Electoral Processes


To what extent is private and public party financing and electoral campaign financing transparent, effectively monitored and in case of infringement of rules subject to proportionate and dissuasive sanction?

The state enforces that donations to political parties are made public and provides for independent monitoring to that respect. Effective measures to prevent evasion are effectively in place and infringements subject to effective, proportionate and dissuasive sanctions.
All political parties represented in parliament are largely financed by the state, based on the number of votes cast and the number of parliamentary seats, and private contributions are limited. Electoral campaigns at all levels are subject to tight regulations on allowed spending, both in terms of amount and item. After each election, all advertising and campaign spending and contributions are scrutinized in detail by a special parliamentary committee, with limited partisan bias. Candidates who infringe the rules may, for instance, lose the right to be elected, even though such instances are rare. In most cases, a range of more modest (financial) sanctions are implemented, typically seeing the candidate forced to repay non-eligible expenses or overspending.

Tight financial control over the party accounts is also exerted during non-electoral periods, again by a special largely nonpartisan parliamentary committee. In 2015, two parties received modest sanctions following some remarks on their accounting techniques. This was quite hotly debated and framed in terms of majority/opposition tensions, but can generally be seen as an indication that the system of checks and balances functions quite well.
Financing of political parties is regulated by the Act on Political Parties (APP). All parties have to keep proper books and accounts, specify the nature and value of donations and membership fees, and publish their financial records regularly on their party’s website. An independent body, the Political Party Financing Supervision Committee (PPFSC), monitors whether parties have properly declared all financial resources and expenditures; the committee can also impose sanctions when parties have violated the law.

The regulatory and investigative powers of the PPFSC have been expanded several times through amendments to the APP. Despite significant progress some loopholes in financing regulations still exist. One of the major concerns is that the PPFSC has limited access to information necessary to deal efficiently with financial fraud. To tackle the problem, the PPFSC regularly proposes amendments to the APP. However, recent proposals have been neglected by the Constitutional Committee of the parliament. There is no political will to make political parties more accountable for financial misconduct.
New campaign-finance legislation was implemented between 2008 and 2009, in the wake of several political financing scandals. This legislation requires politicians to disclose funding sources, and has provided for independent and efficient monitoring. There are now bans on donations from foreign interests, corporations holding government contracts and anonymous donors. In addition, there are limits on the amount a donor can contribute over a time period or during an election. Currently, a single private donor can donate up to €6,000 to a candidate standing in a parliamentary election. Candidates are required to report the sources of their campaign funds. These reports are filed with ministries and auditing agencies, and made publicly available. Financing scandals involving parties and candidates continue to attract media coverage, and studies indicate that parties are likely to lose electoral support if they are involved in finance scandals. As a result of the new rules, the quality of party financing has improved and public opinion polls indicate that the credibility of politicians has increased.
Demokratiapuntari 2012: Yhteenveto. Ministry of Justice/MTV3/tnsGallup, 02/2012;
Mattila, Mikko and Sundberg, Jan 2012: Vaalirahoitus ja vaalirahakohu. In: Borg, Sami (ed.): Muutosvaalit 2011. Oikeusministeriön selvityksiä ja ohjeita 16/2012. Oikeusministeriö (Ministry of Justice), pp.227–238.
Funding for political parties in Norway is predominantly public. On average, parties receive about three-quarters of their revenues through state subventions (ranging from 60% to 80%). Membership fees are now an insignificant source of party finances. Parties also receive private donations; for example, the Labor Party receives funds from particular trade unions, while the Conservative Party receives donations from individuals and business organizations. State support for parties is proportionate to the results of the last-held election, but even parties not represented in parliament have access to state support.

