Political Finance Series: The Effects of Crises on Federal Political Fundraising

By Trey Richardson

Over the last few weeks, political fundraising has declined due to the stressful and uncertain circumstances COVID-19 has created for our country. In addition to the direct health consequences, the near shutdown of our economy has led to oppression in terms of jobless claims, U.S. economic output and consumer spending. Combined, these have depressed the stock market and caused fears of a recession. While these fears are understandable, a recession may not occur. As such, it is from the vantage point of a crisis that we must scrutinize the possibilities for political finance this election year. While we all realize democracy in America will forge on, the historic impact other crises and recessions have had on the political market may serve us well to plan for what life after the current crisis may bring.

According to legendary investor Benjamin Graham, the reality of the stock market is that it’s a voting machine in the short term, assessing the popularity of companies. But more importantly, it’s a weighing machine in the long term, assessing substance and enduring value. The same can be said of investing in candidates, parties and political action committees.

When evaluating the history of political finance over the last three decades, it is encouraging to realize that the time period between fundraising lows is traditionally irregular. Contractions in the political finance market tend to coincide with economic recessions, but interestingly do not coincide with other major crises. 

Looking back, the September 11, SARS and Swine Flu crises did not induce major stock market crashes beyond the first few days and had little impact upon the political finance market. Yet, stock market corrections have had serious consequences for political funding:

  • 1987 caused by a weak dollar and mishandling of U.S. trade agreements induced losses of 34% in the stock market and 34% for political finance.

  • 2005 due to lower than projected consumer spending and corporate earnings reports posted losses of 1% in the stock market and 8% for political finance.

  • 2008-2009 because of fallout from the Great Recession that collapsed the housing and financial services sectors created losses of 34% in the stock market and 13% for political finance.

  • 2014 due to a high unemployment rate created losses of 2% in the stock market and 9% for political finance.

The lesson here is that recessions affect political finance, but crises do not.


COVID-19, combined with low oil prices from reduced worldwide consumption and Saudi Arabia’s moves to increase oil production, has had a significant impact on the stock market; initially reducing the Dow Jones Industrial Average some 32% in the first three months of the year. Encouragingly, although counterintuitively, this market decline is far less than the impact the Great Recession had on stocks. Jim Stack, founder of InvesTech Research, recently said there “are no solid warning flags of a recession” looming. This sentiment was elaborated upon by Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, saying “The U.S. and global economy may be in better shape than Wall Street thinks…because the economy was not vulnerable when the virus hit.” The possible exception to his statement is that Goldman Sacks’ projection of a 24% reduction in U.S. economic output in the second quarter of 2020 is an indicator of a recession.

This is mostly good news for political fundraising professionals and campaigns.

Thankfully, the market is already rebounding a bit. Assuming we don’t “hit the trifecta” with another incident negatively impacting the financial markets, I am estimating the dawn for political fundraising will arrive just before the June primaries. It is interesting when researching political finance and stock market trends that after a major market correction, political fundraising rebounds an amazing 31%. Following crises like September 11, SARS and Swine Flu, political finance returned increases of some 23% on average.

Like stocks, the political market rewards people and organizations that create long-term value. What matters is underlying infrastructure and actual performance, not fickle opinions about a program’s prospects in the short term given deviations in the financial market. Even though the economic slowdown is currently haunting our thoughts and actions, it’s important to provide goodwill and education to your donors and prospects now. In return, your actions will find their way back in the form of contributions, participation and appreciation. To be successful, take action to create enduring value for your candidates and organizations today.

Trey Richardson is managing partner of Sagac Public Affairs and GR Pro, national firms that provide communications, market research, fundraising, issue advocacy and independent expenditure solutions to hundreds of political, nonprofit and corporate organizations.

© Sagac Public Affairs, LLC

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