There are six main ways of regulating political finance:
- bans on funding from certain sources
- limits on contribution amounts
- expenditure bans
- expenditure limits
- public funding/subsidies
- campaign time limits
- full and public disclosure [1]
The first four of these may involve election integrity questions.
Thus, although the intention may be simply to reduce corruption and level the playing field, these methods of regulating private political funding are not neutral in their political effects. Moreover, restrictions on the sources and amounts of political donations—and especially expenditure limits—could lead to evasion and cheating. The restrictions on receiving and spending funds require effective mechanisms for law enforcement, and these in turn require effective mechanisms for financial reporting, disclosure and transparency. Without such mechanisms, electoral participants who obey the restrictions are playing by a different set of rules from those who disregard the restrictions with impunity. Finally, in political environments where election and/or judicial authorities are fundamentally biased and dishonest, legal restrictions on political finance may be arbitrarily enforced against opposition candidates.
Election integrity issues also arise with the use of public funding/subsidies for political parties, candidates and other electoral participants, whether the funding is in addition to or in place of private funding opportunities. The values of fairness, equity, accountability and transparency assume particular importance when electoral participants are to be allocated public funding or other benefits, such as free broadcast time.
- Fairness and equity are crucial in deciding thresholds and requirements for eligibility, standards for the amount of subsidy entitlement (if the amount differs for each recipient), conditions on the use of funds or particular forms of subsidy, and timing of receipt of the subsidy or other benefit.
- Accountability and transparency are critical to maintaining election integrity standards in the way that public subsidies or other benefits are distributed and used. Fortunately, public funding (or rather the threat of losing public funding) provides substantial leverage in requiring eligible electoral participants to meet higher standards of financial reporting and internal accountability controls.
Campaign time limits often are intended to limit the amount of money spent in a campaign. However, political parties and candidates can evade such limits by claiming that their pre-election efforts are non-political. Further, this approach may actually encourage more spending overall by allowing money to be spent without any limit outside the campaign period. [2]
Finally, full and public disclosure is a fundamental public control mechanism.
NOTES
[1] See Money in Politics Handbook: A Guide to Increasing Transparency in Emerging Democracies, Washington, D.C.: US Agency for International Development, 2003, p. 13–18.
[2] Money in Politics Handbook, p. 15.
