Many countries have adopted campaign finance regulations aimed at promoting fair political competition and curbing the influence of money over policies and politics.  Campaign finance regulations include rules on contributions, expenditures, disclosure requirements, enforcement, and sanctions. These regulations can be divided into three main categories: sources of financing, campaigning, and reporting/ oversight and sanctions. The table below summarizes the main components of each of the three main groups with a reference to one or several international instrument(s) applicable to the type of regulation cited.

A variety of campaign finance systems exist around the world, ranging from loose sets of legislation to tightly regulated legal frameworks. Within this large array of systems, some regulations are more common than others. The graphic below (figure 1) shows the percentage of countries using the different types of campaign finance regulations. The figures mentioned below are based on the International IDEA political finance database[1] and are only related to regulations applicable to the financing of electoral campaigns in the 180 countries surveyed for the database. Thus, percentages given regarding the contribution limits and bans, the campaign spending limits, and the reporting requirements are those applicable to both political parties and candidates in relation to campaign finances.

Depending on the country, campaign finance regulations may be contained in the constitution, and/or elaborated in a specific law on campaign finance or in broader laws on elections or political parties. Additionally, criminal legislation, such as the penal code, as well as legislation governing anti-corruption measures, auditing, media, gender equality or taxes, may also contain provisions about campaign finance. Relevant constitutional/ judicial case-law may also clarify some legal provisions on campaign finance. Most campaign finance laws allow the oversight body to provide further clarification of campaign finance regulation through the publication of instructions. 

Practice varies throughout the world, with different institutions tasked with the supervision of campaign finance regulations. Institutions may include an Election Management Body (EMB), a specialized body, a Ministry, a Court, or a government/ auditing institution. Of the countries with oversight bodies responsible for enforcing campaign finance rules, the most common institution taking over this supervision task is the election management body (47% of the cases).  This Focus On is limited to countries in which the electoral management body is responsible for campaign finance regulation, which means that most case studies will address specific aspects of campaign finance regulation in countries where the EMB is responsible for campaign finance monitoring. 

Figure 2: Different types of campaign finance enforcing bodies[1]

The EMB is considered in many countries as the best suited institution to enforce campaign finance legislation since it is generally a permanent state body which is supervising and managing the whole electoral process. On the other hand, the EMB might not have the specialized personnel, sufficient institutional and financial resources, or enough time to carry out such a task. In addition, in instances where the EMB has some representatives from different political parties, it might be seen as partial or susceptible to take political-biased decisions.

 For ease of understanding, and in order to review the existing methodologies and approaches to regulation of campaign finance, the three sets of regulations mentioned above - i.e. regulation of income, regulation of spending, and regulation of control mechanisms - will be considered in greater detail.

Sources of financing

Most countries around the world use a mixed campaign finance system that allows for both public financing, allocated by the State, and private financing, given by individual and/or legal entities. Both types of financing allow for monetary and in-kind contributions.[2]

Public campaign financing

Public funding is a widespread practice of campaign finance regulation,3] and a common aim is to contribute towards a landscape where parties and candidates can compete equally. A potential upside is that it may encourage compliance with campaign finance rules because of the threat to withhold public funds if electoral contestants fail to abide by them. Public financing also implies the need for transparency regarding the use of these funds, since the public is the ultimate source of these funds and should be allowed the possibility of meaningful scrutiny. The level of public funding disbursed is also another critical factor to take into account. If there is too little money or if the number of eligible recipients is too important, the allocation of public funding will have a limited impact, if any at all, and could be seen as a waste of taxpayer money or will make no difference to political parties which will be granted a fairly small amount of public funds. On the other hand, in instances where the level of public financing is high and constitutes the dominant funding source, there is a risk that electoral contestants become increasingly dependent on public funding  and lack grass-roots support bringing about the weakening of the link between political parties/ candidates and their electorate.

Public campaign financing can be both direct and indirect. Direct financing refers to monetary contributions in the form of both annual subsidies covering parties’ routine functioning, as well as electoral campaign subsidies granted to candidates and political parties for the purpose of contributing to campaign and election costs. Indirect financing includes non-monetary contributions, which can range from providing candidates and/or political parties with services for free or at a reduced rate – such as access to public media or use of billboards in order to display the electoral materials – to allowing the use of state property for the purpose of campaigning, to printing of electoral materials, or to tax relief based on campaign contributions.

Public financing can either be allocated before the election or after in the form of reimbursement of electoral expenditures once electoral actors have complied with reporting requirements. It is typically based on objective criteria, such as parliamentary representation, percentage of votes cast for the party or the candidate, the number of candidates put forward by the party in an election, or a combination of these criteria. Most countries use some kind of threshold for receiving public funding which is often lower than the electoral threshold for the allocation of a mandate in parliament.         

