2017 at the Stanford Center on Philanthropy and Civil Society’s fourth annual Junior Scholars Forum. The event brings together new researchers, including graduate students, postdoctoral fellows, and junior faculty, whose work covers civil society, the nonprofit sector, and philanthropy.
What happens when ultrarich donors pool their money to influence politics and policy? Two donor consortia—the Koch brothers’ network on the right side of the political spectrum and the Democracy Alliance on the left—have emerged in the United States to advance their ideologies. New research from Alexander Hertel-Fernandez, an assistant professor at Columbia University’s School of International and Public Affairs, along with Harvard University professor of government and sociology Theda Skocpol and graduate student Jason Sclar, examines the effects of such concentrated giving on the political landscape.
“At the top of the income distribution, there’s a small number of households that have tremendous power to invest in politics,” Hertel-Fernandez says. These donors band together into like-minded groups that have distinct features, including steady donations from members, a long time-horizon that exceeds election cycles, and a social network that enables members to get to know one another at exclusive events and collaborate on shared goals. Donor consortia also provide sustained funding not just for individual candidates but also for organizations such as think tanks and advocacy groups.
“Politicians come and go, but organizations have staying power over time,” Hertel-Fernandez says. While the rich have always supported political candidates and parties, this sort of centralized giving is new. The Koch Seminars (regular donor conferences hosted by Koch Industries, the multinational headed by brothers Charles and David Koch) and the Democracy Alliance were launched in 2003 and 2005, respectively. Their broad-based focus also makes the consortia more powerful than single-issue fundraising groups such as pro-choice Emily’s List or pro-free-market Club for Growth.
The researchers assembled lists of known donors who had either revealed themselves, been named in the media, or been cited in political opposition research. They found tentative evidence that donors in both groups, once they joined, shifted to support financially more extreme candidates than the national average. Preliminary analysis of the data also showed that the groups’ members gave more to politicians who spoke at the gatherings.
The two groups use their funding differently, however. The Democracy Alliance spreads members’ money across a large swath of progressive groups, while the Koch Seminars funders concentrate on a much smaller number of organizations through its nonprofit Freedom Partners arm. In 2013-2014, for instance, the Democracy Alliance poured $144.6 million into 173 groups, while Freedom Partners dispensed $148.2 million from Koch Seminars members to just 34 organizations.
“If you look at trends in campaign finance, contributions have become increasingly concentrated among a small number of donors,” says Adam Bonica, an assistant professor of political science at Stanford University. “Having a better understanding of how these individuals are coordinating tells you a lot more than it used to.”
This research is important, Bonica says, because it highlights how these wealthy donors jointly become kingmakers, by funnelling support into specific Senate primary races, for instance, rather than each choosing a candidate and competing with one another to back the winner. In addition, the social networking aspects of the consortia may mean that rich donors are prodded into giving more money than they would otherwise donate.
The emergence of these donor consortia could have implications for how democracy functions in the United States, Hertel-Fernandez says. The Koch Seminars group said they were raising about $700 million during the last election cycle, roughly the same amount as what the Republican National Committee and associated other Republican electoral groups collected, according to Hertel- Fernandez. Yet the donor lists of each consortium are mostly secret, leaving unanswered questions about where this funding originates and what agendas are behind the donations.
“It’s practically like a third party that’s privately controlled,” he says. The difference is that political parties are, on some level, democratically accountable. “At least in theory they have the incentive to cater to the preferences of their primary and general-election voters,” he says.
Because of the way the donor consortia are structured, with most of their spending going to policy shops and grassroots organizations rather than directly to political campaigns, campaign finance reform plans as currently discussed would not change their influence to a significant degree, Hertel-Fernandez says. “If you’re concerned about wealthy people having so much money to invest in politics, calling for higher taxes on capital gains and other taxes would help,” he says.
Alexander Hertel-Fernandez, Theda Skocpol, and Jason Sclar: “When Wealthy Political Contributors Join Forces: U.S. Donor Consortia on the Left and Right,” 2017.
Read more stories by Chana R. Schoenberger.