A year before the midterms, quarterly fundraising reports are already reshuffling expectations and causing some candidates to drop out. And candidates are spending almost as much raising money as they collect. That’s because in congressional primaries and general elections, the top fundraiser still wins 92 percent of the time. Danielle Thomsen finds that candidates are raising money earlier and in larger amounts than ever. And everything from who runs for office to who rules in Congress is now governed by money, even though most of the value is in signaling rather than actually using it to communicate with voters.
Guest: Danielle Thomsen, UC Irvine
Studies: The Money Signal
Transcript
Matt Grossmann: How the money chase governs our elections, this week on The Science of Politics. For the Niskanen Center, I’m Matt Grossmann.
A year before the midterms, quarterly fundraising reports are already reshuffling expectations and causing some candidates to drop out, and candidates are spending almost as much raising money as they collect to signal their viability. That’s because in Congressional primaries and General Elections, the top fundraiser still wins 92% of the time. How did we get here?
This week I talked to Danielle Thomsen of UC Irvine, about her new Chicago book, The Money Signal. She finds that candidates are raising money earlier and in larger amounts than ever. And everything from candidate entrance to working your way up the leadership ladder in Congress are now governed by money, even though most of the value is in signaling rather than actually communicating with voters. You won’t be too inspired by the state of our politics in today’s episode, but I think you’ll enjoy our conversation. Danielle was on my second ever episode and I’m happy to have her back for episode 210. So tell us about the main findings and takeaways from the new book, The Money Signal.
Danielle Thomsen: Yes. The main argument is that money is a widely used indicator of viability and strength in American politics today. And importantly, money matters because a bunch of key political actors, so candidates, donors, journalists, and party leaders coordinate around fundraising as a focal point. So the chapter had drawn a lot of different sources of data and different data sets to look at how these actors use money as a focal point.
So I did a survey of house candidates in 2022 and almost all of them said that money is very or extremely important. I’ve looked at dropout decisions and it shows that candidates who have struggled to raise money are more likely to exit the race before the primary election. I looked at newspaper coverage of races in 500 open seat races, and journalists are increasingly likely to cover money and they do it earlier and earlier in the cycle. And finally, rewards associated with fundraising carry over after the election and party leaders are giving office related benefits to members, to lawmakers, who contribute more to the party team.
So I do want to situate the contribution in the context of political science as well. So there’s a lot of work on money and politics and for the most part it’s been treated as an independent variable. So what is the effect of money on either the voting behavior of lawmakers, so what’s the effect of campaign contributions on lawmaker votes, and what is the effect of donations or spending on who wins on election day?
And the goal here is to think about money a little bit differently, to take a broader net to understand why lawmakers and candidates care so much about raising money. And I think once we start to turn to fundraising as a focal point and think about the value of money as a signal in American politics, it helps us understand why political candidates, why party leaders, why a bunch of actors and observers care so much about the fundraising metric.
Matt Grossmann: So you start with this striking statistic that 92% of the time, the candidate that raises the most money wins in the primary election, and then 92% of the time the candidate that raises the most money wins in the general election. So why can’t we interpret that through just the simple story that elections are now bought and it’s the one who raises the most wins?
Danielle Thomsen: So scholars have long been skeptical that money buys elections because donors are thought to bet on the candidates who are most likely to win. So the causal arrow is reversed. Political scientists spend a lot of time trying to untangle this, mostly in the 1980s and 1990s, and try to identify and pin down the causal effect of money, mostly in general elections. There was a big debate over whether and how much both incumbents and challengers benefit in the general election.
But you’re right that there is a clear relationship between fundraising and election outcomes. And in a lot of ways there needs to be in order for fundraising to be important at all. But I think the goal of the book is to showcase the many other ways in which money matters beyond election day. And I think one interesting feature about these graphs in particular with respect to changes over time is that top fundraisers are not more likely to win today than they were in the past, despite the fact that they’re raising a lot more money to be the top fundraiser.
