Political party funding

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Political party funding is a method used by a political party to raise money for campaigns and routine activities. The funding of political parties is an aspect of campaign finance.

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Political parties are funded by contributions from multiple sources. One of the largest sources of funding comes from party members and individual supporters through membership fees, subscriptions and small donations. This type of funding is often referred to as grassroots funding or support. Solicitation of larger donations from wealthy individuals, often referred to as plutocratic funding, is also a common method of securing funds. Parties can also be funded by organizations that share their political views, such as unions, political action committees, or organizations that seek to benefit from the party's policies. In certain locales, taxpayer money may be given to a party by the federal government. This is accomplished through state aid grants, government, or public funding. [1] [2] Additionally, political fundraising can occur via illegal means, such as influence peddling, graft, extortion, kickbacks and embezzlement.

Donations and membership fees

Political parties may be given money by organizations, businesses, individual donors and special interest groups, such as trade unions. These groups may offer money or gifts to either the party or its leading members as incentives. When this happens with the goal of influencing the political stance or actions of the party, this is referred to as lobbying.

Since the second half of the 20th century, parties that typically relied upon donations or membership fees have been facing mounting problems. Increased scrutiny of donations and the long-term decline in party memberships in most western democracies are placing a greater strain on funding. For example, in the United Kingdom and Australia, membership of the two main parties in 2006 was less than an eighth of what it was in 1950, despite significant increases in population over the same period. [3]

Straddling personal and public political funding, a U.S. public funding program allows taxpayers to direct $3 of their federal income tax to finance the qualified expenses of eligible presidential candidates. [4] Rather than a contribution, the small individual donation constitutes a redirection of income tax owed without additional direct disbursement by taxpayers.

In some parties, such as the post-communist parties of France and Italy, or the Socialist parties in Ireland and the Netherlands, elected representatives take only the average industrial worker's wage from their salary as a representative, while the rest contributes to funding their party in general. Although these examples may now be rare, "rent-seeking" from incumbents continues to be a feature of some parties, such as in Nepal. [5]

In the United Kingdom, it has been alleged that peerages have been awarded to party fund contributors, with benefactors becoming members of the House of Lords and thus in a position to participate in the legislative process. For instance, UK Prime minister David Lloyd George was found to have been selling peerages. To prevent similar future corruption, Parliament enacted the Honours (Prevention of Abuses) Act 1925, [6] making the outright sale of peerages and similar benefits a criminal act. However, some benefactors are alleged to have attempted to circumvent this by disguising their contributions as loans, giving rise to the "Cash for Peerages" scandal.

Such activities, as well as assumed influence peddling, have given rise to demands for donation caps. As the costs of elections increase, so do the demands of party funds. In the UK, some politicians have advocated that parties be funded by the state, a proposal that promised to give rise to debate in the country that was first to regulate campaign expenses in 1883. However, no legislative action has followed the proposal.

Public subsidies

Subsidies for party activity have been introduced in many countries. Public financing for parties and candidates is increasingly common. Germany, Sweden, Israel, Canada, Australia, Austria, and Spain are cases in point. More recently, France, Japan, Mexico, the Netherlands and Poland have followed suit.

There are two broad categories of public funding:

According to the comparative data from the ACE Electoral Knowledge Network, from a sample of over 180 nations, 25% of nations provide no direct or indirect public funding, 58% provide direct public funding, and 60% provide indirect public funding. [7] Some countries provide both direct and indirect public funding to political parties.

Funding may be equal for all parties or dependent upon the results of previous elections [8] or the number of candidates participating in an election. [9] Frequently, parties rely on a mix of private and public funding and are required to disclose their finances to an election management body. [10]

== Foreign In fledgling democracies, funding can also be provided through foreign aid. International donors provide financial help to political parties in developing countries as a means to promote democracy and good governance, or, in some cases, to support preferred political parties. Support can be purely financial or otherwise. Frequently, support is provided in the form of capacity development activities, including the development of party manifestos, party constitutions, and campaigning skills. [5]

The goal of all aid types is to provide development assistance at the international level to maintain a functioning global society. Major principles of modern forms of foreign aid were determined within the Marshall Plan, which aimed to support the reconstruction of Europe after World War II and the US Foreign Assistance Act of 1961. [11] Developing ties between ideologically affiliated parties is another common feature of international support for a party. [5] This can sometimes be perceived as direct support for the political aims of a political party, such as the support of the US government to the Georgian party behind the Rose Revolution.[ citation needed ]

