What Is Public Financing? How Small-Dollar Democracy Combats Big-Money Elections

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"VOTE" buttons on 100 dollar bills.

Wealthy special interests have increasingly dominated the financing of our elections, threatening to drown out the voices of everyday Americans. Running an electoral campaign for public office can come with an exorbitant cost, which helps explain why megadonors — or the outside groups they bankroll — routinely end up footing the bill and, in the process, discourage those without wealthy networks from running.

This cozy relationship between candidates and big spenders drives a wedge between elected officials and their constituents, making officials less accountable to the people they represent. A campaign finance system that encourages candidates for office to appeal primarily to wealthy special interests is fundamentally detached from our democratic ideals.  

Public financing is a proven solution for amplifying the voices of all Americans in a democracy of, by and for the people.

The Basics of Public Financing

Public financing refers to government programs that provide limited public funds to candidates for campaign expenses.  

The first comprehensive public financing programs in the United States were established in the wake of the 1972 Watergate corruption scandal, in response to public pressure for more transparent financing for presidential elections. The presidential public funding program represented a powerful tool to combat corruption and expand small-donor participation.  

While the program worked well for decades, it has fallen out of favor because Congress has failed to provide needed updates to the program as the cost of presidential campaigns has skyrocketed.  

By contrast, state and local governments across the country have implemented innovative public financing programs that reduce barriers to running for office, strengthen the voices of everyday Americans and reduce opportunities for corruption.

Unlike the big-money private financing system that dominates modern U.S. elections, public financing programs are intended to amplify the voices of constituents while curbing the undue influence of wealthy special interests. While the design of public financing programs varies, two commons models being implemented are:

  • Matching funds: The government “matches” certain small-dollar donations earned by a candidate with public funds at a set rate. For example, participating candidates for city office in Los Angeles receive $6 in public funding for each $1 in small donations the candidate raises from Los Angeles residents, up to specified amounts.  
  • Vouchers: The government distributes “vouchers” representing a small amount of public funds to each eligible resident, who may donate the funds to a participating candidate of their choice. Seattle’s Democracy Voucher Program provides four $25 vouchers to every eligible resident of the city for use in city elections.

A well-designed program creates incentives for candidates to fundraise and connect with the people they seek to represent — including ordinary Americans who lack the financial means to spend large sums of money on elections.  

This translates to a donor base that is broader, more diverse and more representative of the community, rather than a handful of wealthy elites. Moreover, these programs expand the pool of potential candidates by ensuring people can run for office without relying on personal wealth or connections to wealthy networks of donors.

Additional Requirements and Restrictions Maintain Public Confidence in Elections

Public funding for campaigns comes with specific requirements that reinforce the principles of transparency, accountability and responsiveness, thereby maintaining the integrity of the program and the confidence of the public.  

To qualify for public funding, candidates must demonstrate their popular support by raising a certain amount of small donor contributions. Once qualified, candidates must adhere to specific conditions, such as capping individual contributions, complying with enhanced recordkeeping requirements and submitting to mandatory audits.  

Because these programs leverage public funds, public financing agencies are required to ensure that those funds are disbursed and spent appropriately. The additional scrutiny provided by public financing programs creates enhanced transparency and accountability for campaigns.  

Public Financing Has Already Made Our Elections More Democratic  

Over three dozen state and local jurisdictions make public funding available to candidates, directly contributing to a more inclusive and representative democracy.

  • Reduced barriers to running for office in Denver: Public funding increases opportunities for candidates from historically underrepresented groups or who lack access to wealthy networks to run for office. After Denver implemented its Fair Elections Fund, a record number of candidates ran for city office in 2023. In a postelection survey of participating candidates, 72% of respondents indicated that the availability of public funds impacted their decision to run. The program created an $8 million fund that provides a 9-to-1 match for donations of $50 or less.
  • Diversifying the donor base in Seattle: In 2017, the City of Seattle implemented the first voucher program in the country, sending four $25 vouchers to eligible Seattle residents to contribute to a candidate of their choosing. Over five times as many Seattle residents contributed to city council races compared to 2015 — many for the very first time. In contrast to private contributors, who skew whiter and wealthier than the Seattle electorate at large, the racial diversity of voucher users in subsequent elections closely resembled that of active voters in the city.
  • Amplifying local voices in Washington, D.C.: The District’s Fair Elections Program changed the landscape of local elections in 2020, with 76% of all contributions made to participating candidates coming from small-dollar contributions from district residents. By comparison, D.C. resident contributions of $50 or less accounted for only 27% of contributions that individuals gave to nonparticipating candidates.

These examples show that empowering local voices can reorient our elections by broadening political participation among the public at large, encouraging new candidates to seek public office and reducing opportunities for corruption.  

Campaign Legal Center continues to advocate for the expansion of public financing systems as a response to the ever-growing influence of wealthy special interests on our elections and the need for a more responsive, representative government.

Aaron is a Senior Legal Counsel on CLC's Campaign Finance team.
Maha is a Communications Associate for Campaign Finance & Ethics at CLC.