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Explainer: Understanding Public Matching Funds Means Following the Money

Thursday, August 04, 2011

New York City's Matching Public Funds Program (Alana Casanova-Burgess/WNYC)

The election that will determine the next mayor of New York City may not be for two years still, but the fundraising has already begun. As the races heat up, one huge player in New York City election financing will be the public matching funds program. But what is that program exactly?

It's A Free Country breaks down the massive undertaking that is the New York City Campaign Finance Board's public matching funds program.

Taxpayers: The money to fund the public matching funds comes out of the City General Fund, which is made up of revenue generated from taxes. Every year, the CFB submits an estimate, and the mayor is required to provide that estimated amount in the budget proposal.  City Council can approve or reject the budget, but neither they nor the mayor can change the amount.

CFB: The campaign finance board matches money - up to $175 -contributed to qualifying candidates from qualifying individuals with a 6:1 match.  Money not spent in the election is returned to the city.

Contributors: Eligible contributors get their donations matched 6:1. In elections where the candidate faces a high spender who is not in the program, that ratio may be increased. In elections where there is little challenge, that ratio may be decreased.

Candidate: The candidate can use that money for their campaign, to pay staff, canvas, etc.

Campaign workers: Campaign workers can contribute to the candidate, and those contributions may be eligible for a match, depending on the type of worker. One-time workers and contractors may donate to the campaign but will not have their donation matched. Long-term workers, however, are eligible for the match.

 

What is the Program?

The matching funds program aims to limit the influence of corporate money in elections by amplifying the effect of individual small donations. For candidates who agree to abide by spending limits, the Campaign Finance Board matches every dollar, up to $175, with six dollars more. So a donation of twenty dollars becomes $140 to the campaign, a donation of $100 becomes $700, and so on.

Who Participates?

Candidates running for election in city elections are eligible, as long as they qualify and agree to the spending limits. Almost everyone who runs for office participates. Of the winners of the 2009 City Council race, only one person abstained from the program. Not all the winners used the funds—some found that it was more lucrative for them to forego the matching funds and be free of the spending limits, but many did.

Can't Participants Game the System?

There are a number of provisions in place to try to prevent candidates from abusing the system. For starters, candidates can use the public funds they receive to pay their campaign staff, and campaign staff can donate to that candidates campaign, but there are strict guidelines on whether that donation would receive matching funds. For another example, City Councilmembers have been criticized in the past for directing discretionary funding to non-profits, whose directors and board then donated back to that candidate's campaign in the next election. Now a law prohibits matching funds from vendors doing business with the city.

The Quinn Scenario

The New York Daily News published an article this week disclosing that 2013 mayoral hopeful Christine Quinn had directed money to non-profits whose top executives then donated to her campaign. The article speculated that with matching funds, those contributions could potentially be worth over $242,000. However, her campaign represents the exception, as Quinn began fundraising for a mayoral bid as far back as 2006—a year before the Doing Business rules were passed.

Quinn, who dropped her mayoral bid after term limits were extended, actually was a supporter of the Doing Business legislation, which specifies that people doing business with the city, or top executives, senior managers, or anyone with a ten percent or greater stake in an entity doing business with the city, must register on the Doing Business Database and is not eligible for public matching funds.  However, because Quinn rolled the unused funds from that earlier dropped bid into her current fundraising, and those contributions were from before the rule was passed, it is possible that she may have contributions that were matched that now would be considered ineligible. 

The Revolving Door

A potential weakness of the current Doing Business law is that it only applies to those people in the database at the time of the contribution, and the database is in constant flux, as contracts and grants are won and lost. A more thorough approach might be to keep a database of all doing business with the city in a ten-year period.

Does It Work?

There is strong evidence that it does work. In the 2009 New York City elections organizational money made up less than ten percent of total campaign funding. For perspective, two-thirds of the money in New York State elections came from organizations. (Graph courtesy of the NYC Campaign Finance Board).

 

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