Organization Trends

Caveat Donator: Small Donors Need Not Apply

Caveat Donator (complete series)
When Scams Influence ElectionsSmall Donors Need Not ApplyThe Pendulum Swings

Summary: The message is loud, aggressive, and simple: Defend the President! Others call for “Impeachment now!” or claim to “draft” a challenger to face down a hated rival, even one within the same party. But while solicitations for political contributions often bear the names of prominent politicians, political parties, or issue campaigns, they sometimes mask that they are, in fact, a sophisticated scam—raising money from small-dollar donors not to use for political advocacy or to support campaigns, but to instead funnel money back into consulting firms tied to the PAC’s officers. Now, the government—with support from political candidates who feel these groups have deceived their supporters—is cracking down on so-called “Scam PACs.”

The Stakes of Political Scams

The Scam PAC industry might sound like a problem for political candidates and professional fundraisers—in short, a matter for “official Washington” and not heartland America. The problem is that these scams target supporters in the heartland, taking money and enthusiasm away from meaningful political engagement to line the pockets of consultants.

One consultant who saw the effects of these small-dollar marketing efforts first-hand was Paul Jossey, a Republican-aligned campaign finance lawyer. In 2016, he wrote a long article on the Scam PAC industry for D.C. political trade publication Politico in which he decried the fundraising of professional so-called “Tea Party” groups—not to be confused with grassroots activists organizing themselves under a “tea party” banner—as a “pyramid scheme.”

The scams arguably cost conservative candidates and waste tens of millions of dollars of political resources. A 2015 analysis by RightWingNews found that in 2014, ten so-called “tea party” political committees raised over $54 million and spent only $3.6 million on candidate contributions and independent expenditures. If the PACs had met the efficiency of the long-standing insurgent conservative Club for Growth, that $54 million might have yielded $47 million in support for candidates.

Jossey suggested that the actions of the professional consultants flying a “tea party” flag might have killed the insurgent political movement by sapping its resources—especially the small-dollar contributions of elderly supporters—and by stealing its energy by playing up fear and defeatism for fundraising purposes.

Polarization Creates Prey

It shouldn’t be surprising that the first plague of Scam PAC behavior targeted conservative causes and Republican donors. The Citizens United decision, which overturned unconstitutional prohibitions on “independent” political advocacy not coordinated with campaigns or parties, opened the doors to reputable political operations, which bring in high-dollar contributors—think billionaire environmentalist Tom Steyer on the left or nationalist conservative Rebekah Mercer—further into the political process. But it also incentivized fly-by-night operators who could use public confusion about these new “independent expenditure” committees or Super PACs to solicit small-dollar donors—who have no reason to give to a Super PAC instead of directly to a candidate’s campaign since their contributions do not exceed FEC contribution limits.

Increasing the susceptibility of conservative donors to the scammers was a series of political developments which are generally called “polarization.” As the centrist wings of the Republican and Democratic parties have faded away and partisan identity has hardened, partisan factions have spiraled into a dynamic that libertarian-leaning Washington Post columnist Megan McArdle dubbed “Jane’s Law”: “The devotees of the party in power are smug and arrogant. The devotees of the party out of power are insane.”

The fear of the partisan Democratic agenda of the Obama years, combined with the inability of Congressional Republicans to advance a positive agenda in the face of President Obama’s veto pen, drove many conservatives and Republican supporters to what were once the fringes of the movement. One of the consequences of that flight from the ineffective traditional mainstream was the rise of Scam PACs, which purported to support mostly insurgent conservative candidates but ended up sapping their fundraising.

In the conclusion of Caveat Donator, learn how both parties are susceptible to this practice and what needs to be done to limit the damage these fly-by-night organizations do to the political process. 

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Michael Watson

Michael is Research Director for Capital Research Center and serves as the managing editor for InfluenceWatch. A graduate of the College of William and Mary, he previously worked for a…
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