Apart from receiving money from public funding schemes, political parties can receive their funds from membership dues, private (or sometimes corporate) donations, or income from properties or businesses. Too much reliance upon public funds is claimed to reduce the linkage between political parties and their members, and turn them into organs of the state rather than voluntary organisations. Most countries in the world therefore accept, and sometimes even encourage, political parties to seek funds from other sources. All sources of funds are, however, associated with specific risks that may endanger the successful operation of a democracy. Therefore, donations from dubious sources are often prohibited or limited altogether. Grass-roots funding and membership dues are probably the only two sources of funds that are always allowed.
The sources that are most likely to be prohibited are:
- Funds coming from foreign governments, individuals, corporations, or (in some cases) exiled communities. If a political party relies heavily on funding from foreign sources – especially if it is in government – there is a risk that the national sovereignty could be threatened and that political decisions will be taken with foreign rather than domestic needs in mind. Many object to anyone who does not have voting rights in the country still being able to influence politics.
- Donations from government contractors are prohibited in many cases. The risk is that elected representatives would feel compelled to reward government contracts to those who have contributed to his or her campaign, or demand donations in exchange for contracts.
- Corporate donations from national, multi-national, and foreign companies are often prohibited on the grounds that they may corrupt politics by leading the donors to expect favours from elected politicians. It is mainly the fact that corporations can donate very large sums of money that has proven problematic.
- Donations from State entities (that are not part of public funding schemes involving all political parties) are prohibited on the grounds that donations from State entities would compromise the neutrality and impartiality of the State administration.
- Trade union donations are prohibited where there is a feeling that the trade union organisations should be kept separate from the political parties.
- Funds from illegal sources like organized crime, gambling, and the drug trade are banned in many countries and unacceptable in all, regardless of legal provisions, again on the grounds that the donors might expect favours from elected politicians.
- Religious groups are sometimes prohibited from donating funds to political parties following an argument that organized religion is a domain that should be kept separate from politics.
Prohibitions may be difficult to enforce since they demand that authorities keep a close eye on all funds – including cash, which is notoriously difficult to trace – that come into political party accounts and pockets. The administration of prohibition laws is difficult and consumes both time and resources. Many argue, however, that the importance of the protection it gives democratic politics is important enough to invest resources, while others seek other ways of regulating or monitoring party income. If prohibitions seem like a line that is hard to draw, introductions of limits on donations can help curb the potentially distorting effect of donations but still give political parties a wider range of acceptable sources of funds.
See also:
Campaign Legal Center (USA). A Guide to the Current Rules for Federal Elections (2010).
Party Funding and Campaign Financing in International Perspective (Columbia-London Law Series, 2006). Keith Ewing and Samuel Issacharoff, ed.