Other donors work on a more neutral basis, where multiple donors provide grants in countries accessible by all parties for various purposes defined by the recipients. [5] Some leading think-tanks like the Overseas Development Institute have called to increase support for political parties as part of developing the capacity to deal with the demands of interest-driven donors to improve governance. [5]

Foreign interference

Concerns have been raised over less overt interventions in national political party funding made by foreign governments [12] as it impugns the reputation of nation-states on the world stage; the topic remains controversial and fiercely debated [13] and defended. [14] [15]

In August 2021, a lawsuit charged the former fundraiser of the United States Republican Party, Elliot Broidy, accountable for accepting funds worth millions of dollars from the government of the United Arab Emirates. The funding was allegedly aimed at executing a smear campaign against the State of Qatar, a then-rival of the UAE, and influencing the US foreign policy. [16]

See also

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<span class="mw-page-title-main">Campaign finance</span> Political vote advocacy funding

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A publicly funded election is an election funded with money collected through income tax donations or taxes as opposed to private or corporate funded campaigns. It is a policy initially instituted after Nixon for candidates to opt into publicly funded presidential campaigns via optional donations from tax returns. It is an attempt to move toward a one voice, one vote democracy, and remove undue corporate and private entity dominance.

<span class="mw-page-title-main">Campaign finance in the United States</span> Contributions to American election campaign funds

The financing of electoral campaigns in the United States happens at the federal, state, and local levels by contributions from individuals, corporations, political action committees, and sometimes the government. Campaign spending has risen steadily at least since 1990.

Party subsidies or public funding of political parties are subsidies paid by the government directly to a political party to fund some or all of its political activities. Most democracies provide cash grants from taxpayers' money, the general revenue fund, for party activity. Such funds may cover routine or campaign costs incurred by the party. Among the established democracies the United States, Switzerland and India are the most notable exceptions. Party subsidies can be relatively small or quite generous. In the U.S., the Presidential Fund takes money from the general fund only after authorized by a statement indicated upon a taxpayer's tax return.

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Electoral reform in the United States refers to efforts to change American elections and the electoral system used in the United States.

Political funding in the United Kingdom has been a source of controversy for many years. Political parties in the UK may be funded through membership fees, party donations or through state funding, the latter of which is reserved for administrative costs. The general restrictions in the UK were held in Bowman v United Kingdom to be fully compatible with the European Convention on Human Rights, article 10.

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The financing of federal political entities in Canada is regulated under the Canada Elections Act. A combination of public and private funds finances the activities of these entities during and outside of elections.

Political finance covers all funds that are raised and spent for political purposes. Such purposes include all political contests for voting by citizens, especially the election campaigns for various public offices that are run by parties and candidates. Moreover, all modern democracies operate a variety of permanent party organizations, e.g. the Democratic National Committee and the Republican National Committee in the United States or the Conservative Central Office and the Labour headquarters in the United Kingdom. The annual budgets of such organizations will have to be considered as costs of political competition as well. In Europe the allied term "party finance" is frequently used. It refers only to funds that are raised and spent in order to influence the outcome of some sort of party competition. Whether to include other political purposes, e.g. public relation campaigns by lobby groups, is still an unresolved issue. Even a limited range of political purposes indicates that the term "campaign funds" is too narrow to cover all funds that are deployed in the political process.

Party finance in Germany is the subject of statutory reports, which up to 35 parties file annually with the administration of the German parliament. Important questions pertaining to political party funding can be answered by analysing the data given in these financial reports: How much money is raised and spent by each party operating in Germany? What assets are at the disposal, which debts are on the books of German parties? For which purposes did parties spend their funds? From which itemized sources did a specific party collect its revenue? Who are the donors of major contributions and how much did each donor give during a specific calendar year?

The term corporate donation refers to any financial contribution made by a corporation to another organization that furthers the contributor's own objectives. Two major kinds of such donations deserve specific consideration, charitable as well as political donations.

By and large political finance in the Netherlands is a party matter. Compared to other nations the spending level is quite moderate, annually about €2,40 per voter.

