One powerful sanction that can be imposed on a political party, candidate or other electoral participant is the withholding of a public benefit. The loss of public subsidy (e.g., matching funds or free media broadcasts) may have more impact than a monetary penalty. And since the political finance regulator (PFR) often disburses and has primary jurisdiction over the administration of the public subsidy, this type of enforcement mechanism may be relatively easy to administer.

Public financing is intended to offer candidates, especially challengers, sufficient resources to run a viable campaign without dependence on big donors or spending excessive time fundraising. The provision of public subsidies is a popular political finance approach. According to one source,[1] over 79 percent of countries have some or all of the following:

• public funding/subsidies to political parties and/or candidates;
• tax relief such as tax deductions or credits for donations to parties or candidates;
• free or subsidized media broadcasts by political parties and candidates; and/or
• in-kind subsidies (other than media broadcasts) such as free or reduced postal rates, rent or printing.

If it is properly structured, a public financing program may be an effective enforcement technique. First, eligibility for a public subsidy can be restricted to political parties or candidates willing to voluntarily meet certain political financing standards, such as more extensive disclosure or spending limits. In the United States, for instance, public matching funds for the presidential race are available only to candidates who pledge to remain within voluntary spending limits. (During the last two presidential campaigns, 2008 and 2012, however, at least one of the major candidates has opted out of the limits and public financing; and, in addition, funds from supposedly independent groups have played an ever-larger role.) 

Second, the PFR can require the return of some or all public funds allocated if a party/candidate does not properly disclose and document how the funds were used, or if the electoral participant is in violation of the public financing laws generally. Removal of a public subsidy is a practice sometimes used to sanction offenders in France, Germany, Poland, Russia, Spain and many Latin American countries.[2]

Public funding may facilitate enforcement; but the need to regulate it presents new problems:

• The State may wish to impose higher standards on political parties/candidates receiving public funds; for instance, the PFR may restrict the use of public funds to core electoral campaigning activities, or it may require more detailed documentation for expenditures. Higher standards for those accepting public funds creates a two-tier enforcement system, with different requirements and possibly different sanctions applied to publicly funded and privately funded electoral participants.
• Which parties or candidates should receive public financing? How should public subsidies be allocated among them in an equitable manner? These questions have no easy answers. There may be several options for dividing public financing or subsidies between electoral participants, with a different argument to support each one.[3]