One aspect where the need for public controls to foster equal opportunities is most clearly reflected in electoral law relates to the funding of the electoral campaigns; political finance is a vital issue for democracy, governance, and development. No matter how flawless are the country’s elections, how active its civil society, how competitive its political parties, and how responsible its local authorities, the role of money in politics undeniably influences the quality of democracy and governance.[xvii]
Among other publications, Political Finance Regulation: The Global Experience. International Foundation for Electoral Systems (IFES 2009) and Political Finance Regulations Around the World: An Overview of the International IDEA Database. (International IDEA 2012) are excellent resources to augment the following high level review of what is a very broad, complex and changing subject.
i Funding Political Parties and Candidates
Multiparty elections are a characteristic of democratic elections and it stands to reason that in order for political parties and candidates to present alternate choices to voters, those political entities must have financing adequate for election campaigns and annual activities.[xviii] Private and public funding are two channels for such financing.
1. Private Contributions
Private contributions are a legitimate way to finance the operational and campaign expenditures of political parties and candidates, however, the public policy concern is that, 'campaign financing may come with strings that attach the party or the candidate to the donor. To prevent legitimate campaign funding from transgressing the line and becoming a non-legitimate method of influence, some regulatory measures are needed.'[xix]
The main sources of private funding are:
• Membership subscriptions
• Donations to political parties or candidates by individuals
• Funding by institutions such as large business corporations, trade unions etc
• Contributions in kind by supporters.[xx]
It is quite common to establish restrictions on private funding of political entities. Such restrictions may be in the form of source and/or amount. However, it is important that, 'Any limits on fund-raising and campaign spending should not be so stringent as to render candidates unable to pay for basic campaign costs.'[xxi] The same notion applies to political parties. Candidates and political parties must have the ability to communicate effectively with the electorate; this is as important to the free choice of voters as it is to political entities.
In terms of amount, reasonable limits on private contributions are often a part of the legal framework. However, what is 'reasonable' is heavily influenced by the context in which the election takes place and depends, 'on the type of election and factors unique to the particular country, such as geography, demographics, and relative costs of media and other campaign materials.'[xxii] However, while more common in Europe, globally 55% of countries do not limit the amount of contributions that may be given to political parties or candidates.[xxiii]
Source restrictions may include a prohibition on receiving donations from public or semi-public entities, as well as from foreign states, organizations, companies and individuals. Some legal provisions contain more specific rules, such as the prohibition of donations from religious associations. In a similar way, anonymous donations and money from unknown sources are often prohibited or limited to very small amounts.
Globally, bans on foreign contributions are quite common. In the case of political parties, 68% or countries and in the case of candidates, 51% of countries ban donations from foreign sources.[xxiv] Only 22% of countries ban corporate contributions.[xxv]
One variation of source restriction of private contributions is found in frameworks that deny direct contributions to political entities in favour of private political contributions being aggregated in a public pool and then redistributed to political participants based on a formula. In effect, the contributor will then be contributing to both the desired recipient and competitors and for this reason such a scheme should be carefully evaluated as to whether it amounts to a violation of a person’s rights to free association and expression.[xxvi]
Donations should be publicly disclosed.
2. Public Funding
Public funding of political parties and candidates may take many forms. For example, the previous section on the electoral campaign included a discussion of the provision of state resources to candidates and political parties. In other countries public funding of political parties and candidates is direct, for example, in the form of an annual payment. A further example of public funding is the reimbursement of the partial value of candidate and political party election campaign expenses usually where the candidate or political party demonstrates a certain level of support in the election. In other cases, indirect state funding may be provided in the case of tax receipts issued to encourage private political contributions.
In many countries where it occurs, annual public funding for the administration of the ordinary activities of political parties often constitutes more than fifty percent of the parties’ annual budgets.
Generally, where public funding occurs, "the aim is both to enhance the positive role played by political parties and to help curb some of the excesses of money in politics.'[xxvii] Thus it is an acceptable practice for a legal framework to provide for the campaign financing of parties and candidates.