The allocation of public funding can be made contingent on compliance with requirements for women’s participation.4] According to International IDEA’s political finance database, 27 out of the 180 countries listed have adopted reforms that directly target gender equality.5] One approach is to create financial incentives in the form of additional public funding for political parties meeting legal criteria such as including a certain number or percentage of either sex on their candidate lists or reimbursing for example, some specific expenditure related to childcare services. Another approach is to reduce, deny or withdraw public funding for political parties which do not include a certain number or percentage of women candidates.  The last approach is to earmark a certain share of the public funding to activities related to gender equality within the party, such as the training of women candidates or the support of women’s wings.

Figure 3: Examples of approaches to connect campaign finance with gender equality

Private campaign financing

Private funding includes contributions6] from individuals or legal persons, self-financing and in some instances, loans taken out by political parties and candidates to finance their campaign, depending on the states’ legislation. Private campaign financing is a form of political participation and it is important that all individuals have the right to freely express their support of a political party or a candidate of their choice through financial and in-kind contributions. Private funding can be limited by amount (quantitative limitations) and/or by source (qualitative limitations), as private financing can distort the political process in favour of wealthy interests.

Quantitative limitations, which cap the monetary amount of campaign-related contributions people can make to a candidate or a political party, aim to minimize the possibility of corruption and the purchasing of political influence. However, contribution limits have to be balanced with the legitimate need to protect freedom of expression. Caps on the contribution amounts may be seen as an infringement of freedom of expression since they limit financial and in-kind support from individuals. Two contradictory principles are at stake here: the need for parties and candidates to raise enough funds to campaign effectively, and the right of people to express themselves by giving money. In some countries, money is speech and freedom of expression trumps other principles, such as the principle of fair elections, while in some others, the use of money is limited in order to create the conditions for an even level playing field.

According to International IDEA’s political finance database, 38 % of countries cap the amount that individuals and/or legal entities can contribute to a political party in relation to an election, while 30% of countries limit the amount a donor can contribute to a candidate.

Qualitative limitations, which restrict the sources of contributions, aim to limit the ability of particular groups or wealthy contributors to gain political influence on candidates or political parties. These restrictions often apply to non-citizens, companies, unions, government contractors, and anonymous persons. The graphic below (figure 4) shows the different types of contribution bans to electoral contestants in relation to election campaigns.7]

Figure 4:Contribution bans

Besides private contributions, electoral contestants are also permitted to finance campaigns by taking out loans to equalize access to private funding among candidates regardless of individual wealth. This source of financing is considered private campaign financing. When loans are allowed, electoral contestants can take out loans from financial institutions (banks, credit card companies), and sometimes from legal entities or individuals. For transparency, legislation should require that all bank loans and loan details be reported and disclosed, including: identity of the lender, total amount of loan, interest rate, repayment period, and any contingency which may impact the initial conditions agreed for the loan in question.   

Campaigning

Campaign spending regulations usually aim at restricting the amount of money that can be spent and the kinds of expenditures that political parties and/or candidates can incur for electoral purposes. This common form of regulation consists of setting a ceiling on the permissible electoral expenditures that individual candidates can incur and/ or the total amount spent by a political party during a campaign and/ or setting out rules prohibiting the use of administrative resources for electoral purposes.

Spending limits

The rationale behind a ceiling on expenditures is twofold: levelling the playing field by ensuring that candidates with more financial means are not unfairly advantaged, and keeping the total campaign costs at a moderate level, and thus minimizing the need for additional fundraising and subsequent political dependence on donors. The spending limit has to be realistic enough to allow candidates and political parties to effectively campaign and reach out to voters. The spending limit is usually determined by factors such as the voting population, the geographic size of constituencies, the length of the campaign period, and other factors such as the cost of inflation. Whether electoral contestants are provided with free media time by law is another important factor in setting spending limits, given the high cost of paid advertising.

However, setting a ceiling on expenditures can be undermined if third parties such as interest groups, trade unions, corporations, associations, or individuals spend money on behalf of or in opposition to a particular political party or candidate and do not have to abide by the spending limit. Most countries have no regulations on third-party spending,8] which remains an area of concern, and “gives interest groups a significant role in political spending, although campaign spending by parties and candidates is subject to statutory limits.”[9]   

To make the spending limit effective, it is important for regulations to define two things: electoral expenditure and the campaign period. These inform electoral contestants of both the types of expenditure that must be reported in the financial reports and the timeframe, respectively.

The definition of electoral expenditures must encompass both monetary and in-kind expenditures. In-kind expenditures, such as use of the candidate’s personal car or the supply of personnel by the political party for electoral purposes, should count towards the spending limit according to their market value to prevent circumvention of spending limits. The definition of electoral expenditures should also take into account the issue of illegal expenditures (such as vote buying10]) which have to be reported in financial reports but cannot be financed through legal sources. Indeed, while those expenditures are illicit by nature, they are nevertheless incurred to get electors’ votes. In this regard, they have to be counted against the spending limit when such a limit does exist.

