Facts About PACs Podcast
The Facts About PACs Podcast is the #1 PAC podcast in America. The show is produced especially for the members of the National Association of Business Political Action Committees (NABPAC). Each weekly episode includes a recap of the association's latest activities, actionable intelligence for the employee-funded and business trade association PAC community, and an interview with a featured guest. Show host Micaela Isler is the President and CEO of NAPBAC.
Facts About PACs Podcast
PAConomics: Why Good Economies Make PAC Fundraising Harder
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How much of your PAC's fundraising year is you — and how much is just the economy you're operating in? Chad Taylor of SAGAC Public Affairs put it to the test: 15 cycles, 300 business PACs, $4 billion in receipts. The surprise? When you de-trend the data, a hotter economy means slower fundraising. Uncertainty drives giving; prosperity doesn't. Adam Belmar and David Schild unpack the "insurance theory" of PAC fundraising, the three-factor UPP check for reading your cycle, and why your fall ask should open with the congressional calendar — not last quarter's earnings.
Got 300 committees, every industry, and one number. In a financial services pack and an energy pack or healthcare pack, they do not live in the same world.
SPEAKER_01Welcome back to the Facts About Packs podcast. I'm Adam Belmar. Michaela is out this week. So it's me and David Schill today. David, it's good to see you here in summer school.
SPEAKER_02Adam, it is great to be here. It is hot in Washington. We just had some really important midterm elections. So the term on everybody's mind is DSA, which stands for David Sweats a lot.
SPEAKER_01A lot. And you know, so do I. But come on. It's August in Washington. You're right. Everybody is fleeing. The jet fumes hang in the air. And as I alluded, uh, we're no stranger to summer school. And today we're asking a question every pack director has asked, and nobody in the industry has ever really answered. How much of your fundraising year is actually about you? Your strategy, your events, your board versus the economy you happen to be operating in, David?
SPEAKER_02Adam, this is a question I think a lot of our listeners have had to confront. You run this clean program, you do everything right, and sometimes you still come up short. You never know, was it your program or was it the political year that you chose to operate it? Nobody's really been able to answer this question for themselves.
SPEAKER_01Well, somebody's tried 30 years of data on it, and the answer is not what you'd expect. All that coming up in just a second. But first down to business. The Facts About PACs podcast is produced especially for the members of the National Association of Business Political Action Committees. In every episode, we recap this week's NAP activities, share actionable intelligence and better practices, all while connecting the PAC community.
SPEAKER_02All right. Well, let's get into it, Adam, because this particular data set, this particular analysis has changed the way that I think about PAC operations.
SPEAKER_01All right, before we bring in our guests, you ran a PAC, and when you had a down cycle, what was the conversation with leadership that you actually had?
SPEAKER_02Well, this is why it's so important, Adam, I think to have a deputy pack manager, someone to point the finger at and fire when things go south. But assuming you don't have the budget for that fall guy, then really, you know, what would happen often is people would ask, you know, what is going on? Are there these sort of macroeconomic trends that are affecting you? Is there a political headwind that you are sailing against? And we had thick years and we had thin years. And sometimes people opened up the Washington Post and understood why we were having a difficult time. And sometimes it was the Wall Street Journal that told you why we were having a difficult time. But you have to be prepared for both. There's like what, 130 days left in the year, a lot less time until the midterm election cycles. I'm hoping most of our audience is starting to do that mid-year to almost third quarter now analysis of how they're doing and have some anecdotes ready, have some data ready. And this is why I think our guest timing here is so perfect today.
SPEAKER_01Chad Taylor is head of strategy and planning at SAJAC Public Affairs. He and his colleagues, working with Dr. Michael Cornfield at George Washington University, built something they're calling paconomics. 15 election cycles, 300 business packs, $4 billion in receipts, tested against eight economic and political variables. And Chad, welcome to the Facts About Packs podcast. Hey everyone, Adam and David. Thank you so much. It's really great to be with you guys today. Well, Chad, let's start with the question that started it all. What were you actually trying to find out with your PAC economics research?
SPEAKER_00Yeah, so Trey Richardson is our managing partner here in Sagic Public Affairs. He and I have a version of this conversation with what seems like a hundred clients a hundred times a year or a cycle. So somebody calls and says, hey, we need a number for next cycle, or hey, I've been given this number for next cycle. What should it actually be? Now, if we're honest about how that number actually gets set, it's really a few different inputs. So what we raised last cycle, uh, what the board wants to hear, what their recommendations are, uh, or maybe what your boss thinks should be a fair goal, and then vibes or just a feeling, you know, let's do let's do 10% more, let's do 50% more, just kind of grabbing at different numbers. And that's really kind of the methodology. That's been the state of the art. And we decided that there's got to be a better way. So we went and we got the data, who's FEC filings 1996 through 2024. We took the top 300 business pack committees for every cycle. Like you said, it was about $4 billion in receipts. We then tested all those receipts, uh, cycle over cycle growth against all the different things that we've been guessing about. So GDP, inflation, unemployment, market returns, major legislation, party control. And then we brought in Dr. Michael Cornfield over at GW as our academic partner. And the question was really simple. How much of your fundraising year is the year, the conditions, and how much of it is you?