Among the positive outcomes anticipated to flow from public funding are; an increased ability to communicate resulting in a more informed electorate, a more level playing field of electoral competition, increased institutionalization of political parties, reduction in corruption and the role of money in general and, influencing party behavior regarding such things as transparency and gender equality. Possible downsides include; delinking parties from the people, failure of the party system to adjust to new trends in support, governing parties solidifying their position and generally the unpopularity of direct public funding.[xxviii]
Early instances of public funding for political parties include Uruguay, Costa Rica and Argentina in 1928, 1954 and 1959 respectively and introduction in Europe (West Germany) in 1959.[xxix] Of a 175 multi-party system countries for which information about direct public funding is available, 58% have legal provisions for some form of direct public funding to political parties.[xxx]
To satisfy international standards, public funding should be determined on the basis of pre-determined objective and reasonable criteria which result in equitable funding of political entities and which must be applied in a non-discriminatory manner.[xxxi] Often, such criteria for the allocation of direct public funding are based on a proportion of actual campaign expenditures, the proportion of votes received in the previous election or the number of each party’s seats held in the legislature.[xxxii]
Where there is public funding, it is critical that the criteria for equitable distribution and key definitions (such as 'campaign expenses' where there is reimbursement) are clearly established in the legal framework and that the framework is then applied equally and without discrimination.
Worldwide, 116 countries provide direct public funding to political parties, including the vast majority (86%) of European countries.[xxxiii]
Overall, "The notion of public funding adds a positive approach of assisting the capacity of political contestants while simultaneously countering the perverse impacts that public funding may have."[xxxiv]
ii. Ceilings on Campaign Expenditures
Controls on the amount of election expenditures incurred by political parties and candidates are common to many countries and primarily intended to encourage competitive elections. Specifically, "limits on party and campaign expenditures are used to avoid excessive increases in the cost of party politics, control inequalities between parties and restrict the scope of improper influence and corruption." [xxxv] In other jurisdictions, however, expenditure limits are regarded, "as an unconstitutional curtailment of the fundamental right to freedom of speech and expression." [xxxvi] As such, spending limits, "contribute to a conflict between two fundamental principles of modern liberal democracy – the need to secure political equality and the need to secure political liberty." [xxxvii] Nevertheless, the HRC recognizes that 'reasonable limitations' on campaign spending may be justified to ensure the free choice of voters is not distorted by disproportionate expenditures among candidates or parties.[xxxviii]
Although the first examples of limiting campaign expenses of parties were observed in the UK in the late nineteenth century, these measures are now encountered in many states. The principal aim is to limit the excessive cost of campaigns, in the context of frequent scandals related to improper funding of political parties. On the one hand, to participate in a democratic election, the limit must be high enough to allow effective communication with voters but on the other hand, in excess, 'there is no minimum standard that requires that electoral contestants be given an opportunity to buy an election.'[xxxix]
Furthermore, ceilings on campaign expenditures aim to prevent political parties with greater financial resources from dominating electoral campaigns and ensuring their success through high expenditures, thus marginalizing small political parties.
Therefore, in reality, taken together these rules may be understood as an auto-limitation of the big parties, rather than as a way to allow the participation of political parties with limited financial resources.
Despite the best intentions of regulation of this subject within the legal framework, experience also shows that the imposition of unreasonably low limits, such as those for the presidential elections in Russia, may provoke illegal financing of political parties. This is a factor that should be taken into account when regulating this matter.
One other aspect related to expenditure limitations is the matter of so called 'third party' spending by individuals or groups that are not a part of a political campaign but who may spend money to either promote or oppose a particular candidate or political party. When introducing expenditure limits, the legal framework should consider whether 'third parties' should also be subject to expenditure limitations in order to avoid an unbalanced situation where expenditures of political entities are limited but 'third party' spending to defeat or elect candidates and political parties is unlimited. This is not necessarily easily accomplished, for example in the U.S., Citizens United v Federal Election Commission (2010), the Supreme Court held that constitutional guarantees of freedom of speech prohibited the government from restricting independent political expenditures by corporations and unions.
