A guest colum follow after the jump from Professor Jay Mandle, of Democracy Matters, on the issue of a "small donor democracy" and recent debate around small donors in the context of the presidential race.A Small Donor Democracy?by Jay MandleRecently Barak Obama has emphasized the importance of small donors to his campaign. His electoral efforts, he said, have “created a parallel public financing system.” With it, he went on, if the American people decide “they want to support a campaign, they can get on the Internet and finance it.” And with that, he concluded, “they will have as much access and influence over the course of our campaign that has traditionally reserved for the wealthy and the powerful.”My intent in examining Obama’s claims concerning small donors is not to take sides in the Democratic Party primaries. Rather, because the goal of a “small donor” democracy has attracted favorable attention among members of the political reform community, it is important to assess its strengths and weakness as a campaign finance measure.There are at least two issues that need to be addressed in this regard. The first is whether the 2008 presidential candidates in fact have increased their reliance on small donors for their funding. The second concerns who these small donors are, particularly their level of income, and whether they are representative of the American people as a whole. The data in Table 1 suggest that the answer to the first question is no: small donors have not become more important, at least with respect to major Democratic candidates. In 2003, small donations amounted to 39 percent of the combined contributions received by Kerry and Dean. During a comparable period, 2007, such limited donations were 23 percent of the funds received by Obama and Clinton. Interestingly, small donations were considerably more important for John McCain in 2007 than they were for George W. Bush in 2003. It is very likely however that this is because for most of the year McCain was not considered a front-runner. Big donations will almost certainly increase now than McCain is the presumptive Republican candidate. Table 1Contributions of $200 or Less as Percentage of Net Individual Contributions, 2003 and 2007 2003 2007 Total Democrats 39 Total Democrats 23 Kerry 15 Clinton 14 Dean 49 Obama 32 Bush 15 McCain 25 Source: Computed from Campaign Finance Institute, “2004 Presidential Candidates: Large & Small Contribution ($1,000 or more/$200 or less) in 2004” and “Presidential Candidates Fundraising Activity, Jan 1, 2007 through January 31, 2008” and “Presidential Candidates Fundraising Activity January 1-31, 2008.”The question of who small donors are is difficult to answer. Campaign contributions of less than $200 at the national level do not have to be itemized. Campaigns therefore are under no obligation to reveal information about them. However as part of a research project undertaken by the Campaign Finance Institute (CFI), surveys were undertaken of donors and non-donors to state-wide office seekers in six states. Care must be taken in using these state data to gain insight into small donors at the national level. The people who provide funds for state-wide offices may differ from those who support candidates at the federal level. Further, in these surveys $100, not $200, is used as the cut-off in defining small donors. Nevertheless, at present this is the best data we have on which to base a profile of small donors.The CFI surveys suggest that small donors, not to mention medium and large donors, have significantly higher incomes not only than non-donors, but also compared to the typical household in the country generally. More than one-half of the people who made small contributions in the six states surveyed earned between $75,000 and $250,000. To put this figure into perspective it is important to remember that in 2005 the median household income in the United States was a little over $46,000. By contrast, almost one-half (48.3 percent) of non-donors earned less than $40,000. To the extent that these data correspond to what occurs on the national level, they suggest that a vast gap in income and wealth separates political donors – even low level contributors – from people who do not contribute to political campaigns.Table 2 Percent Distribution of Household Income of Donors to Governor and State Legislature Candidates in 2006* N/A Sm. Donors Med. Donors Lg. Donors< $40,000 48.3 11.2 4.9 0.8$40,000 to $74,999 31.6 25.4 13.9 5.8$75,000 to $249,000 19.5 55.5 60.0 48.9$250,000 or More 0.6 7.8 21.3 44.5The data in these two tables suggest that, despite much talk to the contrary, a new political financing system is not under construction, and even if it were, it would not be significantly more fair than the current one. And as I argued in my previous MOMM, a small donation of $200 or less cannot begin to compete for influence with the millions of dollars contributed by major donors attached to financial interests, pharmaceutical companies, and other business groups.If our goal is for candidates running for office to be equally responsive to all of their constituents, and not be disproportionately sensitive to relatively wealthy funders, the only realistic option is a publicly funded system. On the evidence presented here, failing to move to “fair elections” means the continuation of an electoral system in which the selection of candidates and what office seekers say and do will continue to be unfairly influenced by the small minority of relatively wealthy people who make political contributions.* States: Arizona, Colorado, Connecticut, Iowa, Ohio, Pennsylvania. Small Donors: $100 or less; Medium Donors: $101-499; Large Donors: $500 or More.Source: Michael J. Malbin, “Rethinking the Campaign Finance Agenda,” The Forum, Vol. 6, Issue, 1, p. 13.