SPEAKER_01So let's get to the headline because I want to make sure our audience gets this one right. When you first ran GDP against pack receipts, you got a strong positive number. Case closed, right? Good economy, good fundraising. But then you did one more step. Walk us through what that step was and what happened.
SPEAKER_00Yeah, so when you run the GDP numbers against pack receipts, those raw numbers, you get a big positive correlation. Both of those lines go up and to the right for 30 years, and you get those results, and you feel very smart about yourself for about an hour, but that's not really the finding. Those are just two things that both grew since 1996. PAC fundraising is up over 270% over that stretch. Well, the economy is also up too. So you have to de-trend. Now, in plain English, what that means is that you strip out the long-run growth of both lines and then ask a little bit better questions. So in the cycles where the economy ran hotter than its own average, what did PAC fundraising do against its average? And that's when the relationship flips. When the economy grows faster than trend, pack fundraising grows slower than trend. Uncertainty is really what drives engagement. Prosperity doesn't. And so this is kind of the way that I put it to pack boards or clients or heads of office. A PAC is really more about political insurance. Nobody wakes up feeling great about their life and calls their agent to increase coverage. You buy insurance when you're worried about what could be coming.
SPEAKER_02Really interesting take there. And, you know, Chad, the numbers, you know, sort of put political professionals like our audience members in a little bit of a tough spot. Like you said, the economy is booming. It might actually be harder to convince people that they need political activism, right? We know how to scare people or put an attention to politics into the mind of our potential contributors when things are not going well. But it sounds like what your data is showing is that when things are going well, that's actually a little bit of a more difficult sales pitch. Is that true? And were there other numbers that you thought we could sort of draw insights from?
SPEAKER_00Yes, that is true. I think what the data is showing us, or at least our interpretation of the data, is that when there's not a big boogeyman out there, that when things are going great, or I suppose about as great as they could be, people don't feel that impetus to really get involved. Now, there's one thing that was really interesting, uh one cycle that was really interesting. It was 2022. We saw nominal GDP grow at 16%. That was the biggest single cycle jump in the entire 30-year data set. Now, business pack receipts actually declined. They were down 6.3% in that cycle. That was the only decline over that 30-year period. It was the first one that we recorded for those 300 packs. Now, if the good economy theory were right, that should have actually been the greatest fundraising cycle that any of us have ever lived through, but it was actually the worst one. Now, one data point doesn't prove a whole thesis, but it's hard to look at a boom economy in record decline and hold on to the old story. Now, if you run it another way, 2004, we had GDP up 10% and PAC fundraising was up 27%. That wasn't really the economy either. That was more post-9-11, Iraq war authorization, major tax legislation, healthcare was in play. The stakes were enormous. Uh, and the stakes were really the thing that was doing the work. Now, 2022 has got a little bit of an anomaly because we were obviously coming out of COVID, uh, the events at the Capitol on January 6th, and a lot of organizations making their own decisions about what they wanted to do concerning political advocacy. Um we did not include those two specific issues in this study because we kind of felt that the way that an organization responded to those two things uh was more internal rather than an external effect. So while these were external things that affected organizations, each organization chose uh to respond to these different events uh in their own way.
SPEAKER_02So let's talk about a number that I think is gonna be a little hard to digest for some of our listeners. You found that from 1996 to 2008, the industry grew about 20% per cycle. And then after 2010, that number drops to 3%. What's going on there?
SPEAKER_00Yeah, so there could be a number of things going on here. And this is gonna be part of the number three phase that we're gonna do in this study is looking more at the full political picture. So we're going to take in political giving to super PACs, to nonprofits, uh, to different 501Cs, and also the rise of direct giving programs. And we're gonna try and see if some of the money that has been going to some of these business political action committees has now started to be funneled into different advocacy vehicles. Of course, there's uh there's big change since uh Citizens United, uh, since that SCOTUS ruling came down uh you know over a decade ago. Um, and then there's been even more changes with recent uh rulings about coordination and giving limits. Um and so there could be uh even bigger changes for the pack community as we move forward and seeing how these different advocacy vehicles um are going to draw attention.
SPEAKER_02So when it comes to pack money, I want to see more, but uh-oh, here comes 501c4.
SPEAKER_00501c4, yeah.
SPEAKER_01So, Chad, I I like the uh idea of the private conversation between you and Trey Richardson trying to come to an answer on these questions and just to move us into a news you can use gear. You you guys built a three-factor check here, right? What does that do and what does it tell us or tell our listeners about the cycle that we're currently in?