Besides capping electoral expenditures, some campaign finance systems also limit or ban certain types of expenditure; most notably on paid political advertising.

Paid political advertising is statutorily forbidden in a significant number of Western European countries such as: Belgium, Denmark, France, Germany, Ireland, Malta, Norway, Portugal, Switzerland, and the UK and in some central and Eastern Europe, such as the Czech Republic and Romania. In these countries, electoral contestants are usually granted free airtime, generally on public service broadcasters, to present their programs.    Other countries, such as Australia, Argentina, Canada, or South Africa, do not have a blanket ban, but have restrictions regarding the use, content and amount of political advertising (either the amount of money spent on political advertising or the number of advertisements).

The rationale behind this ban is to constrain growth of campaign spending and to prevent the domination of public debate and electoral campaigns by wealthy parties and to maintain the presentation of balanced views. In addition, it is believed that bans on paid advertising safeguard the quality of political debate. With bans on more expensive and financially intensive campaigns, less expensive means – such as social networks, door-to-door campaigning, and campaigning through networks of volunteers – become more popular.

However, a ban on political advertising may make it more difficult for new parties and candidates to make their views known to voters. The key issue regarding potential limitations or bans on paid political advertising during the campaign period is to assess whether or not political parties and candidates are able to get their messages to voters and whether voters have full access to receiving political and electoral information.

Abuse of administrative/ state resources

The misuse of administrative resources refers to the use of state (or public) legal, institutional, financial, and coercive resources for campaign purposes when these are not provided by law. The misuse of administrative resources during electoral processes, including in countries with a long-standing tradition of democratic elections, is a widespread phenomenon and represents one of the most crucial and recurrent challenges as regards campaign finance regulation enforcement.11] The misuse of public resources is particularly damaging because it typically benefits the incumbent party.

If misuse of state resources is mostly addressed through formal regulations civil society and the media must be vigilant in monitoring compliance to ensure that the state institutions involved in administering and regulating the electoral campaign treat all parties and candidates equally, impartially, and fairly. The political will of the state authorities remains a key factor to ensure free and fair elections and effectively implement measures to prevent the misuse of administrative resources.

 Administrative resources can be classified in four main categories:12]

The misuse of administrative resources during electoral processes may threaten some of the basic requirements of free and fair elections, i.e. equality of opportunity between electoral contestants, transparency of the campaign, and freedom of expression of opposition parties/ candidates. Legislation pertaining to the use of administrative resources varies considerably throughout the world. Different ways of regulating the issue may be considered; from banning civil servants from actively participating in campaign activities, to requiring public servants to resign from their position before running in an election. Whatever the regulations, the principle of neutrality that guarantees a level playing field for all political contestants and that entails impartial behaviour by civil servants and authorities at all levels should prevail throughout the election campaign period.

Enforcement/ sanctions/ disclosure

To maintain the integrity of the electoral process, strengthen public confidence in political actors, and hold both political parties and candidates accountable, proper enforcement of laws and regulations on campaign finance is critical. To do so, the oversight body needs to have at its disposal an array of sanctions which are deterrent, effective and proportionate to the gravity of the violation. Campaign finance reporting and disclosure are important measures to inform the public of the financial support given to electoral contestants, thereby promoting transparency in the campaign finance system.

Reporting

Campaign finance reporting is the main policy instrument for achieving transparency in campaign finance regulation and refers to the timely submission of information about contributions received by parties and candidates (and third-parties when applicable), as well as their expenditures. A common requirement for political parties and candidates is to appoint a financial agent who is responsible for all campaign finance aspects of the campaign, such as collecting contributions, paying expenditures through a campaign-specific bank account opened for this purpose, and keeping an accurate and detailed account of all transactions made for electoral purposes. This rule aims to increase the transparency of a campaign’s sources of financing, to enhance the comprehensiveness of financial transactions reported in the financial report, and to ease the supervision task of the oversight body.

The OSCE/ODIHR Handbook for the Observation of Campaign Finance recommends that “It is good practice for authorities to introduce a standard template and guidance for reporting, which enables timely analysis and meaningful comparison between different parties and candidates. (…) Reporting formats should include the itemization of all contributions and expenditures into standardized categories as defined by the regulations. Itemized reporting should include the date and amount of each transaction, as well as copies of proof of the transaction.”[13] Although reporting rules are crucial to ensure that all political actors comply with campaign finance legislation, maintain the required records, and report on all direct and in-kind contributions and campaign expenditures, they should not be burdensome for political actors. This is why some countries (such as Canada, USA or Australia) use thresholds under which resources and expenditures do not have to be reported.

