When journalists or watchdog groups scrutinize donations to US politicians, they tend to focus on corporations and special-interest groups. In part this is because contributions from individuals are difficult to track. But it also stems from a widespread perception that contributions from individuals are less problematic.
“In many people’s minds, donations from companies tend to be corrupt, or have the potential to corrupt, while donations from individuals are seen as mostly ideologically driven,” said Edoardo Teso, an assistant professor of managerial economics and decision sciences at the Kellogg School.
But does that common distinction reflect reality? After all, many individuals are linked to companies, and if they’re senior enough in their organization’s hierarchies, they may stand to benefit a good deal from a particular candidate’s victory.
It’s an important question to ask, because donations from individuals make up the majority of campaign contributions — by a long shot. In 2018, more than three-fourths of the money raised by candidates for Congress came from individuals, up from 70% in 2000.
Teso set out to examine how much individual political donations were made in ways meant to strategically help the donor’s company. He did so by determining the share of corporate executives or members of corporate boards who are individual donors, and then sought to isolate the motivations of that subset of donors. Specifically, he wanted to understand whether this group’s financial contributions to members of Congress were driven purely by political ideology, or whether corporate leaders were at times donating with their companies’ interests in mind.
Teso focused on how donations from corporate leaders changed as congresspeople’s power waxed and waned. He found that the likelihood of an individual corporate leader donating to a member of Congress increased by 11% when that legislator received a committee assignment making him or her