Matt Grossmann: So you also find that candidates are raising money earlier and in larger amounts, and you even quote some saying that it doesn’t necessarily matter how much is actually raised or if we spend it all on fundraising itself. So, why would they spend $99 to raise a hundred dollars?
Danielle Thomsen: Yeah, fundraising has changed in a lot of ways. In the book I look at a lot of different data sources, like I said. I have created a data set that includes all receipts, all reports filed by candidates across the election cycle. So with this data set, we can see when candidates start fundraising, how much they’re raising in their first report, things like that. And it’s clear that two big changes that have happened is that candidates are raising money earlier and earlier in the cycle today. They used to start raising money between the first and second quarters of the year of the election, now they’re raising money between the third and fourth quarters of the year before the election on average.
On top of that, the bar for early fundraising has changed as well and become much higher. So the top fundraisers are raising much more money than they used to, even in adjusted dollars. So top fundraisers today are posting two, $300,000 averages in their first quarter compared to 50, a hundred thousand in the 1980s and 1990s. So it begs the question about why these changes occurred, like you said. And I think we tend to emphasize the material benefits of fundraising. So things like they can buy staff, they can purchase ads, have access to campaign infrastructure like office space, but we think less about the money chase as an activity in and of itself that comes with these less tangible benefits as money, as a signal of strength to actual and potential competitors. Money as numbers that generate good press from journalists. These numbers also attract future donations from donors and provide policy benefits to lawmakers in office. So when it comes to fundraising success largely begets success.
Campaign receipts are viewed as a way to convey strength and support, and the first report in particular is critical because it serves as a first impression of a candidacy and creates expectations about what comes next. There’s also two changes that have occurred in the broader political environment that I also think have increased the emphasis on early money. So first is the decline in competitive districts. So more and more lawmakers are selected from parties that are heavily slanted toward one of the two parties. As a result, the primary stage is far more consequential in the selection of lawmakers than it used to be.
A second feature of the electoral environment that’s changed is the availability and accessibility of fundraising data. So fundraising data has been publicly available since the 1970s and even more widely since the 1980s. But numbers are accessible in a way they weren’t before the rise of the internet. So I interviewed a staffer at the FEC who talked about how journalists and some academics used to send a fax, a lot of the communication was by fax or they would come into the office and request to look at paper reports. That is not the case today. Detailed fundraising numbers are accessible with just a click of a button online and in part as a result, I think it makes these data far more convenient and attractive to use.
Matt Grossmann: But if this is all signaling and we’re not actually relying on the money to actually spend to influence voters, is there a chance that it all breaks down? That is that we get a few cases where some late breaking candidates generate social media attention, get some national fundraising, and the media, endorsers and other candidates and candidates themselves stop taking it as this-
… candidates themselves stop taking it as this key early signal.
Danielle Thomsen: So it’s not only a signaling game, I want to also include that caveat, but it is partly a signaling game and one that I think that part has not gotten very much attention. Money is also not entirely determinative of success. There are a small minority of candidates who do win without raising as much money. And there’s other things like redistricting, we’re seeing now that can also upend the dynamics of races and change the timelines of the normal timelines that we see. And sure, it could break down, or in a handful of cases we do see exceptions to the rule. But in general, I think it’s important to remember that there’s a lot of uncertainty in the pre-primary period. And there’s also not a whole lot of information in this environment as well. So voters and party leaders and donors and all these actors that I’m talking about, journalists, candidates, they have some information, things like biographical information, occupation, prior office experience, other traits like race and gender. But fundraising continues to be seen as a useful piece of information in a context where there’s not a whole lot of information.
And from interviews with candidates, if anything, it seems like they worry more about getting into late in large part because others have already shored up their support from donors. So there are always exceptions to the rule in congressional elections. You can find them every single cycle. And a candidate that I interviewed, he said, “A lot of candidates want to talk about how they’re going to build grassroots support and not rely on very much money in order to campaign and run for office.” He said, “But the fact of the matter is there aren’t that many candidates who can pull off an AOC style upset and raising money is the surest way to get your name recognition out there and that’s how you win primaries.” So there are exceptions to the rule, but there are also patterns. And the book is definitely, leans more so into these patterns.