The frequency of financial reporting depends upon each state’s legislation. Only a few countries require electoral contestants to report on their assets and liabilities at the start of the campaign or during the campaign (such as Armenia, Belarus, Croatia, Russia, Uruguay or the USA). The deadline to submit (final) financial reports to the oversight body should be precisely defined in the law in order to allow electoral contestants to gather all supporting documents within the legal allocated time. It is also critical that the timeframe for the oversight body to issue its decisions is sufficient to allow for a thorough and comprehensive audit of financial reports.

Disclosure

The United Nations Convention against Corruption (Article 7-3) calls on State Parties “to enhance transparency in the funding of candidatures for elected public office and, where applicable, the funding of political parties.” Disclosure is the key principle allowing the dissemination of information about electoral contestants’ finances and enabling public scrutiny regarding the sources of financing and campaign spending, thereby promoting accountability of electoral actors and transparency of the whole campaign finance system. Disclosure rules should clearly define:

• what has to be disclosed (reports including sources of financing and notably the identity of donors and types of expenditure along with the decisions of the oversight body);
• when it has to be disclosed (the timeframe);
• how it must be disclosed (on the internet, in media outlets);
• who has to disclose (political parties, candidates, or both);
• and to whom electoral contestants, and third-parties, must disclose (to the oversight body and/or to the public).

Moreover, in countries where political finance regulation is used to promote gender equality, disclosure mechanisms can help assess whether measures—such as electoral quota enforcement and earmarked funds for female candidates—are being adequately implemented. Indeed, the publication of political parties’ financial reports allows other electoral contestants, civil society organizations and citizens to check whether funds earmarked for gender-equality initiatives have been used for that purpose. Gender disaggregated reports are important tools to assess the effect of financing regulations on women’s participation in electoral contests, to determine how women’s fundraising and spending compares to that of men and whether party funds are equally allocated to male and female candidates.

It is noteworthy to underline that financing disclosure rules differ throughout the world. In some countries, data and information included in electoral contestants’ financial reports are not published either by the candidates and the political parties themselves or by the oversight body, while in some other countries, disclosure rules require the publication of information contained in the financial reports. Some oversight bodies have developed very interesting detailed databases to allow for public scrutiny (Australia,14] Canada,15] and the USA16]).    

The question of the disclosure of donors’ identity is dealt with in different manners the world over. In some countries, the identity of donors is not made public as this is seen as a violation of privacy or because of the risk of intimidation or physical threat. In some other states, disclosure of donors’ identity is required above a certain threshold. Finally, in some countries, all information relating to the donor’s name and address is made public. In the last two instances, the rationale is to enhance transparency of financing sources and to allow for public scrutiny. 

Supervision and enforcement

To ensure impartial enforcement of and compliance with campaign finance regulations, it is crucial that the oversight body is independent of political influence. Moreover, it must have the authority to detect and investigate infringements, as well as to apply sanctions. The oversight body must also have the necessary financial and staff resources to carry out its duties. The members of the oversight body should be appointed on the basis of neutral, objective and non-partisan criteria and given the security of tenure.

Regarding the mandate of the oversight body, the OSCE/ODIHR Handbook for the Observation of Campaign Finance has underlined that “Responsibilities should be clearly defined in the law and may include: providing guidance on how to comply with requirements and informing other electoral stakeholders of the rules; establishing reporting forms and reporting procedures; receiving, auditing and publishing financial reports; initiating inspections and public investigations; handling and adjudicating complaints; imposing sanctions; and publishing decisions on adjudicated complaints.” Besides enforcing campaign finance rules, the oversight body should also play a supporting and advisory role by providing guidance on how to comply with reporting requirements, holding trainings for electoral contestants, publishing compliance guidelines, and establishing financial report templates to help parties and candidates comply with the regulations. In order to help electoral contestants understand the rules they have to abide by, some oversight bodies have developed some guidance policies.

Civil Society Organizations (CSOs) can also play a very important role in monitoring campaign finance and estimating campaign costs (such as the costs of billboards, political/ electoral advertising, and of renting campaign venues or cars) to assess whether a candidate or party has reported accurately and has complied with campaign finance rules.

Sanctions

To maintain the integrity of the campaign finance system, strengthen public confidence in the political sphere, and hold both political parties and candidates accountable, proper enforcement of campaign finance regulations is critical. Indeed, the best conceived system is of little value unless it is implemented and enforced effectively, and a full range of legal sanctions serves little purpose if the oversight body is not endowed with sufficient powers to apply them.17] To support campaign finance regulations, the oversight body needs to have at its disposal a range of sanctions. These sanctions may be administrative, financial, electoral or criminal and have varying degrees of severity. Sanctions must be objective, enforceable, effective and proportionate to their specific purpose. 