Since 1998, political parties have been obliged to publish an overview of the source of their revenues, with detailed reports required since 2005. Thus, all party organizations, central and local, are today obliged to submit detailed income reports, with full information on the source of income, on an annual basis. Information on contributions of NOK 30,000 or more must be provided separately, with the identity of the donor included. Income reports are submitted to the Central Bureau of Statistics and are published in detail. A new provision under consideration as of the time of writing would obliges parties to report expenditures, property holdings and debt as well as income.
The state enforces that donations to political parties are made public and provides for independent monitoring. Although infringements are subject to proportionate sanctions, some, although few, loopholes and options for circumvention still exist.
All candidates in state and federal elections are entitled to public funding, subject to obtaining at least 4% of the first preference vote. The amount to be paid is calculated by multiplying the number of votes obtained by the election funding rate for that year. The funding rate is indexed every six months to increase in line with the consumer price index; for the 2016 election, it was 262.8 cents per eligible vote in both houses of parliament (House of Representatives and Senate). The total election funding paid in the 2016 federal election was AUD 62.8 million. The Australian Electoral Commission administers the distribution of funding and provides full public accounts of payments made.

For private funding, there are no limits on the value of donations, and while there are disclosure rules, they are not comprehensive and vary considerably across state governments. At the federal level, for example, candidates endorsed by a registered political party may roll their reporting of donations received into their annual party return, which, in the case of the July 2016 federal election, was not due for release until October 2017. The AEC does, however, rigorously monitor and enforce the disclosure requirements in place. Several of the state and territory governments have in recent years legislated to improve disclosure requirements for private funding and in some cases limit donations. Other states, such as Victoria, introduced a non-binding Code of Conduct in October 2011.

In June 2017, an investigation by journalists into Chinese attempts to influence Australian political parties revealed that both major political parties accepted donations believed to have originated from the Chinese government. The prime minister subsequently ordered an inquiry into espionage and foreign interference laws. The conflict between Australia and China escalated in late 2017: the Australian government accused China of undue interference, while Chinese commentators have labeled Australia an agent of the United States.

Following the rise in public scrutiny of Chinese influence within the Australian political system, legislation was passed in November 2018 that bans donations of more than AUD 100 from foreign governments or state-owned enterprises to any “political actor” – including parties, individual candidates and significant political campaigners. Additionally, The Foreign Influence Transparency Scheme commenced on 10 December 2018. Its purpose is to provide public and governmental decision-makers with a view of the nature, level and extent of foreign influence on Australia’s government and political process. The scheme introduces registration obligations for persons and entities who have arrangements with or undertake certain activities on behalf of foreign principals.
http://www.lo c.gov/law/help/campaign-finance/australia.php


The Canada Elections Act requires registered parties or electoral-district associations to issue income-tax receipts for contributions, and to make public reports on the state of their finances. Furthermore, the act requires registered parties to report and make public all contributions of more than CAD 20. Elections Canada provides access to the full database online for public use. Corporations, trade unions, associations and groups are prohibited from contributing to political parties. Only individuals are allowed to contribute. The amount that candidates and leadership contestants may contribute to their own campaigns is CAD 5,000 and CAD 25,000, respectively. Individuals receive generous tax credits for political donations. Annual contributions to registered parties, registered associations, electoral candidates, and nomination and leadership contestants are capped at a relatively modest amount of CAD 1,550. However, transparency in political financing is still seen as a problem. Public debate over transparency recently reignited after it was revealed in the press that the prime minister and other senior ministers were raising millions of dollars at private “cash-for-access” fundraisers, giving donors secretive cabinet access. Furthermore, provincial practices and rules regarding political donations vary widely. Fixed contribution limits, for example, range from only CAD 100 per year in Quebec to CAD 6,000 per year in New Brunswick. Yet, in other provinces like Saskatchewan, any individual, corporation, union or special interest group can make a political contribution of any size to a provincial political party.

