‘Tis The Season (For Political Giving Research)

 

political

Guest Post by Lori Hood Lawson

As I write this, it’s less than 80 days until Christmas and it’s less than 30 days until this year’s US Presidential Election.

Don’t worry – I’m not going to talk about politics but, rather, some interesting news on political giving. This is a completely nonpartisan blog post, truly, so please read on (also, supporters of either major party are equally charitable according to a 2013 study by MIT, so let go of that notion that one party’s supporters are more charitable than the other).

Finding your prospective donor has contributed politically suggests he/she is more likely to be charitable, as proven by numerous industry studies, including my own experience working with wealth screening results with various types of organizations. Additionally, while capacity formulas abound along with justifications for such, a long-time general rule of thumb is this: estimated gift capacity = 20 X political contributions made within any one election cycle.

You likely have your own nuanced version of this rule, but suffice it to say one should utilize every relevant publicly-available piece of data to best employ estimated gift capacity formulas, and estimate such within the context of your prospect’s life stage and current (and, if possible, future) circumstances.

Remember – this is both art and science and should not be confused with a suggested ask amount. For the most comprehensive of all political giving and philanthropic giving articles in our industry, you should read Daniel Greeley’s article in APRA’s Connections, Q1 2016 (NOTE: APRA membership required).

Recent news in the world of political giving, as discussed in this September 27, 2016, article from Financial Advisor, reveal some wealthy Americans are sitting out this year’s election cycle. According to the 2016 US Trust Study of High Net Worth Philanthropy, a biennial study based on a survey of more than 1,500 US households conducted with the Indiana University Lilly Family School of Philanthropy, only 24 percent of HNW donors contributed to a political candidate, campaign, or committee in 2015, or at least planned to contribute. (NOTE: The full 2016 report has yet to be released in its entirety to the public, but should be available later this month.)

I took a look at previous studies to see how the reported 24 percent stat compared to previous years. According to the 2012 study (which at the time was named the Bank of America Study of High Net Worth Philanthropy), that year’s study was the first time the respondents were asked to report on whether or not they gave to political organizations or candidates for the specific purpose of electing or defeating candidates. The study discovered 50.7 percent of high net worth households gave to such in 2011, with an average amount donated of $1,363 and a median of $500. The 2016 reported stats reflect a 53 percent drop.

However, the 2016 results as reported in Financial quimbyAdvisor go on to state this: “Respondents gave several reasons for why they are not donating: because they do not feel like their contributions have an impact compared to corporate and political action committee contributions [emphasis is my own]; they do not feel like political contributions in general make a difference; and because they do not have a political candidate that they would endorse in the 2016 election.” So, it’s possible a larger percentage of US high net worth philanthropic households contributed to a PAC rather than directly to a candidate for this year’s US Presidential election.

The Washington Post’s “Meet the wealthy donors who are pouring millions into the 2016 elections” piece, last updated September 7, 2016, and the newspaper’s “The new Gilded Age: Close to half of all super-PAC money comes from 50 donors” (April 15, 2016) article both support the notion US high net worth households are contributing to PACs more so than directly to candidates. Additionally, since the US Supreme Court decision in 2010 Citizens United v. FEC, many contributions are coming from LLCs; some LLCs are being viewed as “ghost corporations,” as there is little information available regarding such LLCs. You can read more about political contributions from LLCs in The Washington Post’s How ‘ghost corporations’ are funding the 2016 election” (March 18, 2016).

What does all of this mean for philanthropy and prospect research? Understand what you can uncover for each method of financially supporting candidates or initiatives.

  • Super PACs: may raise unlimited amounts of money from corporations, unions, associations, and individuals and then spend unlimited amounts of money to advocate for or against a candidate or initiative. May not contribute directly to political candidates; spending cannot be coordinated with a candidate which would benefit from such spending. Required to report their donors to the FEC on a monthly or semiannual basis in off-years and MONTHLY in the year of an election. Yes, that means you can search on super PAC contributions and their contributors. As stated on the FEC Individual Contributor Search page, “The Individual Contributor Search includes contributions made by individuals, Native American tribes, partnerships, sole proprietorships, limited liability companies (LLCs) and contributions by the candidate to all political committees including Independent Expenditure-Only Political Committees (Super PACs) and Political Committees with Non-Contribution Accounts (Hybrid PACs). The Search results include refunds to these contributors, as well.”
  • PACs: Political Action Committees must file regular reports disclosing receipts and expenditures. PACs, unlike super PACs, have contribution limits. You can search on contributors to PACs, via the FEC and resources such as iWave PRO.

If you are looking for any idea of affinity via a prospect’s support of specific PACs or candidates, I would caution you. Prospects and donors with business ownership and/or who are very prominent within a certain industry will more often than not contribute on “both sides of the aisle,” in order to gain a measure of influence regardless of the outcome of any one election.

If you choose to infer affinity, I would look for corroborating evidence for such affinity. For example, if you see Ms. Prospect contributes regularly to an environment-related PAC and you can see Ms. Prospect has also been philanthropically inclined to support environment-related nonprofit organizations, yes, it would be fair to say Ms. Prospect has an interest in the environment. At this point, the level of contributions is not the focus. You can search for specific PACs by interest areas via the Center for Responsive Politics: https://www.opensecrets.org/pacs/search.php

voteWhile opinions differ on utilizing political contributions in estimating gift capacity, it would be irresponsible to NOT take such contributions into consideration. Make sure you search on each LLC affiliated with your prospect in addition to your prospect’s name. Additionally, please maintain compliance with the FEC’s terms of use, which explicitly states, “Reports and statements filed by political committees may be inspected and copied by anyone. The names and addresses of individual contributors, however, may not be sold or used for any commercial purpose or to solicit any type of contribution or donation, such as political or charitable contributions. 2 U.S.C. §438(a)(4) [PDF]; 11 CFR 104.15. This restriction applies to Federal reports and statements filed in Washington, as well as in each state. Any person who violates this restriction is subject to the penalties of 2 U.S.C. §437g [PDF].”

Hope you approve this message! And get out the vote – US Election Day is November 8, 2016. If that day is not convenient, several states offer early voting. Here’s the list. No excuses – exercise your civil rights!

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