Political party funding

Political Party Funding (PPF) is the method by which a political party raises money for campaigns and routine activities. The funding of political parties is an aspect of general campaign finance.

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, dues, subscriptions, or small donations. This route 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 route of securing funds. Parties may also be funded by organizations that share their political views, such as unions or 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 (e.g. influence peddling, graft, extortion, kickbacks, embezzlement). When a party is mostly funded by private individual, they expect certain thing in return as stated in their agreement.

Donations and subscriptions

Political parties are given lobbying money by organizations, businesses, and special interest groups, such as trade unions. Money or gifts to either the party or its leading members may be offered as incentives.

Since the second half of the 20th Century, parties that often relied on donations or membership subscriptions faced mounting problems. Along with the increased scrutiny of donations, there has been a long-term decline in party memberships in most western democracies, placing more strains 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 that period.[3]

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 goes into party coffers. Although these examples may now be rare, "rent-seeking" from incumbents continues to be a feature of many political parties around the world.[4]

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 passed the Honors (Prevention of Abuses) Act 1925 into law [5], 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

In many democracies, subsidies for party activity were introduced decades ago. Public financing for parties and candidates has several permutations and is increasingly common. Germany, Sweden, Israel, Canada, Australia, Austria, and Spain are cases in point. More recently, France, Japan, Mexico, the Netherlands, Poland, and others have followed suit.

There are two broad categories of public funding:

  • Direct, entailing a monetary transfer to a party
  • Indirect, including broadcasting time on state media, use of the mail service, or supplies.

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.[6] 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[7] or the number of candidates participating in an election.[8] Frequently, parties rely on a mix of private and public funding and are required to disclose their finances to an Election management body.[9]

Foreign aid

In fledgling democracies, funding can also be provided by foreign aid. International donors provide financing 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, it is provided as capacity development activities, including the development of party manifestos, party constitutions, and campaigning skills.[4] 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.[10] Developing ties between ideologically affiliated parties is another common feature of international support for a party.[4] 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. 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.[4] 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.[4]

See also

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. Foresti and Wild 2010. Support to political parties: a missing piece of the governance puzzle. London: Overseas Development Institute
  5. "From Lloyd George to the lavender list: the history of honours scandals". the Guardian. 2016-08-01. Retrieved 2020-07-25.
  6. ACEproject.org ACE Electoral Knowledge Network: Comparative Data: Political Parties and Candidates
  7. 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.  – via Questia (subscription required)
  8. ACEproject.org ACE Electoral Knowledge Network: Comparative Data: Political Parties and Candidates
  9. ACEproject.org ACE Encyclopaedia: Public funding of political parties
  10. "WHAT IS FOREIGN AID? 5 THINGS YOU SHOULD KNOW". Concern worldwide US. January 23, 2020.

Books

Articles
  • 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. 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.
  • 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.
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