In addition to individual donations, political parties are funded by the government. Each registered federal political party that received at least 2% of all valid votes in the last general election, or at least 5% of the valid votes in the electoral districts in which it has a candidate, is reimbursed 50% of its national campaign expenses and further “election rebates” for riding-specific expenses. Until 2015, such parties were also given a per-vote subsidy, largely considered to be the most democratic financing regime. A bill passed in 2012 reduced and later eliminated this subsidy, seen as negative from the perspective of fairness in party financing.
Elections Canada, Administrative Compliance Policy for Political Financing, retrieved 2015 from http://www.elections.ca/pol/acp/adcom_e.pdf.
Political parties are financed by membership fees, support from other organizations/corporations and state subsidies. Traditionally, the Social Democratic Party has received support from the labor movement and the Conservative Party and Liberal Party have received support from employers’ organizations. A law enacted in 1990 made such contributions voluntary, implying that members of these organizations who do not want their membership fees used to support political parties can opt out.

Private sources that contribute more than DKK 20,000 should be made public, although the amount donated can remain confidential. It is possible to circumvent this requirement by making multiple donations below the threshold limit to local political party branches. There are also examples of other indirect ways of supporting parties. The Danish branch of Transparency International has criticized these rules for failing to achieve sufficient transparent.

Public support for political parties is becoming more important. The party groups in the parliament (Folketinget) receive financial support (recently increased) for their legislative work, including staff costs. Further, the parties receive electoral support depending on the number of votes won.

There is an ongoing case regarding the possible use of EU money to fund political activities in Denmark unrelated to the European Union by the Danish People’s Party. An investigation conducted by OLAF, the European Commission’s Anti-Fraud Office, concluded in October 2019 that €583,047 should be paid back. Since OLAF has no power to prosecute, the case was sent to the Danish State Prosecutor for Serious Economic and International Crime, which has now started its investigation.
Partistøtte på grundlag af deltagelse i seneste folketingsvalg, http://valg.sim.dk/Valg/Partistoette/Folketingsvalg.aspx(Accessed 8 October 2015).

Transparency International Danmark, “Privat Partistøtte,” http://transparency.dk/wp-content/uploads/2012/12/Policy-Paper_Privat-partist%C3%B8tte_elektronisk-version.pdf (accessed 20 October 2014).

Zahle, Dansk forfatningsret 1, pp. 159-160.

“EU’s svindeljægere overdragerDF-sag til Bagmandspolitiet,” https://www.msn.com/da-dk/nyheder/krimi/eu-svindeljægere-overdrager-eu-sag-med-df-til-bagmandspoliti/ar-AAIReWw (accessed 17 October 2019).
Lacking a sufficient legal framework, party financing has long been a source of recurrent scandals. Nearly all political parties used to finance their activities by charging private companies working for local public entities, or by taxing commercial enterprises requesting building permits. Former President Jacques Chirac’s sentencing once he lost his presidential immunity provided a spectacular illustration both of the illegal practices and the changing attitudes vis-à-vis illegal financing. The first reasonably robust regulatory framework was established only in 1990. Since then, much progress has been made in discouraging fraud and other illegal activities. Nonetheless, not all party financing problems have been solved. Current legislation outlines public funding for both political parties and electoral campaigns, and establishes a spending ceiling for each candidate or party. The spending limits cover all election campaigns; however, only parliamentary and presidential elections enjoy public funding. Individual or company donations to political campaigns are also regulated and capped, and all donations must be made by check, except for minor donations that are collected, for instance, during political meetings. Donations are tax-deductible up to certain limits. Within two months after an election, a candidate has to forward the campaign’s accounts, certified by an auditor, to the provincial prefecture, which conducts an initial check and then passes the information on to a special national supervisory body (Commission Nationale des Comptes de Campagne et des Financements Politiques). In presidential elections, this review is made by the Constitutional Council (Conseil Constitutionnel).