Party funding in Austria has been subject to public regulation and public subsidies since 1975. Although the demarcation between campaign financing and routine activities due to overlapping election cycles and "permanent campaigning" is quite difficult, Austrian law has for a long time provided for separate subsidies from the federal budget. So have done the nine states of the Austrian federation and some municipalities.

<span class="mw-page-title-main">Political funding in New Zealand</span>

Political funding in New Zealand deals with political donations, public funding and other forms of funding received by politician or political party in New Zealand to pay for an election campaign. Only quite recently has political funding become an issue of public policy. Now there is direct and indirect funding by public money as well as a skeleton regulation of income, expenditure and transparency.

Political funding in Ireland has re-emerged as an issue of public policy quite recently when in 2012 the Electoral Act of 1997 was amended to cover basic needs of transparency and control.

Party funding in Israel is political financing in Israel that covers the funds raised and spent to influence political competition between political parties, especially the campaigns for national (Knesset) and municipal elections as well as the routine operation of party organizations. Ever since the Yishuv. the pre-state formation of Jewish life in Eretz Israel, political parties have been the foremost organizations of the polity.

References

  1. ↑ See Heard, Alexander, 'Political financing'. In: Sills, David I. (ed.) International Encyclopedia of the Social Sciences, vol. 12. New York, NY: Free Press – Macmillan, 1968, pp. 235–241; Paltiel, Khayyam Z., 'Campaign finance – contrasting practices and reforms'. In: Butler, David et al. (eds.), Democracy at the polls – a comparative study of competitive national elections. Washington, DC: AEI, 1981, pp. 138–172; Paltiel, Khayyam Z., 'Political finance'. In: Bogdanor, Vernon (ed.), The Blackwell Encyclopedia of Political Institutions. Oxford, UK: Blackwell, 1987, pp. 454–456; 'Party finance', in Kurian, George T. et al. (eds.) The encyclopedia of political science. vol 4, Washington, DC: CQ Press, 2011, pp. 1187–1189.
  2. ↑ Herbert E. Alexander (ed.): Comparative Political Finance in the 1980s. Cambridge, UK; Cambridge University Press, 1989, pp. 14/15.
  3. ↑ "The parties' democratic deficit". Inside Story. 2010-02-10. Retrieved 2020-07-25.
  4. ↑ "Public funding of presidential elections" . Retrieved 2020-08-28.
  5. 1 2 3 4 5 Leni Wild; Marta Foresti (December 2010). "Support to political parties: A missing piece of the governance puzzle" (PDF). ODI - Overseas Development Institute. Overseas Development Institute. Retrieved 11 October 2020.
  6. ↑ "From Lloyd George to the lavender list: the history of honors scandals". the Guardian. 2016-08-01. Retrieved 2020-07-25.
  7. ↑ ACEproject.org ACE Electoral Knowledge Network: Comparative Data: Political Parties and Candidates
  8. ↑ In Italy, "given the repeal of the 1993 referendum on the public financing of parties, the electoral reimbursements are charging numerous instances of political funding": Buonomo, Giampiero (2000). "Ai vecchi rimborsi elettorali negata la ripartizione regionale". Diritto&Giustizia Edizione Online. Archived from the original on 2012-08-01. Retrieved 2016-03-14.
  9. ↑ ACEproject.org ACE Electoral Knowledge Network: Comparative Data: Political Parties and Candidates
  10. ↑ ACEproject.org ACE Encyclopaedia: Public funding of political parties
  11. ↑ "WHAT IS FOREIGN AID? 5 THINGS YOU SHOULD KNOW". Concern worldwide US. January 23, 2020.
  12. ↑ "Public opinion and foreign electoral intervention" (PDF). American Political Science Review, 2020".
  13. ↑ "Contesting Accusations of 'Foreign Interference': New Agendas for Australian Civil Society". Hudson Institute.
  14. ↑ "Russian donors have stepped up Tory funding". openDemocracy. Retrieved 2020-08-28.
  15. ↑ "China's foreign interference likely 'widespread' in Canada, says author of new report". The Star. Retrieved 2020-08-28.
  16. ↑ "Qatar-Based Travel Firm Mosafer, Inc. Files Lawsuit Against Elliott Broidy And George Nader In US Federal Court For Allegedly Illegally Orchestrating And Executing Secret Assault Against Qatar And Qatari Businesses; Suit Alleges They Violated Fara And Other Reporting Obligations". Finance.Yahoo. Retrieved 6 August 2021.

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