While regulatory authorities can determine sanctions, there should be an opportunity for a party to request that the final decision regarding sanctions should be made by the appropriate judicial body, in accordance with judicial principles. In any case, the principles of effective remedy and due process must be strictly respected. 

There is no blueprint for campaign finance; each country will need to reflect its unique historical, political and socio-economic setting in the design of its own regulatory framework. This section focuses on comparing the strengths and weaknesses of existing legal frameworks by stressing the goals pursued by campaign finance regulations and their positive and negative effects on the electoral process. It also highlights several key elements to consider for all approaches regarding the main shortcomings of existing campaign finance systems worldwide.

Comparative assessment of strengths and weaknesses of existing legal frameworks 

This section includes a summary table that assesses the potential positive and negative effects of existing frameworks against the goals pursued and the effect on the electoral process. ‘Strength’ relates to the rationale having led to the adoption of  different campaign finance rules and the impact that these campaign finance regulations can have on the electoral process as a whole, while ‘weakness’ pertains to their negative effect.

Main weaknesses of existing legal frameworks

Although a legal framework is necessary to regulate the influence of money in politics, it is not always sufficient. In many countries legal regimes governing campaign finance are riddled with loopholes and poorly enforced. It is difficult to enforce campaign finance regulation when laws are too complex, burdensome or vague to be implemented, or when oversight bodies are insufficiently resourced to carry out their duties.

Loopholes/ Ambiguous laws

One recurrent problem of existing campaign finance systems is imprecision or the lack of definitions of key terms. Indeed, it makes little sense to set out extensive and detailed reporting and disclosure requirements when the concepts of electoral expenditure, the length of the electoral campaign period or in-kind contributions are inadequately defined.[1] The absence of clarity in the regularity framework is also problematic when reporting requirements, such as opening a dedicated bank account or appointing a financial agent, or disclosure requirements are established by law without greater detail. The oversight body will then need to develop and issue instructions to further clarify the obligations of electoral contestants if it has the mandate to do so.

A common loophole is when regulations apply to either parties or candidates, but not to both, allowing for funds to be channelled from one to the other and thus circumventing the law. Most countries around the world do not have regulations on third-party spending. As mentioned in the IDEA Handbook on Political Finance, “actors that are neither political parties nor candidates may want to spend funds in order to influence political discourse in general or the outcome of an election. Such political spending by [third-parties] poses serious problems in terms of the amount of corporate and interested money that can be channeled in to the political process.”[2] This area remains problematic and third-parties are often used as vehicles to circumvent campaign finance regulations, such as spending limits, contribution limits or disclosure requirements in countries where this issue is not dealt with.

Absence of enforcement

The oversight body must be independent in terms of appointment, security of tenure and funding. It also needs to have adequate authority to supervise and investigate accounts and refer irregularities to criminal justice authorities. Whenever appointment and dismissal procedures of the oversight body members are not independent from political pressure, when appointees are not guaranteed security of tenure, or when the funding and the independence of its budget necessary for the oversight body to fulfill its mandate is not sufficient, there is a risk that the oversight body can be deadlocked along ideological lines, perceived as partial or be susceptible to biased enforcement of campaign finance regulations.  

A broad range of sanctions is the main toolset that the oversight body can use to effectively enforce campaign finance regulations. Sanctions should be flexible enough to cover the type and gravity of a possible violation and also proportional, effective and deterrent. Thus, a balance should be struck between sanctions that are excessively harsh and those that are too weak to act as a sufficient deterrent, leading to situations where electoral contestants prefer to accept penalties rather than comply with the law. 

Campaign Finance is a recent and developing topic and has attracted growing attention from regulators and electoral contestants in the last few years. As such, some aspects of campaign finance regulation discussed in this Focus On might have to be adjusted in order to take into account new developments, while new areas of concern/ new components of campaign finance regulation should be addressed. The following questions aim at considering avenues of reflection in order to broaden the scope of this Focus On. 

Alternative models of campaign finance enforcing bodies

This Focus On is limited to countries in which the electoral management body (EMB) is responsible for campaign finance regulation. However, monitoring campaign finance can be undertaken by a variety of different bodies, including a competent supervisory body, a Court or a state financial body. Taking the EMBs solely into consideration gives only a partial overview of the supervision mechanisms since, according to the IDEA political finance database, only 47 % of the countries targeted by the database have an EMB as the campaign finance oversight body.[1] Taking into account examples from countries in which the supervision of campaign finance is taken on by a specialized body (such as in France or Lebanon) could help include the topic of political party financing since those institutions are generally tasked with the monitoring of political finance as a whole. This would help bring specialized expertise and auditing skills. On the other hand, including instances of campaign finance oversight carried out by Courts (such as Tunisia or Guinea) would help demonstrate further the sanctioning process since those judicial institutions are endowed with power to investigate potential violations of campaign finance regulations and to impose sanctions. 