SPEAKER_00So the cycle that we're currently in, so we've we've developed this kind of silly little mnemonic device, uh, which is either evidence, it could be evidence that I shouldn't be naming things. We're calling it UPP. So the uh U stands for the economy underperforming its trends. So when GDP and PCE are growing slower than their long run averages. So watch quarterly GDP against the 10-year rolling average, call that usually 4%. That's one thing that we're currently not certain about. We'll need to see how the rest of the year goes. Policy is the first P that is obviously contested. It's a good thing for PAC fundraising. Act we've uh got active legislative calendar going on, not to mention the regulatory calendar, which is something else entirely. Uh, this is really where we have no doubt that this is a big area that's driving people. We know that business is mobilized when things are in play, not when they're settled. Um, and then finally, we've got the PCE. This is the consumer expenditure. This is another uh Federal Reserve data point. So as long as this is basically how much consumers are spending in the economy. If this number is high entering the cycle, the prior cycle consumer spending really is the single best indicator that we found. So strong consumer spending in the prior period means that revenues were healthy, which means that donors had the capacity to make contributions. So uncertainty really creates the motive and that PCE creates the memes.
SPEAKER_01So if you're running a program and you're going to take one action based on this episode this week, what do you do?
SPEAKER_00Yeah, I mean I might think about rewriting the ask or think about what your ask is. So if your fall solicitation, let's say you're doing something this fall, everybody gets back to school with how the company has performed last quarter or the summer or year to date, that could be the wrong first sentence. So 30 years of data says uh that is not what moves the money. So open with the calendar instead. Here's what's coming in our space, here's what we're looking at, here's what the risks are, here's who is deciding these issues. That's really what uh we think the data shows, the sentence that works. And then also think about who you're benchmarking against. So most pack managers benchmark against the pack down the street, which could be fine, except that that pack is having the same year that you are for the same reasons if we're talking about the different economic conditions. So we want to benchmark against what the conditions are.
SPEAKER_02Chad, this is incredible. And as we always talk about on this show, you know, be the smartest political person in your organization. What a unique data set this is, right? To say that you're looking at macroeconomic trends, that you're looking at your peers in the PAC community, and that you're using data to actually evaluate the environment in which you operate. Now, the hard question, what can't this data tell us, right? You went out and got 15 data points. What are we still trying to answer?
SPEAKER_00Yeah, sure. So 15 cycles is 15 data points. That's actually a relatively small sample, but it's enough to see a strong signal, but it's not enough to be serious about moving out to multiple decimal points. So the strong findings or the de-trended GDP, PCE, I'll stand on those things. The marginal ones are directional. We can call those more hunches with some evidence attached. Now, the the second one is this is a correlation. We can tell you what moves together, but we can't really prove the mechanism. Now, the insurance explanation that I gave is the most plausible story. Um, the third is probably the one that bothered me the most that came up earlier. So the 2010 structural break uh in the middle of the data set, I do believe that Citizens United has genuinely changed the landscape. Um we might need to eventually make different models based on what some of those numbers are. Uh finally, probably the biggest one, I'd say that everything that we were talking about here is in the aggregate. We've got 300 committees, every industry and one number. And a financial services pack and an energy pack or healthcare pack, they do not live in the same world. So we've run the same methodology industry by industry across 10 different verticals. And the short version is that the direction holds pretty much everywhere, but the signal that's doing the work really depends on your sector. So we've got an industry breakdown, and then this fall we're going to bring in super PAC data, party committees, candidate committees, so we can finally see on the whole board what these numbers are, and really take a more micro look rather than a macro. And then one, I guess, last caveat I would say uh is that this only covers the external conditions, the stuff that's outside of your control, says nothing about your staffing, your program tactics, or whether your leadership actually shows up. And those matter enormously. They're just a little bit different study.
SPEAKER_01All of this, David, without the use of the anthropic fable five model. Chad Taylor, head of strategy and planning at Sage Public Affairs, just fantastic. Thank you for bringing all of this to our audience. Thank you guys very much. Really appreciate your time today.
SPEAKER_02Adam, you know, this is really incredible data. I don't know that anybody's ever run this sort of environmental analysis before. And, you know, I asked myself, does this make the job easier? No, not necessarily. It makes the job more explainable because maybe you had a flat fundraising cycle in a boom economy doesn't mean you were failing. Maybe your receipts were really up while the environment was bad for most political action committees. Well, that is an opportunity for you to study what your strategy and tactics were and potentially replicate that process again.
SPEAKER_01Absolutely. That that's got to be the takeaway. Stop benchmarking only against the pack down the street, as Chad said. Benchmark against the conditions. And if your ass this fall starts with how the company did last quarter, rewrite it before September. There's a congressional calendar full of reasons to give, and none of them are on your earnings statement, David. Well, listen, thanks to everybody downloading and sharing the number one pack podcast in America. As we say always, subscribe and share, and meet us right back here next week.
