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Key Text Funding of Political Parties and Election Campaigns: Handbook Series

Author: International Institute for Democracy and Electoral Assistance (IDEA)
Date: 2004
Size: 262 pages (1.05 MB)

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Summary

Achieving sustainable democracy requires attention to the financing of politics. How can funding best be managed to ensure that different parts of society have an equal opportunity to participate in political processes and decisions? This handbook from the International Institute for Democracy and Electoral Assistance (IDEA) examines examples of political financing from around the world and proposes some ‘best practice’ guidelines.

The formation of effective political blocs is a key element of the transition to democracy. Political parties matter because they link government institutions with civil society, and mediate between the two. They are integral to electoral processes and facilitate the transformation of diverse opinions into policy action. They must be financed, but established democracies are suffering from declining interest in party politics. Analysis of electoral campaign and wider party financing in Africa, the Anglo-Saxon orbit countries, Western Europe, Central and Eastern Europe, Asia and Latin America reveals wide differences in funding sources and regulation. There is no perfect solution for producing an efficient political finance regime. However, emerging democracies should base tailored policy packages around four elements: transparency, encouragement, public support and supervision.

Established democracies use diverse systems for generating and controlling political financing. For example, Anglo-Saxon democracies have preferred a regulatory approach, while those in Western Europe have focused on public subsidies to parties. Important lessons include the following:

Competition among political parties is vital to sustainable democracy and good governance. Parties need access to adequate resources to allow them to develop and strengthen.
Money should not be treated just as a problem in new democracies, but as a means to create a basis for democratic government. Sustainable party financing must be balanced with the need to curb corruption.
Some party activities are purely partisan and do not benefit civil society or the political system. This must be considered when establishing funding rules.
Political funding should be made an issue of public debate, and regulated by disclosure rules that ensure adequate transparency.
It is unwise to rely too heavily on funding from either the public or private sectors. A mixture of sources helps to ensure sufficient levels of finance and prevent corruption.

Party financing should aim to strike an innovative balance between a shortage of funds, which is no good for a sustainable democracy, and a waste of money, which is no good for a healthy democracy. This requires voter checks based on reliable information and sanctions, and statutory incentives for fundraising. Incentives to build a sustainable financial base work better than penalising wrong-doers. ‘Best practice’ should aim to:

Build public confidence through realistic measures to improve transparency.
Encourage grass-roots funding while ensuring it is not parties’ only source of finance. This can be done partly through legal incentives for contributors and fundraisers.
Take a pragmatic approach to discouraging dangerous sources of funds.
Provide limited public funding. This could match party fundraising and be in the form of subsidies in kind or indirect support, rather than cash. Parties that ignore transparency obligations should be excluded.
Create a supervising agency that is judicially independent and strikes a balance between law enforcement, auditing and meeting parties’ needs.
Implement measures that support increased participation of women in political parties.

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Source: International Institute for Democracy and Electoral Assistance (IDEA), 2004, ‘Funding of Political Parties and Election Campaigns: Handbook Series’, International IDEA, Stockholm
Author: International Institute for Democracy and Electoral Assistance, http://www.idea.int/
Organisation: International Institute for Democracy and Electoral Assistance, http://www.idea.int/