Role of Civil Society Organizations in monitoring campaign finance

Civil society organizations (CSOs) can often play a major role in investigating facts, exposing wrongdoing, advocating for change, highlighting flaws in the regulatory process, identifying gaps in implementation, and proposing workable remedies and solutions. Moreover, CSOs are sometimes in a position to monitor campaign finance for a longer period and at a deeper level than is normally possible for the oversight body.

Campaign finance monitoring carried out by CSOs is a fundamental technique to achieve governmental transparency and accountability. Is it possible to combine/ link institutional campaign finance supervision and domestic campaign finance monitoring carried out by CSOs?  If so, how this Focus On could address this relationship?

There is also a growing number of campaign finance observation/ monitoring handbooks and reference materials (such as codes of good conduct or methodology manuals) published by international organizations or CSOs, including notably:

§  BRIDGE (Building Resources in Democracy, Governance and Elections);

§  The Institute for Democracy and Electoral Assistance Political Finance Database;

§  The Institute for Democracy and Electoral Assistance Handbook on Political Finance;

§  The International  Foundation for Electoral Systems (IFES) Political Finance Oversight Handbook, Training in Detection and Enforcement (TIDE)

§  The Organization for Security and Cooperation in Europe’s Office for Democratic Institutions (OSCE/ODIHR) Handbook for the Observation of Campaign Finance;

§  The reports of the Council of Europe’s Group of States against Corruption (GRECO) including assessments on political party and campaign finance systems in the 49 GRECO members;

§  Monitoring Election Campaign Finance A Handbook for NGOs, Open Society Justice Initiative (2005) - see at: http://www.soros.org/sites/default/files/Handbook_in_full.pdf;

§  CRINIS,  joint project from Transparency International and the Carter Center, http://archive.transparency.org/regional_pages/americas/crinis

§  Regional Transparency International Initiatives, available at: http://www.transparency.org/news/feature/elections_and_anti_corruption_in_europe.

Social media and the internet

Social media have been extensively used by both the institutional actors (through the publication of electronic financial report templates and the disclosure of financial reports on internet) and the electoral contestants (through the setting up of Facebook and Twitter accounts and the submission and the publication of their financial reports).

→ The website of the oversight body could be used to disseminate information on campaign finance regulation. Indeed, all materials aimed towards candidates and political parties (handbooks, campaign account template, FAQs, etc) should be published on the oversight body’s website, be readily accessible in user-friendly reports, and be available sufficiently in advance of the electoral period.

The oversight body could develop a single web-based portal/platform which will allow political parties and candidates to file their campaign finance accounts directly and electronically, if the legal framework foresees electronic submission of financial reports. This would allow for a timely and up-to-date publication of all relevant information related to the financing of the campaigns. Decisions issued by the oversight body along with financial reports lodged by electoral constants should be made public in a timely manner to make this information easier to interpret and to reorganize for research purposes.

→ From the perspective of electoral contestants, the use of social media and the internet represent an innovative way of campaigning, allowing them to reach out to a greater number of voters more easily and at a lower cost. Most of countries do not have specific rules governing the extensive use of social media and the internet. This area will have to be further looked into and be dealt with in connection with the broader issue of New Voting Technologies.

The purpose of these sets of questions is to try to put together all the questions that relate to each thematic chapter developed in the Focus On. Those highlight the key points of the main campaign finance regulations and are seen as a tool to help practitioners and all observers approach the subject.

Sources of financing

• What are the sources of funding available to political parties and candidates?
• Is public funding provided? If so, what are the requirements to obtain public funding? Is such funding provided in advance or after the election?
• What is the mode of allocation of public funding?
• What is the proportion of the public funding vis-à-vis the private funding?
• What are the limitations / prohibitions on contributions to parties / candidates?
• Are there contribution bans from certain sources?

Campaigning

• Is there a limit on the amount a political party / candidate can spend?
• Is there a ban on some expenditure a political party / candidate can incur?
• Is there a definition of the electoral expenditure provided for in relevant legislation?
• Is the length of the electoral campaign period defined in the law?
• Is there a ban on state resources being given to or received by political parties or candidates?

Enforcement / sanctions / disclosure

• Are candidates, political parties, and third-parties required to file reports before the election campaign starts, during the electoral campaign period or only after election day? Is the reporting timeframe established in the law?
• Are there disclosure requirements in the law? If so, are reports publicly available and easily accessible, notably on the internet, in a timely manner? Is the donors’ identity disclosed?
• What kind of oversight body is responsible for supervising campaign finance regulations? Is the institution / oversight body set up to enforce the campaign finance regulations independent from political influence?
• Does the oversight body have sufficient resources in terms of staff and budget to provide for effective review of campaign accounts? Are there manuals and clear/accurate information made available to political parties and candidates?
• What kinds of sanctions are set out in relevant legislation for violation of different campaign finance laws and regulations? Are they effective, deterrent and proportionate to the nature of the offense?
• Who can be subject to these sanctions (candidates, political parties, third parties)?
• Can sanctioned candidates / political parties appeal the oversight body’s decision to an impartial tribunal?

