Political party funding


Political party funding is a structure of methods that a political party uses to raise money for campaigns and routine activities. The funding of political parties is an arm of general campaign finance.
Political parties are funded by contributions from multiple sources. One of the largest arms of funding collection is via party members and individual supporters through membership fees, dues, subscriptions, or small donations. This method 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 means by which political parties secure 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 policies of the party. In certain locales, taxpayer money may be given to the party by the federal government. This is accomplished through grants called state aid, government, or public funding. Additionally, political fundraising can occur via illegal means.

Donations and subscriptions

Political parties, especially those in government, are given lobbying money 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.
Since the second half of the 20th century, parties that 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, placing more strains on funding. For example, in the United Kingdom and Australia, membership of the two main parties was less than an eighth 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, 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 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 party fund contributors, with benefactors becoming members of the House of Lords and thus in a position to participate in the legislative process. Famously, UK Prime minister David Lloyd George was found to have been selling peerages. To prevent such corruption in the future, Parliament passed the Honours Act 1925 into law., making the outright sale of peerages and similar benefits 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 elections escalate, 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 an interesting debate in a country that was the first to regulate campaign expenses. However, no legislative action has followed the proposal.

Public subsidies

In many democracies, such 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, and Poland, among others, have followed suit.
There are two broad categories of public funding:
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 an Election management body.

Foreign aid

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, 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. The goal of all these forms of aid 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, aimed to support the reconstruction of Europe after World War II and the US Foreign Assistance Act of 1961. 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.

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