Hidden Donors Play Significant Role in Political Campaigns

A new Caltech study reveals that so-called hidden donors in a political campaign—those contributors who donate less than $200—can make up a sizable fraction of a candidate's campaign funds.

The study, appearing in the Election Law Journal, specifically looked at the 2016 presidential campaign of Bernie Sanders. Unlike many other campaigns at the time, that of Sanders used an intermediary online fundraising service, called ActBlue, which meant that small contributions were required to be reported to the Federal Election Commission (FEC). Typically, donations from a single donor that add up to $200 or less do not need to be reported, but for intermediary fundraising services, the rules are more strict.

"That may seem like a small amount, but we have always wondered what it adds up to," says Mike Alvarez, professor of political science at Caltech and lead author of the new study. "Until recently, we haven't had the data to ask this question."

The study, in which the researchers sifted through and analyzed more than 100 million donation records, showed that the smaller contributions made up a total of 33 percent of all funds for the 2016 Sanders campaign. What is more, there were seven times more hidden donors than visible ones.

"What this is saying is that grassroots efforts to raise money from tens of thousands of people are an important part of a politician's campaign," says Alvarez.

Seo-young Silvia Kim, a Caltech graduate student who will soon become a professor at American University, led the data analysis, downloading chunks of individual contribution records from the FEC databases. At first, she began looking at many campaigns, but then later realized that the different rules for ActBlue donations resulted in smaller contributions being reported.

"Just in the 2016 election cycle, there were more than 1,133,000 files and more than 100 million records of individual contributions for all the campaigns," says Kim. "But to make sense of the data, you have to dig deep into the raw data, and not just its summaries. That's when I noticed how intermediary committees were reporting contributions differently than the usual committees."

"It's hard to scrape all this information together," says Alvarez. "The data are either not available or hard to obtain. Silvia is an incredibly talented data scientist. She linked the many data sets together, which was no easy task."

The results also showed that the hidden donors tended to contribute to the campaign relatively later than what is typical, and that they tended to be students, females, and racial/ethnic minorities.

The researchers plan to do similar studies for the 2020 elections, and with the increasing use of online fundraising platforms, they will be able to track small campaign contributions for not just Sanders but other candidates as well.

"Money is very important in politics, but all the previous studies about campaign finance were restricted to relatively large donors, leading to a skewed picture of this important political activity," says co-author Jonathan Katz, the Kay Sugahara Professor of Social Sciences and Statistics at Caltech. "Given changes in technology, these smaller donors are becoming both more numerous and important."

The Election Law Journal study is titled, "Hidden Donors: The Censoring Problem in U.S. Federal Campaign Finance Data."