An alternative way to distribute public funding is the matching funds system in which the government matches all or part of the funds raised privately by electoral contestants. New York City has adopted such a system called “New York City’s multiple match public financing system”. New York City provides public money to candidates (capped at 55% of the maximum amount that a participating candidate is allowed to spend) in exchange for the candidate’s acceptance of expenditure limits and enhanced disclosure. This system supercharges small contributions by matching up only the first $175 of each eligible contribution - even if candidates can receive contributions larger than $175 - at a six-to-one ratio.[1] Before becoming eligible to receive matching funds, participating candidates must first meet a “qualifying threshold” by gathering contributions from a certain number of constituents depending on the type of election (mayor, comptroller or city council). This system creates an incentive for candidates to rely on small donors.

In 2014,[1] the US Supreme Court struck down the aggregate limit on the amount individuals may contribute in total to political parties and federal candidates on the grounds that aggregate limits on campaign contributions were unconstitutional under the First Amendment, as they constituted a violation of freedom of speech.

According to the Tunisian Election Law, an electoral expenditure is any expenditure in cash and in-kind incurred by or on behalf of the candidate or the party list during the election period and consumed during the election campaign in order to get voters’ vote. During the 2014 general elections, the Superior Independent Electoral Authority (ISIE in its French acronym) issued a decision laying down the rules, procedures and financial arrangements for the election campaign in order to further clarify some key concepts. In this instruction, the ISIE went beyond the definition of the electoral expenditure in the law, to define what an illegal expenditure was, i.e. vote buying, political advertising and illegal propaganda, and to highlight that those expenditures shall be counted against the spending limit.[1] .

There is an extensive jurisprudence regarding paid political advertising. On several occasions, the ECtHR ruled that a ban on paid political advertising constitutes a breach of freedom of expression under Article 10 of the European Convention of Human Rights and may violate freedom of expression of small political parties, since they receive minimal coverage in the edited media and thus paid advertising may be the only way to obtain coverage. However, in a recent ruling, the ECtHR mitigated its position, deciding that a ban on political advertising constitutes a permissible attempt to “protect the democratic process from distortion by powerful financial groups with advantageous access to influential media”.[1]

Mexico has extensive provisions regarding the misuse of administrative resources. The Federal Code of Electoral Institutions and Procedures (COFIPE) forbids the use of social programs and of federal, state, municipal, or Federal District resources in order to induce or coerce citizens to vote for or against any political party or candidate from the start of the campaign to the elections. In April 2013, the head of Mexico's Social Development department dismissed seven officials after some were mentioned in taped discussions about using anti-poverty programs (i.e. providing small monthly stipends to poor families and handing out government-supplied wheelchairs) to promote the governing party in the 2013 local elections.

According to the Elections Canada Law, candidates have to give the full name and address of contributors who have donated a total amount of funds and goods or services greater than CAD200.The names and addresses of contributors are then made public on the website of Elections Canada.[1]

This disclosure requirement also applies to registered third parties. They must report their election advertising expenses within four months of election day. Among other information, the financial report must include the name and address of any contributor who gave a total of more than CAD200 for election advertising in the period starting six months before the election was called and ending on election day. This information is then made public on the website of Elections Canada.[2]

The UK Electoral Commission has posted a warning on its website saying that “Candidates and their agents must follow certain rules set out in legislation. We provide guidance to help candidates and agents comply with the rules. You do not have to follow this guidance, but if you do, you will normally be doing enough to comply with the law.”

The Electoral Commission has a team who is in charge of publishing written guidance and training political parties prior to the start of the electoral campaign. To that purpose, the Electoral Commission regularly posts updated guidance documents on its website. Reporting forms, power-point presentations regarding main campaign finance regulations, and a webcast to explain how to fill in and submit financial reports are made available and can be accessed anytime.

In the run-up to major elections and referenda, the Electoral Commission also carries out targeted campaign monitoring to check that candidates are complying with the rules on spending and donations and evaluate the risk of possible infringements of campaign finance regulation. Monitoring compliance with the rules during the campaign also aims at obtaining information on activity that the Electoral Commission may refer to when looking at the financial disclosures submitted by candidates.

The Electoral Commission also has enforcement powers to investigate allegations of potential breaches of the rules, as well as breaches it identifies proactively and can impose a range of sanctions. If the Electoral Commission believes that the breach has a significant impact on confidence in the transparency and integrity of party and election finance, it can pass the matter to the police or prosecuting authority.[1]

The cornerstone of the US campaign finance system is transparency, which is ensured by frequent and detailed campaign finance disclosure. By law, the official committees of candidates for federal office, party committees, PACs, and Super PACs are required to file regular reports to the FEC disclosing the funds they raise and spend on the campaign. The reports contain a list of all donors who donated over USD 200, along with their address, employer and job title. The FEC makes the reports public on its website within 48 hours after their receipt.