Matt Grossmann: Are the parties benefiting from this system? It seems like selecting for fundraising ability might not select for the best policymakers, and even in elections it might not select for the best general election candidates. So is this affecting the party’s abilities to compete in more places or diversify their candidates in ways that might appeal to more voters?
Danielle Thomsen: So I think are very few benefits from the current system that we have. Money is an easy piece of information to find and that makes it a convenient and accessible measure. It is also the case that being a good fundraiser probably does capture some things that we do care about and that we think are normatively good. So things like ties to a community, things like grit or charisma or the depth of a candidate’s networks. But there are a lot of downsides that come with the use of money as a metric. And I’m not quite sure that growing fundraising demands are doing much to help parties win general elections. And to the contrary, I actually think it probably keeps good would-be candidates out of the running, either through not gaining traction or not entering in the first place.
If you want to think about exceptions to the rule, AOC is viewed as a rising star or a risen star in the Democratic Party and she struggled to raise money her first bid. And most people think that she has an enormous amount of talent. And this upset runs counter to this general rule, but we want good candidates, even if they’re unable to mount, to post these eye-popping fundraising numbers. There is a lot of talk right now about getting high quality candidates authentic, candidates who are authentic and they talk about issues that people care about. And I think this money-driven ecosystem that we have is contributing to why candidates are maybe not as good at talking to normal people because they’re refining campaign pitches with donors on the receiving end rather than voters. And I think this does a disservice to both parties, but this is what candidates have to do if they’re going to be seen as competitive both in the primary and general election. And if you raise a lot less or a lot more than your competitive, political observers will notice.
Matt Grossmann: You also cover the effects of this system on some internal dynamics in the parties in Congress. So talk about those dynamics a little bit and what comes along with helping the party in fundraising, how might that affect the positioning of the National Party, and who is viewed as leaders within the party.
Danielle Thomsen: For a long time, members of Congress have suggested in interviews and in white papers and reports that lawmakers who raise more money are given better committee assignments, but there’s not a lot of evidence, systematic evidence that the scholars have pointed to. And in this chapter I show that most of the benefits of giving money to the party team, so giving money to the party’s congressional campaign arms are the benefits are where party leaders have the most control. So things like committee assignments, things like transfers. I show that indeed, much like members have said that those who give more money to the party team are given better committee assignments in their first term and they are transferring to more coveted committee positions.
They also benefit in other policy ways as well, and in particular for how far their bills advance in the legislative process. So whether a bill gets action and committee and beyond, whether a bill gets voted on the floor and ultimately whether their bill becomes law. You’ll notice that at least anecdotally that members of Congress who raise a lot for one office are almost automatically seen as front-runners if they should enter a race for higher office as well. But interestingly, I think most of the benefits that come within the chamber are places where party leaders have more control.
Matt Grossmann: So you hinted at some of the broader implications that this focus on fundraising might have for the political system. One of them is just, or one of the dynamics is that we have a larger political industry now and it’s not as concentrated in a few months around the election because these elections are all the time. Also, legislative campaigns look more like electoral campaigns and we have an integration of donors as major figures in our politics and in the political parties, different kind of staff networks, all kinds of things that are made possible by all this money that’s flowing into politics. So what do you see as the broader implications of that?
Danielle Thomsen: So I think we need to learn a lot more about the grift associated with these jaw-dropping numbers. I do not do that as much in the book, but Adam Bonica has some really great recent posts showing that more money is being spent towards fundraising than advertising that’s likely to surpass advertising in 2026. And I think the fact that raising more money is not translating into money spent informing voters calls into question the merit of this money-driven ecosystem of elections. There’s a lot of ways that I think this should be studied ranging from informing that this could be changed or studied, but informing voters about where their money is going as well as looking at how much political consultants are benefiting from this whole industry, because it is certainly the case that I think most of the time most donors have no idea where their money is going.
