Funding of Political Parties and Election Campaigns

1 Funding of Political Parties and Election CampaignsA handbook on Political FinanceEditors:Elin Falguera Samuel Jones Magnus OhmanContributors:Julie Ballington Elin Falguera Muriel Kahane Juan Fernando Londo o Karl-Heinz Nassmacher Magnus Ohman Daniela R. PiccioFredrik Sj bergDaniel Smilov Andreas Ufen Daniel Zovatto Funding of Political Parties and Election CampaignsA handbook on Political FinancePolitical Par ties, Par ticipation and Representation International Institute for Democracy and Electoral Assistance 2014 International IDEAStr msborg, SE-10 3 3 4, STOCKHOLM, SWEDENTel: + 4 6 8 698 37 0 0, fax: + 4 6 8 20 24 2 2E-mail: website: electronic version of this publication is available under a Creative Commons Licence (CCl) Creative Commons At tribute-NonCommercial-ShareAlike Licence.

2 You are free to copy, distribute and transmit the publication as well as to remix and adapt it provided it is only for non-commercial purposes, that you appropriately at tribute the publication, and that you distribute it under an identical licence. For more information on this CCl, see: < >. International IDEA publications are independent of specifi c national or Political interests. Views expressed in this publication do not necessarily represent the views of International IDE A, its Board or its Council members. Graphic design by: Turbo Design, Ramallah Cover illustration: Ellen IsaacsPrinted in Sweden ISBN: 978-91-87729-24-9 IIIF orewordOver the course of my career, I have witnessed the negative impact of money on politics and governance.

3 Th ere is increasing evidence that corruption and unregulated donations are exercising undue infl uence on politics and undermining the integrity of elections. In some countries, money from organized crime has infi ltrated politics to gain control over elected offi cials and public institutions. Th ese threats to democratic politics help explain why large numbers of people around the world are losing faith in politicians and democratic processes. For example, recent research shows that more than two-thirds of Americans trust government less because of the infl uence of big e need to regulate uncontrolled, undisclosed and opaque Political fi nance was identifi ed by the Global Commission on Elections, Democracy and Security2 as a major challenge to the integrity of elections in emerging and mature democracies alike.

4 Th e Global Commission argued that poorly regulated Political fi nance can diminish Political equality, provide opportunities for organized crime to purchase Political infl uence, and undermine public confi dence in elections. Indeed, a failure to regulate Political fi nance threatens to hollow out democracy and rob it of its unique all over the world want Political Parties and governments to represent their views and be responsive to their needs. However, all too often Parties are disproportionately representative of the interests of the donors who have largely fi nanced them. If large corporations and rich individuals are able to buy greater infl uence through large campaign donations, then citizens can lose faith in, or be marginalized from, the Political process.

5 Th is is compounded by a lack of citizen participation in Political Parties , which further adds to people s alienation from the Funding of electoral Campaigns and Political Parties has an important role in the functioning of democracy, unregulated money in politics means that the Political playing fi eld is not level. Th e explosive growth in campaign expenditures fuels the perception that wealth buys Political 1 Brennan Center for Justice Research referred to in the report of the Global Commission on Democracy, Elections and Security (2012, p. 34).2 Th e Global Commission on Elections, Democracy and Security was established as a joint initiative of the Kofi Annan Foundation and the International Institute for Democracy and Electoral Assistance (International IDEA).

6 Th e Commission s 2012 report, Deepening Democracy: A Strategy for Improving the Integrity of Elections Worldwide, can be downloaded at uence and threatens Political equality. Th e abuse of state resources by the ruling party to put itself in an advantageous position also remains a problem in many countries. Th is lack of a level playing fi eld prohibits the equal participation and representation of all citizens in democratic Political processes. Recent years have seen a growing penetration of transnational organized crime and illicit funds into politics. In Latin America, West Africa and in many other parts of the world, opaque electoral fi nance and lack of transparency and oversight are providing opportunities for organized crime to gain infl uence over elected offi cials by fi nancing their Campaigns .

7 Th is not only undermines democracy, good governance and the rule of law, but also has negative consequences for economic development and the alleviation of ere is clearly an urgent need to better control Political fi nance. Governments should regulate Political donations and expenditures eff ectively. Th is will require full transparency and disclosure of donations, with penalties for non-compliance. Eff ective monitoring and enforcement of regulations are also crucial. Th is new publication from International IDEA on Political fi nance around the world is a timely and much-needed contribution to the fi eld of democracy support. It builds on International IDEA s previous work and provides a better understanding of the current state of Political fi nance regulation.

8 It also off ers recommendations on reforms for a range of stakeholders and provides concrete suggestions for future research. Th rough sharing global practices in the fi eld of Political fi nance, this handbook is an important step in safeguarding the integrity of elections and of democratic politics. Kofi A. Annan Chair, Global Commission onElections, Democracy and SecurityVPreface Democracy is a system in which the government is controlled by the people, and in which people are considered equals in the exercise of that control. However, unequal access to Political fi nance contributes to an uneven Political playing fi eld. Th e rapid growth of campaign expenditure in many countries has exacerbated this problem.

9 Th e huge amounts of money involved in some Election Campaigns makes it impossible for those without access to large private funds to compete on the same level as those who are well ere is no doubt that Political Parties need access to funds in order to play their part in the Political process. At the same time, the role of money in politics is arguably the biggest threat to democracy worldwide today. Th is threat is clear across all continents from huge corporate campaign donations in the United States and drug money seeping into politics in Latin America, to corruption scandals throughout Asia and Europe. Evidence shows that large portions of the electorate around the world are left with the perception that their politicians are more concerned about money than about representing citizens interests.

10 Recognizing the many challenges of money in politics and the gap in comparative knowledge, International IDEA has been focusing on the topic for over a decade and has worked on a broad range of activities, including stimulating national debates on legal reforms, building institutional capacity and producing global comparative knowledge. Th is handbook builds on the 2003 International IDEA handbook Funding of Political Parties and Election Campaigns and is unique in its global scope. By off ering an overview of Political fi nance around the world, its aim is to advance the debate and stimulate action to improve the role of money in politics. Th ere are a myriad of problems related to money in politics: fi nancial scandals, the abuse of public funds, drug cartels supply of illicit money to Parties , and private corporations funnelling vast sums to party fi gures in order to garner favours.