Who Is Really Winning The Money Race?

When is $28 million worth less than $26 million? When the media tells you it is!

At this early point in the presidential race, most political scientists are looking at two measures to gauge candidate viability, and neither one is based on how the person is doing in the polls. Instead, we are interested in how much money the candidate has raised, and how many endorsements from party elites the candidate has secured. Past research has suggested that both of these are more useful indicators of candidate strength than are polls this many months before actual voting takes place. With that in mind, it is worth examining the candidates’ fundraising totals for the third quarter, which closed on September 30. Although the actual candidate fundraising reports do not need to be filed with the Federal Elections Commission until Oct. 15, some totals have leaked out already.

On the Democratic side, Hillary Clinton raised a reported $28 million during the last three months, while her Democratic rival Bernie Sanders reportedly pulled in close to $26 million. Based on fundraising reports from the last two quarters dating back to March 30, that means Clinton has raised $75 million during the current campaign cycle, compared to Sanders’ $40 million, giving her a substantial lead in the money race – and this doesn’t count the Super Pac money backing Hillary, which totaled $20 million as of July 1, and undoubtedly has increased since then. Sanders, in contrast, has repeatedly rejected Super Pac backing and there are, to my knowledge, no Super Pacs spending money on his behalf.

You might think the media would interpret the latest money totals as good news for Hillary, since it meant she increased her already substantial fundraising lead over her nearest rival. Alas, you would be wrong. In the “new math” evidently embraced by many media pundits, Clinton’s $28 million is not nearly as substantial as Sanders’ lower figure. Why is this? One reason is the “expectations game” that I have documented in several previous posts. Simply put, because Clinton’s fundraising lead over Sanders in the third quarter is smaller than the pundits believe it should be, and she raised less than in the previous quarter, while Sanders has increased his quarterly total, it must show that she has a major problem.

But there is another reason why journalists are touting Sanders’ latest fundraising figures. He has amassed over a million donations so far – more even than Barack Obama attracted at this point in his successful run for the presidency in 2008. (Never mind that he has raised less than Obama did at similar points in their campaigns – as I discuss below, it’s the number of donations, not the total size of the donation pie, that the media thinks most important.) Moreover, most of these contributions have been in small dollar amounts – the average Sanders’ contribution is about $25, according to the Sanders’ campaign. If pundits are to be believed, the relative proportion of small dollar donations a candidate attracts is a useful barometer of a campaign’s vitality.

This is not the first time we have heard this argument. When Obama ran for president in 2008 and broke all previous fundraising records, his campaign touted his ability to raise money in smaller donations than either his primary rival Hillary Clinton or his general election opponent John McCain. This was a sign, they claimed, that Obama was running a genuine grass-roots campaign, rather than relying on deep-pocketed investors who expected a return for their donation. The record amount of money he raised, combined with media reports about his reliance on small donors and, of course, his ultimate victory, cemented the myth that the percent of the small donors is a meaningful gauge of a campaign’s level of support.

In truth, it’s not entirely clear that the percent of small donors contributing to a campaign means nearly as much as the media, and candidates, would have one believe. This is partly because candidates, remembering the favorable coverage Obama received for his army of small donors, now actively encourage supporters to contribute money in small dollar amounts. Clinton, for instance, reportedly sent out emails soliciting $1 dollar online donations shortly before the Sept. 30 deadline! The problem, however, is that because the FEC does not require candidates to disclose the names of those who contribute less than $200 to a campaign, it is impossible to independently verify how many actual small dollar donors a campaign has attracted. Rather than individual donors, the candidate is only required to report the percent of total contributions that came in under the $200 threshold. Thus journalists are left to rely on the campaign to find out how many individual donors contributed toward that small donor percentage. At the same time, pundits aren’t always careful to distinguish the number of donors from donations. More than one initial report on social media stated that Sanders had eclipsed one million donors, rather than donations, during the current election cycle. In fact, the Sanders campaign says it has attracted 650,000 donors – still a substantial number, to be sure, but not quite as impressive as the initial incorrect reports suggested. Clinton, as yet, has not revealed how many individual donors she has.

A second problem with the small donor metric is that one individual can make multiple donations under $200, thus creating the perception that campaign is being fueled by small contributions when in fact it is not. In 2008, for example, an independent study of Obama’s fundraising concluded that while nearly 50 percent of his donations came in individual contributions of $200 or less, when one added up multiple donations from the same donor, only about 25% came from contributors whose total donations added up to $200 or less. That number, it turns out, was not much different than the percent of small donors that contributed to George W. Bush’s campaign in 2004, all the media talk about Obama’s small donor revolution notwithstanding.

Some pundits defend the small donor metric by arguing that it allows a candidate to go back to the same donor as needed for additional contributions up to the individual contribution limit per election cycle of $2,700. While true, the flip side of this argument is the proverbial bird-in-the-hand being worth two-in-the-bush – it is better for the candidate to have the full contribution in the campaign coffers now rather than count on additional smaller contributions that may or may not come in down the road.

A final point is worth noting about small donors – although it is common for campaigns to tout their small donors as more representative of the “average” American, studies show that the more ideologically extreme the candidate, the more likely they will draw donations from the small donor class. The reason for this, as my colleague Bert Johnson explains, is that “people who are passionate about issues are more likely to take extreme positions than those who do not care much, and the passionate are more likely to become active in politics than others.” The consequence is that small individual contributions – particularly ones too small to buy any material rewards – are more likely to come from partisan extremists. We should not be surprised, therefore, that more extremist candidates like Sanders will be more successful than relatively more moderate candidates like Clinton at raising money from individual small donors. The same logic applies to Republicans, where Ben Carson has been the most effective candidate in soliciting small donations.

Let me be clear. Sanders’ supporters should be pleased with his fundraising prowess to date, particularly since he has spent so little time courting major donors. If current trends hold, he should come close to the $75 million mark by the end of the calendar year, more than enough to fund a competitive campaign during the early contests. But if his total raised to date is surprising, his reliance on small donors should not be – we have seen this fundraising portfolio before with other presidential candidates, like Ron Paul in 2012, or Howard Dean in 2004, both of whom staked out relatively more ideologically extreme positions compared to their main rivals.

Most importantly, however, and contrary to what the pundits with their “new math” would have us believe, he’s still losing the money race to Clinton.