Matt Grossmann: One place we might have less concern after reading your book is about vote buying in Congress. It seems like if the impact of money is really pretty early on in these primary campaigns where the candidates are in most agreement and a lot of money, it goes to failed candidates too. It seems like maybe these are not the maximizing strategies for influencing policymaking in Congress. Do you share that interpretation?
Danielle Thomsen: Yes, I do. I think that’s right. So most prior work has cast doubt on this idea that money buys votes in Congress and pointed to other things like-
That money buys votes in Congress, and pointed to other things like the lawmakers partisanship and the partisan lean of their district. So I haven’t really been as concerned about money buying lawmaker votes, and I’m still not. Currently, most early fundraising is driven by individual large-dollar donors in Canada’s personal and professional networks. I wouldn’t say that they’re buying votes either, so I’m not particularly concerned from that angle. It is concerning if PACs though start playing a larger role in primaries. I think people think that PACs currently play a larger role than they do. So now they play a very small role in the pre-primary period. They’re making up like 5% of pre-primary money that candidates have.
Even for non-incumbent general election winners, they contribute like 7% of their early dollars. So the vast majority of early money is coming from individual donors and in particular, individual large-dollar donors. But if PACs started to change that and play a larger role in primaries, they could, because early money is increasingly the gateway to electing officeholders. But under the current system, I don’t think it’s as concerning with respect to electing, to buying votes in office.
Matt Grossmann: So your prior book focused on the candidate pipeline, and in particular, moderates being less likely to run. What was the role of money in that story, and is there any kind of change in the trajectory based on what you’ve been setting more recently?
Danielle Thomsen: Yeah, so there wasn’t really a role for money in that book, or at least I didn’t lean into it as much then as I maybe could have. I looked at the benefits of the office and suggested that moderates aren’t able to pass the kinds of legislation and forge the kinds of relationships in offices that they would want to, that the benefits of serving are too low for moderates to run. I will say that in a lot of my interviews with lawmakers and with candidates, there is absolutely a perception that it’s harder for moderates to raise money, and perceptions matter a lot in politics, even though they’re often difficult to study.
So this perception that moderates have a harder time raising money is also backed up by work showing that donors are more ideologically extreme than non-donors. And this is especially the case with small dollar donors. So it’s probably apparent in the book that I think there’s too much money in politics and that it has a negative impact on campaigning, on policymaking and representation more generally. But in the current context, I do think there needs to be a concerted effort to fund moderate candidates if groups or individuals want to curb polarization. But there is absolutely a perception and a reason to think this as well, that moderates do have a harder time raising money.
Matt Grossmann: So you’re now doing work on self-funded candidates. What do we know there? Does money mean less if it’s not this reliable signal of support, but it just comes from the individual?
Danielle Thomsen: Yeah, so self-funding is surprisingly common. So our current understanding of self-funding is mostly in the context of very rich candidates who fully self-fund their campaigns. And they do lose more often than not, but there’s a lot of candidates who give some money, especially early money to their campaigns. So 30% of non-incumbents and 40% of non-incumbent general election winners. So like the most successful non-incumbents, they donate at least $10,000 to their campaigns before the primary. So they don’t exclusively or even mostly rely on self-funding to build their war chests, but it is nonetheless a very common campaign activity. And I was just reading The Down Ballot’s email newsletter this morning, and they were covering a candidate I believe in New Hampshire who said that he’s not going to ask his networks to give money without he himself giving some. And that’s what happens a lot. So maybe not as much as this candidate will give, but usually candidates who self-fund, they give a combination.
It’s a combination of self-funding and contributions from individual donors. But of course, those with deep pockets themselves generally have access to richer networks. It is possible that different sources of money do convey different kinds of information. There’s a new paper by Sarah Anderson and a few co-authors from a survey experiment suggesting that self-funding is less effective than money from donors at increasing primary voter perceptions of electability. But in real world elections, it’s also the case that voters have a hard time knowing where funds come from. So I asked candidates who self-funded a large amount, one candidate who self-funded over $200,000 to her campaign, and another candidate who raised a lot of money from out of state donors to ask them whether they thought that it mattered where their money came from. And they said that most people didn’t really know because it’s too in the weeds for voters.
