Limits on permitted contributions are intended to reduce the possibilities for the exercise of undue influence on a candidate or party by a contributor.
The limits may apply selective to certain categories of donor, for instance, candidates in the United States are exempt from limitations for contributions to their own campaigns. Alternatively, the limits may apply selectively to different categories of recipient (in Italy, donations to candidates rather than the party are subject to a ceiling).
Contribution limits may be calculated by a variety of formulae. They may be in the form of a sum of money; they may be calculated as a percentage of the donor's income or assets; or they may be related to a yardstick such as the statutory minimum wage or to the average wage. Such yardsticks are useful in countries with high rates of inflation.
Examples of countries with contribution limits as of 1995, included the following countries. Some countries imposed limits only for particular categories of donor or categories of recipient, see 50:
- Brazil
- France
- India
- Israel
- Italy
- Japan
- Mexico
- Russia
- Spain
- Taiwan
- Turkey
- United States
Examples of countries with no contribution limits as of 1995, included:
- Australia
- Canada
- Czech Republic
- Germany
- Great Britain
- Greece
- Sweden
- The Netherlands
Examples of countries with limits for certain categories of contributor only:
- Brazil - individuals and companies
- India - companies
- Israel - individuals
- Mexico - non-profit organisations
Example of country with limits for contributions to candidates but not to parties
Administrative Implications
The administrative burden of implementing such regulations can be considerable both for candidates and for the government. The US laws are enforced by a six-member bipartisan Federal Election Commission, backed by a large staff, see Administrative Implications.
Comments
A positive effect of this regulatory device, especially in countries where the limit is strict, is that the low level of permitted contributions has probably obliged candidates to raise money from a larger number of donors than before. They are thus less dependent upon a small number of 'fat cat' millionaires.
But the limits have a number of shortcomings:
- They have had the side effect of making candidates start their campaigns at a much earlier stage. The next presidential campaign starts when the last one is barely over.
- Despite the restrictions on the amounts that a single donor may contribute, the overall levels of campaign costs have continued to rise.
- The limits have been evaded in a number of ways. An important loophole in the United States is that they have applied only to campaigns for election to federal offices. The regulation of campaigns for state and local offices has remained the responsibility of state governments. Another loophole is that the contributions limits apply only for donations to campaigns. It is possible to give unlimited additional sums provided that they are allocated to general 'party building' activities such as voter registration and membership campaigns. In addition, payments to party-related 'think tanks' are also untouched by the contribution limits.
- The journalist Elizabeth Drew, wrote a book titled Politics and Money: The New Road to Corruption in which she argued that 'The political practitioners who have learned their way around both the Presidential and the congressional campaign-finance laws - and all the skilled ones have - view them with amusement. One Democratic practitioner says, 'They are over-regulating the penguins at the top of the iceberg.' (p.2.)
Draft Only
