American Political Science Review (2018)112.4,792-808 doi:10.1017/S0003055418000382 American Political Science Association 2018 How Internal Constraints Shape Interest Group Activities:Evidence from Access-Seeking PACs ZHAO LI Stanford Graduate School of Business nterest groups contribute much less to campaigns than legally allowed.Consequently,prevailing the- ories infer these contributions must yield minimal returns.I argue constraints on PAC fundraising may also explain why interest groups give little.I illuminate one such constraint:access-seeking PACs rely on voluntary donations from affiliated individuals (e.g.,employees),and these PACs alienate donors with partisan preferences when giving to the opposite party.First,difference-in-differences analysis of real giving shows donors withhold donations to access-seeking PACs when PACs contribute to out-partisan politicians.Next,an original survey of corporate PAC donors demonstrates they know how their PACs allocate contributions across parties,and replicates the observational study in an experiment.Donors partisanship thus limits access-seeking PACs'fundraising and influence.This provides a new perspective on why there is little interest group money in elections,and has broad implications for how partisan preferences and other internal constraints shape interest group strategy. ne of the most important questions in political there would be much more PAC money in politics than science is whether or how interest groups can observed (Tullock 1972:Milvo,Primo,and Groseclose gain political influence with campaign contri- 2000:Ansolabehere,de Figueiredo,and Snyder 2003). butions.Because it is difficult to assess the causal effects This argument,however,assumes interest group of contributions on policy outcomes,many instead PACs could always give more to campaigns had they look for clues revealed by interest group strategies.A wanted to (except for the legal caps on contributions). striking observation is that interest group PACs spend Few scholars have examined internal factors that could much less on campaign contributions than legally al- constrain PAC contributions,3 and,in particular,no & lowed.For instance,an interest group PAC can give research has explored the fundraising constraints on up to $5,000 per candidate per election.In the 2016 PACs'ability to finance these contributions.The pres- election cycle,the average PACsponsored by a publicly ence of fundraising and other constraints may not only traded company in the U.S.gave $5,000 or more to only shed new light on why there is little interest group seven federal candidates,and the median number is money in elections,but also provide valuable insights one.Since PACs rarely reach these contribution limits into a wide range of questions about interest group influential work in campaign finance argues that PAC strategy and power. contributions must generate minimal returns,or else In this paper,I identify one such constraint:an inter- est group's need to seek access by contributing across Zhao Li is a Ph.D.candidate in political economics,Stanford Gradu- party lines could conflict with the heterogeneous par- ate School of Business(zli19@stanford.edu). tisan preferences of individual group members,whose This paper has benefited from excellent feedback from the editor voluntary donations are critical for PAC fundraising. and three anonymous reviewers In addition,I am grateful for con- On one hand,many PACs focus on gaining access or in- tinued guidance from Adam Bonica.David Broockman.Neil Malho- fluence and,as a result,give predominantly to members tra,and Ken Shotts.I am also thankful for many helpful comments from Michael Barber,Dave Baron,Jon Bendor,Kate Casey,Richard of the majority party (Cox and Magar 1999;Rudolph DiSalvo,Alex Hertel-Fernandez,Keith Krehbiel,Jon Krosnick,Ellie 1999).On the other hand,contributions made by spon- Powell,Dave Primo,Larry Rothenberg.and poster session attendees sored PACs,such as those representing corporations, at the Yale Center for American Politics Summer Conference as well must by law be financed solely with voluntary contri- as the Conference of the Society for Political Methodologists.The butions from a restricted class of individuals,such as survey experiment in this paper was preregistered with Evidence in Governance and Politics (EGAP)(Registration No.20170413AC) managers,shareholders,and employees.These restric- and approved by Stanford University's Institutional Review Board tions continue to hold in the post-Citizens United era (Protocol No.39512).Special thanks to the PhD program at Stan While individual donors share an interest in their or ford Graduate School of Business for providing funding for my ex- ganization's economic success,many also have strong periment:Adam Bonica for sharing version 3 of the Database on Ideology,Money in Politics,and Elections;and George Thampy for and stable partisan preferences.Moreover,these pref- suggestions that enhanced the ecological validity of the experimen- erences are often diverse even within the same orga- tal treatment conditions.All errors are my own.Replication files nization,which could conflict with an interest group's are available at the American Political Science Review Dataverse: https://doi.org/10.7910/DVN/TITELH. Received:October 30,2017:revised:March 31,2018;accepted:June 3 Much of the existing literature has focused on whether factors 13,2018.First published online:August 3,2018. such as collective action problems among interest groups(see,for example,Grier,Munger,and Roberts 1994;Gray and Lowery 1997 1 Ansolabehere,de Figueiredo,and Snyder(2003)describe some of Hansen,Mitchell,and Drope 2005)lower the investment returns to the common obstacles to causal identification. PAC contributions,thereby leading to low levels of such contribu- 2 This is based on OpenSecret's bulk data (Center for Responsive tions.But there has been much less attention on what could con- Politics 2018).I examined all companies listed in the Compustat strain PAC contributions and other interest group activities,taking North America database that had active PACs in 2016(Compustat their rates of returns as given.I revisit this point in my theoretical North America 2017). discussions. 