It’s the case that their competitors dive so deep into reports. They know everything about how much their competitors raise, who they raise it from, the occupations of them, whether they’re family of their opponent, whether they’re colleagues. They know a lot about donors because the FEC data are publicly available. But in terms of voters, it is quite difficult in real world elections and quite demanding of a bar to think that that voters do know the ins and outs of how they raise money. But the top line, the top line is still the go-to for journalists. It’s still the go-to for party leaders who are monitoring 435 house races across the country, but the competitors, they know a lot more.
Matt Grossmann: So one consequence of this increased fundraising and earlier fundraising on the ground is that lots of our high political involvement listeners will receive a deluge of regular text messages and emails asking for money. And we do know that it sometimes leads people to sour on their own party or candidates. What do you think about the kind of effects on the people who are asked for this money? And also the dynamic that you mentioned, that a lot of times when people see ads from candidates, it’s not to convince them to vote for someone, but just ask for money.
Danielle Thomsen: The consequences you can imagine run pretty deep so that it erodes trust in parties and candidates. I think a lot of these appeals, I sign up for some of these appeals to see, and they just seem quite disingenuous. Most appeals are pretty bad. The other elementary, the party did this bad thing and we need to fight back, and the way that we fight back is you giving me $5, and by the end of tonight, give me $2. And it’s just not really clear in any of these appeals where the money goes or how it’s spent or why it’s valuable, other than it’s the way that you can fight back.
This does not even include the pretty ethically questionable tactics of automatically enrolling donors into monthly donations, particularly those who are less familiar with the internet, like older Americans. But fundraising has become such a dominant mode of campaigning that it seems like candidates spend more time asking donors for money than asking voters for votes. And in a democracy where elections play such a pivotal role in accountability, and I mean, who governs the deluge of fundraising appeals, I think can really erode public trust in the value of campaigning, and that is unquestionably undesirable.
Matt Grossmann: So you said it’s having a lot of negative effects, but candidates still need the money. So we know you’re a masochist and you signed up for all of the lists, but what do you actually advise friends and colleagues about their personal involvement? Is it still a worthwhile activity to donate to political campaigns? Does it make you say you should donate early to primary candidates who you like, or turn off all of your alerts?
Danielle Thomsen: Yeah, this is really, the problem is we’re in the system. And so in order for candidates to generate any momentum, they have to operate within the system as well. I tell students and friends, if you want to get hundreds of calls and emails and texts, then by all means donate, I wish it wasn’t this way, but fundraising is public and a lot of candidates that I interviewed talked about how the data now, the fundraising data are so good that everyone has access to the same list. When everyone has access to the same list, then anybody who donates once will thus get contacted by everybody who has those same lists. I do think, like you mentioned, that the biggest potential impact for dollars is at the beginning of a race rather than the end, and sometimes when we study congressional elections across four decades… So, this book looks at fundraising from 1980 to 2022.
And you can get really high level, and you can look at these patterns, and you can say candidates are raising X, Y, and Z, but it is important to remember that all of these asks for money are asked from, especially at the beginning, asked to people that they know, usually, at the beginning. And I think it does mean a lot to candidates at the beginning, if their friends and acquaintances donate, especially when they’re trying to cobble together initial support. I guess another potential benefit is that it could allow candidates to talk about things like their small donor support or something like that, but in general, I just think there is far too much money being spent in politics, and I advise my students and friends to spend their hard-earned cash probably on something else.
Matt Grossmann: So, there have been long-term concerns about money and politics, but they do seem to be sliding on the scale of what we’re concerned about in democracy at the moment, when there’s concerns about moves toward authoritarian politics, and there might be some kind of second guessing of the previous set of reform inclinations that we had to try to get money out of politics, particularly in the Republican Party, where the concern was that business had too much influence and now maybe we’re wishing that that influence would return. How much should we change our concern about money and politics given the current state of democratic backsliding in the US?