Another, indirect, but very effective way to limit electoral campaign expenditures is the limitation of the electoral campaign period, which is also in line with the new reality of the mass media. A campaign period of two weeks can be considered as minimum.
Where limits are placed on campaign expenditures it is absolutely critical that a clear and specific definition of 'campaign expenditures' is included in the legal framework. Practice shows that it is also important to provide the electoral management body with interpretive or regulation making power regarding what is considered a campaign expense because campaigning techniques and requirements are constantly evolving and to be effective so too must the definition in order for limits to be effective and so that all political actors are well aware of the rules.
Globally, only 29% of countries limit political party expenditures although candidate expenditures are limited in 44% of countries.[xl]
iii. Disclosure and Reporting
Disclosure, or transparency, is another element in the regulation of political finance. In fact, it can be argued that transparency is the key element of regulation because effective disclosure is required for each of the other regulatory mechanisms to function properly.[xli]
The notion of transparency is codified in the United Nations Convention against Corruption (UNCAC) which calls on all countries to strive to, 'enhance transparency in the funding of candidatures for elected public office and, where applicable, the funding of political parties' (article 7(3)).[xlii] UNCAC was adopted by the General Assembly in 2003 and came into force in 2005. On hundred and forty states are signatories to UNCAC.
The legal framework should establish periodic reporting of contributions and other income as well as expenditures as, 'Legitimate limitations on campaign expenditures are meaningless without reporting and disclosure requirements.'[xliii]
Globally 88% of countries have some financial reporting from political parties or candidates but only 53% require both to report which suggests a potential loophole.[xliv] Further emphasizing the potential for underreporting, a gap between formal rules and practical application may result in a much higher de facto lack of effective oversight.[xlv]
Financial disclosure reports should be filed with the political finance regulatory body established in the legal framework for such matters and once filed every effort should be made to ensure that the information is available to the public in meaningful ways. However, over 25% of countries that do require some form of reporting from political parties or candidates do not require that information to be made public.[xlvi]
Auditing of financial disclosure reports is a common practice in some countries and which adds value to the credibility of the reports.
While common approaches and themes do emerge, the context in each state and the differing normative objectives lead to the conclusion that, "there is no model political finance disclosure system." [xlvii]
iv. Monitoring and Enforcement
Approaches to monitoring and enforcement vary across countries but there is some consensus on basic issues including, " the independence of political finance regulatory bodies, the need for sanctions, monitoring of party and campaign finance, and a clearly defined legal framework." [xlviii]
The agency responsible under the legal framework for the enforcement of political financing laws may be the electoral management body, or a specialized board or commission or located in the judicial branch of government. Globally, it is not uncommon and, may occur in 25% of the cases, that countries do not formally specify an agency to monitor financial returns or investigate potential violations of political financing laws.[xlix] This, plus other dynamics, leads to the observation that, often there are too many laws and too little enforcement.[l] While decisions to prosecute must be based only on the available evidence, 'At the same time, failure to prosecute electoral offences can undermine confidence in the election and encourage further offences.'[li]
In terms of enforcement, the possibility of civil and / or criminal penalties for non-compliance with the above rules should be clearly set out in the legal framework and should be proportional in terms of the gravity of the offence.[lii] There is also the possibility to cancel a candidacy or the election of the affected candidate, accompanied by a possible deprivation of the right to participate in future elections. Finally, the legal framework may provide for further civil or criminal liability and, in less serious cases, for a proportional reduction of public funding. Political parties and candidate financial regulation,' is an area in which enforceability is critical to the credibility of the effort to control political corruption.'[liii]
In conclusion, money in politics and the recognition that money in politics should be addressed in some manner or another by the legal framework is phenomenally consistent throughout the world. A 2012 global study published by International IDEA found that all countries in the world have some regulations regarding the role of money in politics.[liv] The nature and objectives of such regulation, however, as might be expected varies tremendously and, ' the international community has not yet endorsed more detailed working standards; hence despite the importance of money in politics, it remains difficult to establish a legitimate global yardstick to evaluate financial practices.'[lv] However, it is reasonable to keep in mind that regulation essentially intends to encourage healthy multiparty democracy and, " Regulation must not curb healthy competition." [lvi]
An additional observation is that, " Global experience also clearly indicates that regulation and monitoring by government agencies is not sufficient, an active civil society and vigilant media is necessary if effective oversight is to be achieved." [lvii]
[xvii] International Foundation for Electoral Systems (IFES),
Political Finance Regulation: The Global Experience. Edited by Magnus Öhman and Hani Zainulbhai (United States of America: IFES, 2009), 13.