However, the growing importance of outside groups, which can  incur unlimited independent expenditures as long as they do not coordinate with candidates’ campaign committees, have raised concerns as regards transparency of third-party campaign spending. Indeed, the so-called 501(c) non-profit organizations do not have to disclose their donors as long as campaign activity is not their primary activity and have been used, especially since the 2012 general elections, as vehicles to circumvent disclosure requirements.[1] During the 2012 election cycle, overall outside spending amounted to a total of USD 1.3 billion. According to the Center for Responsive Politics,[2] of USD 1 billion spent by outside groups, USD 300 million was spent by the 501(c)s.[3]

The Oversight and Audit Service was, until 2011, a temporary body within the Central Electoral Commission, tasked with monitoring the contributions to, the accounting and use of pre-election funds of candidates, parties and party alliances participating in national elections.

In its 2010 evaluation report on Armenia in Transparency of Party Funding,[1] the Group of States of Corruption (GRECO) stressed that “the independence of the monitoring institutions is insufficient. […] while the CEC is an independent body, it is composed of a majority of representatives of political parties, which may result in a lack of a determined and proactive approach towards supervision. The first stage of the supervision is carried out by the CEC’s Oversight and Audit Service, which is composed of four seconded public officials. There are no measures in place, such as rules on incompatibilities or limitations of the number of mandates, to prevent conflicts of interest and undue interference in the work of the Oversight and Audit Service, nor of the CEC itself. The Oversight and Audit Service, which is only a temporary body established in election periods, clearly lacks sufficient professional staff and financial resources to go beyond a mere formal check of the documents submitted by the parties and candidates, all the more as it has to verify the declarations on pre-election funds within 20 days of their submission. While both the Service and the CEC may request additional information from the parties and candidates and are vested with investigative powers, including access to information from other institutions (e.g. banks), the evidence collected by the [GRECO team] clearly indicates that these powers are hardly used in practice and that no cross-checks are performed to verify the accuracy of the data contained in the declarations. […] The CEC and the Ministry of Justice have no competence to impose administrative sanctions.” The GRECO thus recommended “to ensure that an independent and integrated mechanism is in place for the monitoring of the funding of political parties and electoral campaigns, and that it is given the mandate, the authority and the financial and staff resources to effectively and pro-actively supervise such funding, to investigate alleged infringements of political financing regulations and, as appropriate, to impose sanctions.”

The Armenian Government decided to address the lack of enforcement of campaign finance regulations and amended in 2011 the Electoral Code and the law on political parties. As a result, the Oversight and Audit Service is now a permanent body with a mandate to review both the funding of political parties and election campaigns and has to draw up statements on candidates’ declarations that are then submitted to the CEC for discussion and review. The GRECO, in its 2012 compliance report,[2] underlined that “Positive measures include the new non-partisan composition of the Central Electoral Commission, a reinforcement of the independence of the members of the Oversight and Audit Service from political parties,[3] as well as the fact that the staff resources of the service have visibly been increased and that administrative sanctions may now be imposed by the Central Electoral Commission.”

In France, the allocation of public funding to political parties is contingent on gender equality requirements. By law, if the difference based on sex among candidates put forward by political parties during the last parliamentary elections is larger than 2%, public funding is reduced by 3/4 of this difference. Since the inception of the system, French political parties have chosen to pay the penalty rather than nominate more female candidates. During the 12th legislature (2002-2007), political parties lost annually 7 million EUR; during the 13th legislature (2007-2012) parties lost 6 million EUR per year; and since the beginning of the 14th legislature (2012 to now) political parties have lost annually 6 million EUR.

Although French media regularly report on the amount of the annual penalties political parties have to pay, nothing has been done since the inception of the system. Political parties prefer to pay fines rather than opening candidatures for women.

Campaign Finance

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Campaign Finance

Main Approaches To Campaign Finance Regulation

Review of Existing Methodologies and Approaches to Regulation of Campaign Finance

Assessment of Strengths and Weaknesses of Existing Legal Frameworks

Topics for Further Discussion

Considerations when assessing campaign finance regulations

Case Studies

New York City - USA Matching funds system

USA Contribution limits

Tunisia: Illegal expenditures

Jurisprudence of the European Court of Human Rights (ECtHR) Paid political advertising

Mexico: Regulations on the misuse of administrative resources

Canada Transparency – Disclosure of donors’ identity

UK: Advisory role of the oversight body

USA: Third-party spending and disclosure

Armenia: Lack of Enforcement

France: Sanctions non deterrent