Facts about the funding of political parties and election campaigns

May 15, 2015

"* "Party income from members and small donors can be described as grass-roots financing. This is practically non-existent in Spain. As parties organize less than 2 per cent of the voters, the major parties’ annual income from membership dues is only between 3 and 5 per cent of the total. In France, as well, membership of political parties is small – ca. 1,6 per cent of the electorate. Estimates from different sources assume that donations constituted 4–6 per cent of total party income and membership fees 8–22 per cent in 1995–1998. In all other countries membership dues and extra contributions from members and supporters are important to varying degree". (119)* "Membership dues and small donations – 85–90 per cent of all private political funds in Germany are raised from individuals. More than 96 per cent of all small contributions (up to DEM 6.000 (Int’l $ 3.000) per person and year) which are raised through donations and membership fees ends up in the coffers of the six parties represented in the federal parliament (for an explanation of the use of International Dollars, please see Methodology). In the Netherlands membership fees are the main source of income for political parties. Between 35 and 61 per cent of their total income in 1995 consisted of regular dues paid by party members" (119)* "There has always been a close relationship between the social democrats and the unions in Germany but there are no union contributions to the party" (121). (In contrast to other countries)* "Despite the fact that legislation in Italy demands publication of corporate contributions in companies’ annual reports and parties’ balance sheets, it seems extremely difficult even to guess the true amounts of money parties raised from this source" (121).* "In Germany, Sweden and the Netherlands plutocratic funding is only a minor problem. In Germany contributions from big donors used to be a major source for the right-of-centre parties in election years. This influence was almost completely gone by 1990. In recent years donations in excess of DEM 6.000 (Int’l $ 3.300) per donor and year have contributed only a minor share (between 6,3 and 9,8 per cent) to the total income of all German parties (see columns 8 and 9 in table 18)" (122).* "Although donations to political parties are tax deductible in the Netherlands, big donations from business circles hardly exist. Since the 1960s, donations from corporations have been considered taboo" (122).* "Until the introduction of state subsidies to political parties in 1965, Folkpartiet (the Liberals) and the Conservatives were almost completely dependent on business donations. In 1971, however, the Liberal Party itself decided to stop accepting direct donations from companies at the national level and in 1976 at all other levels, and the Conservatives made the same decision in 1977. After an electoral reform in 1998 (personval – choosing one candidate on a party list) opened the way to candidate campaigns, new questions arose as to the acceptability of corporate donations to individual candidates. Only the Conservative Party explicitly prohibited its candidates from accepting contributions from companies" (122).* "In France state subsidies have been available to candidates and political parties since 1988" (123).* "Germany in 1959 was one of the first established democracies to grant public funding to national parties. Nevertheless it took 35 years to work out the present political finance regime (which has been in effect since 1994). The Supreme Court has played a key role in that process (Kommers 1997:200–217). Germany now has a combination of the Canadian tax credit, the US matching funds (on both these, see chapter 3) and the continental West European flat grant. In order to qualify for access to public funding a party needs an 0,5 per cent share of the national vote (in a federal or European election) or a 1,0 per cent share of the vote in at least one of the (individually held) 16 state elections" (124).The amount of the subsidy is limited by two general ceilings. First, no party may receive its public entitlement unless it has collected an equal amount from (transparent) private sources, i.e., membership fees and individual or corporate donations (the technical term is “relative ceiling”). Second, the public subsidy to all parties may not exceed DEM 245 million (Int’l $ 130 m., called the “absolute ceiling”) for 1998 and the years following, to be adjusted in due course for inflation. The distribution uses a dual criterion. First, ca. 40 per cent of the public subsidy is distributed according to the number of votes received. Each vote in the most recent state, federal and European elections entitles any eligible party to a public grant of DEM 1,00 (Int’l $ 0,51) annually. For the first 5 million votes, eligible parties receive an additional bonus of DEM 0,30 (Int’l $ 0,15) per vote. With the other 60 per cent of the Treasury funds set aside for the party subsidy, small donations by individuals and membership fees are matched 2:1 with public funds" (124).* "As a consequence of these various types of public subsidies, the Swedish political parties are now very dependent on public funds, which are the dominant source of income" (125).* "A major subsidy in kind for all parties is free media time during election campaigns. In Germany private broadcasters are allowed to charge a specific fee to recover their costs; public networks (which are still the major broadcasters in a mixed system of public and private radio as well as television) may recover their production costs only. In European countries air time is generally allocated to the contesting parties in proportion to their performance in the previous general election" (127).* "In Sweden free time on television and radio is given to parties during election campaigns only. Paid political advertising by parties is not allowed except on local television and radio stations" (127).