Danielle Thomsen: Yeah, this is a great question, and really timely, and one that I’ve thought a lot about in the first months of the publication of the book. So, we’ve seen very troubling events in American politics under the Trump administration, we’ve seen attacks on political opponents, on universities, on science, we’ve seen masked ICE agents in the streets and unlawful deportations, the deployment of the National Guard to cities, and unwillingness of Republicans in Congress, in particular, to assume authority or push back on really much at all publicly. It is important to remember that elites play a large role in the maintenance and protection of democracy, and Republican elites I think are falling short in asserting congressional power and calling out unconstitutional actions by the administration. So, what does this have to do with money? The retention and turnover of elites is deeply tied to fundraising, so while money is not the only problem, it is a large one, and the status quo that we have now works to keep those who prop up authoritarian policies in office.
So, there was virtually no electoral punishment for Republicans who voted not to certify the 2020 election, perhaps in part because there were no alternatives on the ballot to make the case. So, Trump, of course, has a strong and solid base of support, but public opinion is also responsive to what elites say as political scientists have long known, and many of these recent trends are not popular among voters, not even popular among Republican voters, some of them, but we have a shortage of Republican elites who are making a case for democracy. And there are not a lot of, I think, perceived avenues to change elected office holders in large part because of the fundraising barrier.
Matt Grossmann: Anything we didn’t get to that you wanted to include, anything you want to tout about what you’re working on now, or any take home messages you want to leave us with?
Danielle Thomsen: Yeah. So, I’ve really talked mostly about how fundraising has been studied, and in my book it’s also understood as an independent variable. So, what is the effect of money on candidate perceptions and behavior, on the kinds of party rewards given by party leaders, and on subsequent behavior of donors? But in my current work and next stage of this, I’m looking at fundraising as a dependent variable. So, what are the factors that shape who raises early money, and who fares better in the early money chase? I have one paper with Ryan Mundy, looking at large dollar donors, the relationship between the wealth of candidates, and how much early money they’re raising, and how much they’re raising from large dollar donors in particular. Unsurprisingly, candidates who… So, we use financial disclosures from the house clerk’s office to show that wealthy non-incumbents are raising more early money, and they’re raising more early money from rich donors. Candidates are also more likely to drop out if they face a rich competitor.
And second quarter fundraising is also higher when candidates raise more large dollar early contributions. So, there’s a lot of ways in which we don’t understand, there’s a lot of parts of fundraising that we don’t understand. I think we have a better handle on money as an independent variable. What is the effect of money on a variety of things that we care about? We don’t really know as much about why some candidates, and lawmakers, are better fundraisers than others. So, that’s one paper, and then another paper I forgot to plug, in the self-funding conversation is a paper I’m working on with Savannah Plaskon, on the race and gender of who contributes to their campaigns.
So, like I said, self-funding is far more common than I think people know, and unsurprisingly, we see self-funding patterns that reflect long-standing disparities in wealth in the United States. So, white men and Asian men self-fund more on average, they’re also raising more in individual and early individual contributions, and Black men, Black women, and Latinas are self-funding less as well. But all of this future work is trying to understand who fares best in their early money chase after I hopefully laid out a case for why money matters in all of these different ways in the book.
Matt Grossmann: There’s a lot more to learn. The Science of Politics is available bi-weekly from The Niskanen Center, and I’m your host, Matt Grossmann. If you like this discussion, here are the episodes I recommend you check out next, How Campaign Money Changes Elections Before and After Citizens United, Why Republican Women Don’t Run for Office and Why it Matters for the Gender Gap in Voting, Why Presidents Still Send Their Time Raising Money, How Donor Opinion Distorts American Democracy, and Congressional Primaries: How the Parties Fight Insurgence. Thanks to Danielle Thompson for joining me. Please check out The Money Signal and then listen in next time.