Small Donor Incentives

US: Follwing Citizen's United Ruling, 10 States Add Campaign Finance Laws

WASHINGTON — Ten states have swiftly passed new laws requiring additional disclosure of political spending, following a Supreme Court ruling that lets corporations and unions pump unlimited amounts of money into certain campaign commercials.

The push in states comes as a high-profile effort in Congress to blunt the court's January ruling has stalled in the Senate amid strong opposition by Republicans, including Senate Minority Leader Mitch McConnell. The Senate inaction has cast doubts that any new federal disclosure rule

Update: Options for Reining in Corporate Election Cash in Wake of Citizens United Supreme Court Decision

The Supreme Court’s Citizens United v. Federal Elections Commission (FEC) decision earlier this year gave corporations the same First Amendment rights as citizens with regard to advocating for or against political candidates, unleashing a flood of new corporate cash into state races and a range of new state policy initiatives that aim to protect the integrity of their elections.  In response, states are pursuing other reforms, such as requiring shareholder approval for corporations spending election cash, tighter public disclosure and attribution in ads, public financing of elections, and calling for a federal constitutional amendment to reverse the Citizens United decision.


Much has been made of the growing influence of small donors in the 2008 presidential race.  These donations have increased significantly, especially among the Democratic Party frontrunners, who received over half of their total contributions for the months of March, April, and May 2008 in contributions of less than $200 dollars.  However, such donors are responsible for only slightly more than a third of all donations in the presidential race from January 2007 to March 2008, up from just over a quarter in 2003-2004.  While this is significant, similar growth has not been seen in other races; however, there are creative policies that can help fuel an increase there as well.

Two basic types of donor incentives are currently being used in states - tax credits and refunds.  In states with tax credits, voters are allowed a credit against personal income taxes for a certain amount of campaign contributions.  States have a diversity of rules regarding which contributions qualify for the incentives, both the amount and the recipients (i.e., PACs, political parties, candidates) are regulated.

Minnesota has a unique program that allows taxpayers to receive a $50 refund for contributions made to political parties or candidates.  As a result of this law, small donations increased from 34% to 39.2% of total donations between 1990 and 1998, a small but significant improvement.  Recently, some have advocated for a system of campaign finance vouchers that would allow any citizen to spend a small amount on political contributions without having to take the money out of pocket and wait to receive a reimbursement at tax time.  

These small donor programs offer an alternative method of public financing that would go a long way to democratizing campaign finance and reducing the power of wealthy contributors.

US PIRG Education Fund - Toward a Small Donor Democracy
Minnesota Small Donor Tax Refund Law