Campaign Contributions

Campaigning for the presidency requires literally millions of dollars. The major-party nominees receive federal funding for their general-election campaigns, but seeking a major-party nomination can cost as much as a general-election race, while minor-party candidates must raise funds to contest the general election. Few candidates are sufficiently affluent to bankroll their own campaigns, raising questions about where candidates derive their financial support and what motivates contributors. Plentiful accounts exist describing the fund-raising process in particular nomination seasons, but few efforts have been made systematically to analyze the fund-raising process across election cycles, despite the ready availability of data suited to this purpose.

Existing work identifies two considerations that might motivate contributors -- ideological considerations, or the desire to impact an election outcome, and pragmatic considerations, or a desire to support a winner in order to have access to an important policy-maker. This paper uses data on individual donors' contributions for every election cycle from 1980 through 2000 to examine whether individual presidential donors appear to be motivated principally by ideological or by pragmatic concerns. We assume that real ideological differences separate the political parties and focus on the aggregate receipts of competitive candidates running

under each party label, that is, we compare the receipts of all Republicans to those of all Democrats (and to those of minor-party candidates, if any).

The paper models partisan receipts as endogenous using unrestricted vector autoregressions (VARs). We examine how contributions affect interparty (e.g. Democrat to Republican) contributions and find that aggregate party candidate receipts do, indeed, contain information that contributors use to make decisions about how to allocate their funds. The use to which contributors put this information