Political party funding
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Political party funding refers to the set of methods that a political party applies to raise money for campaign and routine activities. This subject is also called political finance. In the US, campaign finance is the more frequently used term.
Political parties are funded by contributions from
- party members and individual supporters (via membership fees/ dues/ subscriptions and/ or small donations),
- organizations, which share their political views (e.g. by trade union affiliation fees) or which stand to benefit from their activities (e.g. by corporate donations) or
- taxpayers respectively the general revenue fund (by grants that are called state aid, government or public funding).
Funds for party activity (be it campaigning or routine operations) can be solicited via "grassroots fundraising" as party membership dues or other voluntary contributions from individuals (e.g. direct mail fundraising) or as "plutocratic funding" from wealthy people and/ or the business community as corporate donations. Since the 1960s an additional source of political revenue, public subsidies, is spreading among the democracies. Despite such multitude of promising options political fundraising via political corruption (e.g. influence peddling, graft, extortion, kickbacks, embezzlement) is still around.
Donations and Subscriptions
Political parties, still called factions by some, especially those in the governmental apparatus, are lobbied vigorously by organizations, businesses and special interest groups such as trade unions. Money and gifts-in-kind to a party, or its leading members, may be offered as incentives. Such donations are the traditional source of funding for all right-of-centre cadre parties. Starting in the late 19th century these parties were opposed by the newly founded left-of-centre workers' parties. They started a new party type, the mass membership party, and a new source of political fundraising, membership dues.
From the second half of the 20th century on parties which continued to rely on donations or membership subscriptions ran into mounting problems. Along with the increased scrutiny of donations there has been a long-term decline in party memberships in most western democracies which itself places more strains on funding. For example in the United Kingdom and Australia membership of the two main parties in 2006 is less than an 1/8 of what it was in 1950, despite significant increases in population over that period.
In some parties, such as the post-communist parties of France and Italy or the Socialist parties in Ireland and the Netherlands as well as the Sinn Féin party, elected representatives (i.e. MPs, MEPs, incumbents) take only the average industrial worker's wage from their salary as a representative, while the rest goes into party coffers. Although these examples may be rare nowadays, "rent-seeking" from incumbents continues to be a feature of many political parties around the world.
In the United Kingdom, it has been alleged that peerages have been awarded to contributors to party funds, the benefactors becoming members of the House of Lords and thus being in a position to participate in the legislative process. Famously, Lloyd George was found to have been selling peerages. To prevent such corruption in the future, Parliament passed the Honours (Prevention of Abuses) Act 1925 into law. Thus the outright sale of peerages and similar honours became a criminal act. However, some benefactors are alleged to have attempted to circumvent this by cloaking 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 that the scale of donations should be capped. As the costs of electioneering escalate, so the demands made on party funds increase. In the UK some politicians are advocating that parties should be funded by the state; a proposition that promised to give rise to interesting debate in a country that was the first to regulate campaign expenses (in 1883). However, no legislative action has followed the proposal.
In many other democracies such subsidies for party activity (in general or just for campaign purposes) have been introduced decades ago. Public financing for parties and/ or candidates (during election times and beyond) has several permutations and is increasingly common. Germany, Sweden, Israel, Canada, Australia, Austria and Spain are cases in point. More recently among others France, Japan, Mexico, the Netherlands and Poland have followed suit.
There are two broad categories of public funding, direct, which entails a montetary transfer to a party, and indirect, which includes broadcasting time on state media, use of the mail service or supplies. According to the Comparative Data from the ACE Electoral Knowledge Network, out of a sample of over 180 nations, 25% of nations provide no direct or indirect public funding, 58% provide direct public funding and 60% of nations provide indirect public funding. Some countries provide both direct and indirect public funding to political parties. Funding may be equal for all parties or depend on the results of previous elections or the number of candidates participating in an election. Frequently parties rely on a mix of private and public funding and are required to disclose their finances to the Election management body.
In fledgling democracies funding can also be provided by foreign aid. International donors provide financing to political parties in developing countries as a means to promote democracy and good governance. Support can be purely financial or otherwise. Frequently it is provided as capacity development activities including the development of party manifestos, party constitutions and campaigning skills. Developing links between ideologically linked parties is another common feature of international support for a party. Sometimes this can be perceived as directly supporting the political aims of a political party, such as the support of the US government to the Georgian party behind the Rose Revolution. Other donors work on a more neutral basis, where multiple donors provide grants in countries accessible by all parties for various aims defined by the recipients. There have been calls by leading development think-tanks, such as the Overseas Development Institute, to increase support to political parties as part of developing the capacity to deal with the demands of interest-driven donors to improve governance.
- Political finance
- Party subsidies
- Party political foundation
- Political donations in Australia
- Party funding in Austria
- Federal political financing in Canada
- Party finance in Germany
- Political funding in Japan
- Party funding in the Netherlands
- Political funding in New Zealand
- Party finance in Sweden
- Political funding in the United Kingdom
- Campaign finance in the United States
- See Heard, Alexander, 'Political financing'. In: Sills, David I. (ed.) International Emcyclopedia 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.
- Herbert E. Alexander (ed.): Comparative Political Finance in the 1980s. Cambridge, UK; Cambridge University Press, 1989, pp. 14/15.
- Foresti and Wild 2010. Support to political parties: a missing piece of the governance puzzle. London: Overseas Development Institute
- For details you may want to consult specific articles on Campaign finance in the United States, Federal political financing in Canada, Party finance in Germany, Party finance in Sweden, Party funding in Austria, Party funding in the Netherlands, Political donations in Australia, Political finance, Political funding in Japan, Political funding in the United Kingdom.
- ACEproject.org ACE Electoral Knowledge Network: Comparative Data: Political Parties and Candidates
- ACEproject.org ACE Electoral Knowledge Network: Comparative Data: Political Parties and Candidates
- ACEproject.org ACE Encyclopaedia: Public funding of political parties
- Heard, Alexander, The Costs of Democracy. Chapel Hill NC: University of North Carolina Press, 1960.
- Gunlicks, Arthur B., Campaign and party finance in North America and Western Europe. Boulder, CO: Westview Press, 1993.
- Alexander, Herbert E., and Shiratori, Rei (eds.), Comparative political finance among the democracies. Boulder, CO: Westview Press, 1994.
- Austin, Reginald, and Maja Tjernström (eds.), Funding of political parties and election campaigns. Stockholm: International IDEA, 2003. (see http://www.idea.int/publications/funding_parties/upload/chapter_1.pdf).
- Nassmacher, Karl-Heinz: The Funding of Party Competition. Baden-Baden: Nomos Verlag, 2009.
- Heard, Alexander, 'Political Financing'. In: Sills, David L. (ed.): International Encyclopedia of the Social Sciences, vol. 12, New York: 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. Washiongton, 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.
- Nassmacher, Karl-Heinz, 'Party Finance'. In: Kurian, George T. et al. (eds.), The encyclopedia of political science, vol 4, Washington, DC: CQ Press, 2011, pp. 1187–1189.
- Pinto-Duschinsky, Michael, 'Party Finance'. In: Badie, Bertrand et al. (eds.), International Encyclopedia of Political Science. London: Sage, 2011.