[xviii] International IDEA, International Electoral Standards, 65.
[xix] European Commission and NEEDS, Compendium, 12.
[xx] International IDEA, International Electoral Standards, 67.
[xxi] OSCE, Election Observation Handbook, 61.
[xxii] OSCE, Guidelines for Reviewing a Legal Framework for Elections, 32.
[xxiii] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 10.
[xxvi] OSCE, Guidelines for Reviewing a Legal Framework for Elections, 22.
[xxvii] Magnus Öhman, 'Public Funding of Political Parties and Election Campaigns.' In International Foundation for Electoral Systems (IFES), Political Finance Regulation: The Global Experience (United States of America: IFES, 2009), 57.
[xxxi] International IDEA, International Electoral Standards, 66.
[xxxiii] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 10.
[xxxiv] Magnus Öhman, 'Public Funding of Political Parties and Election Campaigns', 77.
[xxxv] Marcin Walecki, 'Practical Solutions for Spending Limits.' In International Foundation for Electoral Systems (IFES). Political Finance Regulation: The Global Experience. Edited by Magnus Öhman and Hani Zainulbhai (United States of America: IFES, 2009), 46.
[xxxvi] International IDEA, International Electoral Standards, 68.
[xxxvii] Marcin Walecki, 'Practical Solutions for Spending Limits', 47.
[xxxviii] DRI and The Carter Center, Strengthening International Law, 37.
[xxxix] OSCE, Guidelines for Reviewing a Legal Framework for Elections, 22.
[xl] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 10.
[xli] Magnus Öhman & Jack Santucci, 'Practical Solutions for the Disclosure of Campaign and Political Party Finance.' In International Foundation for Electoral Systems (IFES). Political Finance Regulation: The Global Experience. Edited by Magnus Öhman and Hani Zainulbhai (United States of America: IFES, 2009), 27.
[xlii] IFES, Political Finance Regulation: The Global Experience, 13.
[xliii] OSCE, Guidelines for Reviewing a Legal Framework for Elections, 22.
[xliv] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 10.
[xlv] IFES, Political Finance Regulation: The Global Experience, 13.
[xlvi] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 11.
[xlvii] Magnus Öhman & Jack Santucci, 'Practical Solutions for the Disclosure of Campaign and Political Party Finance.', 41.
[xlviii] Hani Zainulbhai, 'Practical Solutions for Political Finance Enforcement and Oversight.' In International Foundation for Electoral Systems (IFES), Political Finance Regulation: The Global Experience. Edited by Magnus Öhman and Hani Zainulbhai (United States of America: IFES, 2009), 98.
[xlix] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 10.
[l] International IDEA, International Electoral Standards, 68.
[li] European Commission, Handbook for European Union Election Observation, 60.
[lii] International IDEA, International Electoral Standards, 67.
[liii] ACE Electoral Knowledge Network, Encyclopaedia. Parties and Candidates Financial Regulations, Website.
[liv] International IDEA, Political Finance Regulations Around the World: An Overview of the International IDEA Database, 11.
[lv] Pippa Norris, 'Are There Global Norms and Universal Standards of Electoral Integrity and Malpractice? Comparing Public and Expert Perceptions,' Faculty Research Working Paper Series (Harvard Kennedy School, March 16 2012), 5.
[lvi] IFES, Political Finance Regulation: The Global Experience, 16.