792American Political Science Review (2018) 112, 4, 792–808 doi:10.1017/S0003055418000382 © American Political Science Association 2018 How Internal Constraints Shape Interest Group Activities: Evidence from Access-Seeking PACs ZHAO LI Stanford Graduate School of Business I nterest groups contribute much less to campaigns than legally allowed. Consequently, prevailing the￾ories infer these contributions must yield minimal returns. I argue constraints on PAC fundraising may also explain why interest groups give little. I illuminate one such constraint: access-seeking PACs rely on voluntary donations from affiliated individuals (e.g., employees), and these PACs alienate donors with partisan preferences when giving to the opposite party. First, difference-in-differences analysis of real giving shows donors withhold donations to access-seeking PACs when PACs contribute to out-partisan politicians. Next, an original survey of corporate PAC donors demonstrates they know how their PACs allocate contributions across parties, and replicates the observational study in an experiment. Donors’ partisanship thus limits access-seeking PACs’ fundraising and influence. This provides a new perspective on why there is little interest group money in elections, and has broad implications for how partisan preferences and other internal constraints shape interest group strategy. One of the most important questions in political science is whether or how interest groups can gain political influence with campaign contri￾butions.Because it is difficult to assess the causal effects of contributions on policy outcomes,1 many instead look for clues revealed by interest group strategies. A striking observation is that interest group PACs spend much less on campaign contributions than legally al￾lowed. For instance, an interest group PAC can give up to $5,000 per candidate per election. In the 2016 election cycle, the average PAC sponsored by a publicly traded company in the U.S. gave $5,000 or more to only seven federal candidates, and the median number is one.2 Since PACs rarely reach these contribution limits, influential work in campaign finance argues that PAC contributions must generate minimal returns, or else Zhao Li is a Ph.D. candidate in political economics, Stanford Gradu￾ate School of Business (zli19@stanford.edu). This paper has benefited from excellent feedback from the editor and three anonymous reviewers. In addition, I am grateful for con￾tinued guidance from Adam Bonica, David Broockman, Neil Malho￾tra, and Ken Shotts. I am also thankful for many helpful comments from Michael Barber, Dave Baron, Jon Bendor, Kate Casey, Richard DiSalvo, Alex Hertel-Fernandez, Keith Krehbiel, Jon Krosnick, Ellie Powell, Dave Primo, Larry Rothenberg, and poster session attendees at the Yale Center for American Politics Summer Conference as well as the Conference of the Society for Political Methodologists. The survey experiment in this paper was preregistered with Evidence in Governance and Politics (EGAP) (Registration No. 20170413AC) and approved by Stanford University’s Institutional Review Board (Protocol No. 39512). Special thanks to the PhD program at Stan￾ford Graduate School of Business for providing funding for my ex￾periment; Adam Bonica for sharing version 3 of the Database on Ideology, Money in Politics, and Elections; and George Thampy for suggestions that enhanced the ecological validity of the experimen￾tal treatment conditions. All errors are my own. Replication files are available at the American Political Science Review Dataverse: https://doi.org/10.7910/DVN/T1TELH. Received: October 30, 2017; revised: March 31, 2018; accepted: June 13, 2018. First published online: August 3, 2018. 1 Ansolabehere, de Figueiredo, and Snyder (2003) describe some of the common obstacles to causal identification. 2 This is based on OpenSecret’s bulk data (Center for Responsive Politics 2018). I examined all companies listed in the Compustat North America database that had active PACs in 2016 (Compustat North America 2017). there would be much more PAC money in politics than observed (Tullock 1972; Milyo, Primo, and Groseclose 2000; Ansolabehere, de Figueiredo, and Snyder 2003). This argument, however, assumes interest group PACs could always give more to campaigns had they wanted to (except for the legal caps on contributions). Few scholars have examined internal factors that could constrain PAC contributions,3 and, in particular, no research has explored the fundraising constraints on PACs’ ability to finance these contributions. The pres￾ence of fundraising and other constraints may not only shed new light on why there is little interest group money in elections, but also provide valuable insights into a wide range of questions about interest group strategy and power. In this paper, I identify one such constraint: an inter￾est group’s need to seek access by contributing across party lines could conflict with the heterogeneous par￾tisan preferences of individual group members, whose voluntary donations are critical for PAC fundraising. On one hand,many PACs focus on gaining access or in￾fluence and, as a result, give predominantly to members of the majority party (Cox and Magar 1999; Rudolph 1999). On the other hand, contributions made by spon￾sored PACs, such as those representing corporations, must by law be financed solely with voluntary contri￾butions from a restricted class of individuals, such as managers, shareholders, and employees. These restric￾tions continue to hold in the post-Citizens United era. While individual donors share an interest in their or￾ganization’s economic success, many also have strong and stable partisan preferences. Moreover, these pref￾erences are often diverse even within the same orga￾nization, which could conflict with an interest group’s 3 Much of the existing literature has focused on whether factors such as collective action problems among interest groups (see, for example, Grier, Munger, and Roberts 1994; Gray and Lowery 1997; Hansen, Mitchell, and Drope 2005) lower the investment returns to PAC contributions, thereby leading to low levels of such contribu￾tions. But there has been much less attention on what could con￾strain PAC contributions and other interest group activities, taking their rates of returns as given. I revisit this point in my theoretical discussions. 792 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000382