* "In the Netherlands donations from both individuals andcorporations are tax-deductible" (127).* "In Germany there have been tax incentives for small donations (and party membership dues) since 1967. Following a Supreme Court ruling, no tax benefits have been available for corporate donations since 1992. Today the tax benefit is limited to individual contributions (including membership fees) up to DEM 6.000 (Int’l $ 3.000) per donor per annum. Individual donors receive a 50 per cent tax credit of up to DEM 1.500 (Int’l $ 750) for a political contribution of up to DEM 3.000 (Int’l $ 1.500)" (127).* "Monitoring and control of political finance have been introduced in Germany, Italy and Spain" (127).* "In Germany, the Netherlands and Sweden there is no legal limit for political contributions by individual or corporate donors. The same applies to party expenditure: there is no limit on the total amount or on specific items for campaign expenses or routine spending. Nevertheless there are practical restrictions. For Germany the most important of these are (a) a ban on tax benefits for corporate donors imposed by the Supreme Court, and (b) public disclosure of all largedonations by the recipient party. Neither of these applies in the Netherlands (which offers tax benefits for donations to political parties by individuals and corporations) or in Sweden (which does not provide such benefits). Both countries, however, have other practical restrictions on corporate donations: All major parties have publicly declared that they will not accept such contributions (and so far seem to live up to this voluntary obligation)" (128-129).* "With Sweden being the only exception (parties are not obliged to provide any public information about their donors), statutory obligations to disclose donors’ identities have been implemented in all the countries compared in this chapter, obviously with different effects" (129).* "This may have been the reason why in France corporate donations of any kind were disallowed in 1995 (see section 4.1 above)" (129).* "In Germany disclosure is restricted to big donors – their names and addresses, and the total of their donations, starting at DEM 20.000 (Int’l $ 10.000) per donor per year" (129).* "Following a very heated debate in 1965, when the parties were afraid of state intervention in their internal affairs, no official monitoring exists for party funding in Sweden. All transparency provided by Swedish parties is voluntary and no legal enforcement of their agreements is possible" (133).* "Legislators clearly prefer public subsidies to private funding, at least to close the gap between increasing costs and declining membership fees and to prevent parties from becoming instruments of wealthy groups or individuals" (133).* "European parties are to a very great extent financially dependent on state subsidies. The impact of public funding in established democracies is controversial. Has it contributed to a breakdown of mass membership? Party membership in Sweden remained fairly stable for a long period after large-scale state subvention was introduced" (134).* "One of the major threats with respect to the introduction of large-scale state aid is that it may lead to a “petrification” of the party system: all subsidies foster the status quo. The development of party systems, however, indicates that there is no causal relationship (Pierre, Svåsand and Widfeldt 2000). The European party systems were considered to be “frozen” long before public subsidies to parties were introduced. In the 1990s the volatility of the electorate increased, resulting in drastic shifts of votes between parties (e.g., in Sweden and Italy), notwithstanding the enormous amounts of state subvention to the major parties. In all countries new parties arose, especially the Greens,being almost the creatures of public funding. In order to reduce the role of big money in political finance, corporate donations are prohibited (in France), limited (in Spain) or disclosed (in Germany, Italy and the Netherlands). In Sweden there are voluntary decisions of the parties not to accept such contributions. The cases of Spain and Italy show that party funding from private sources can operate outside legal mechanisms and thus cause corruption" (134).* "A framework of complete freedom plus effective disclosure would be better than the current system of bans and limits. Generous public subsidies do not stop corruption, especially if enforcement of bans, limits and transparency rules is lax. If, apart from clear fraud, all donations to parties are allowed, scandals are less likely to occur. It may also be important that other channels are open for private interests to influence political decision making. The near-absence of a clientilistic tradition in the Netherlands may have contributed to an atmosphere in which corruption of and by political parties is rare. Today, big donors hardly exist in the Netherlands or in Germany. Especially in Italy and Spain, parties are unwilling to accept effective disclosure and reporting as the political price to be paid for generous public subsidies. This has led to undisclosed contributions and fake balance sheets" (134).* "About 60 per cent of the total amount of public funding is allocated as a grant matching party income solicited from small donations, membership dues and assessments of politicians" (135). (Germany)* "For Germany, it has to be noted that the most highly developed reporting regime in any established democracy goes along with ineffective disclosure and enforcement" (135-136).Funding_of_Political_Parties_and_Election_Campaigns.pdfReginald Austin, and Maja Tjernström, "Funding of Political Parties and Election Campaigns," (Stockholm, Sweden: Institute for Democracy and Electoral Assistance, 2003). http://unpan1.un.org/intradoc/groups/public/documents/untc/unpan014975.pdf[verified 4/15/14]

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