These controls have made election financing more transparent and more equal. Yet loopholes remain, as evidenced by the Constitutional Council statement identifying irregularities in the financing of former President Sarkozy’s campaign in 2012. Presently, the National Rally and its leader, Marine Le Pen, are being prosecuted for violating financing regulations. The tradition of cheating persists in many areas. Another example concerns the practice by some parties (including the National Rally and the MODEM centrist party) of using assistants paid by the European Parliament for purely partisan purposes. Finally, the Fillon scandal (in which Fillon used public money earmarked for parliamentary assistants to hire his wife and children – a practice that in itself was not forbidden – without any documented work being undertaken) led to a new piece of legislation in June 2017. Immediately after the presidential election, Macron introduced a new law to deal with the “moralization” of political life. The new law addressed several legal loopholes that allowed for morally ambiguous political behavior. For example, the new law prohibited members of parliament from hiring family members. Conflicts of interest are more strictly controlled and all ministers are subjected before appointment to a screening by an independent authority on financial transparency. When these rules are violated, three types of disciplinary action can be taken: financial (expenditures reimbursed), criminal (fines or jail) and electoral (ineligibility for electoral contests for one year, except in the case of presidential elections).
On 26 June 2017, mustering the required two-thirds majority, the German Bundestag changed Art. 21 (3) and (4) of the Basic Law, which regulates the financing of the political parties. The Constitutional Court had refused to ban the National Democratic Party (NPD), a right-wing extremist party, on constitutional grounds. In response, the government and other political parties wanted to exclude the NPD and other extremist parties from state-based party financing. As a result of the changes, parties that oppose the free democratic order or the existence of the Federal Republic of Germany by abusing the basic freedoms may no longer benefit from tax advantages for donations or state grants.

In general, Germany’s political parties finance their activities under the terms of the Political Parties Act (PPA) through state funding, membership fees, donations and sponsorships. In order to be eligible for state funding, parties must win at least 0.5% of the national vote in federal or EU elections, or 1% in state elections. A party’s first 4 million votes qualify it for funding of €1 per vote per year; for every vote thereafter, parties receive €0.83. In addition, individual donations of up to €3,300 are provided with matching funds of €0.45 per €1 collected. State funding of political parties has an upper limit, which in 2017 was €165 million. Since 2013, this cap has been annually adjusted for inflation. However, public financing must be matched by private funding. Thus, parties with little revenue from membership fees or donations receive less from the state than they would be entitled to based on vote counts alone.

Following the September 2017 elections, the German Bundestag decided to increase the upper limit for party financing by about €25 million to its current level of €190 million. Before this time, increases had been based jointly on the inflation rate and price increases; in 2017 this calculation produced an increase of 2.5%, whereas the new regulation provided an increase of 15%. The CDU/CSU and SPD, the two governing parties, sought to justify this rise by pointing to steep party cost increases driven by digitalization, intensified communication and higher costs for internet security (Deutscher Bundestag 2018). This change proved highly controversial within the public and between the parties; moreover, the decision was made a day after the beginning of the Soccer World Cup, prompting further criticism of the timing.

Critics continue to argue that party finances are insufficiently transparent. The Group of States against Corruption (GRECO) has identified some progress with respect to transparency, but continues to point out shortcomings in the German system. In its 2019 report, GRECO concludes that “Germany had implemented satisfactorily or dealt with in a satisfactory manner nine of the 20 recommendations, 10 recommendations had been partly implemented and one remained not implemented.” (Greco 2019: 2). In addition, in a recent assessment based on the accounting reports of all major parties, the nonprofit LobbyControl organization found that three-quarters of all donations to parties lack transparency. All donations less than €10,000 and revenues deriving from party sponsorship arrangements remain opaque. By law, the names and addresses of campaign donors must be made public only if donations from that source exceed €10,000 per year (LobbyControl 2019).
Bundestag (2017):

Bundestag (2018): Drucksachen 19/2509 und 19/2734.

GRECO (2019)

LobbyControl (2019)
Financing of Parties:
The financing of political parties in Ireland is supervised by the Standards in Public Office Commission (SIPO). Each of the political parties registered to contest a parliamentary or European election is required to furnish a donation statement to the commission and to publish annual accounts. The commission’s last published annual report is for 2017.

Political parties that obtained at least 2% of the first-preference votes in the last general election qualify for public funding under the Electoral Acts. The amount payable to a qualified political party is based on its share of the votes received in the last election.

Direct public funding is of two types. The first is a contribution to political parties’ annual running costs (excluding elections). Each qualifying party receives a fixed sum of about €130,000, plus an additional share based on the number of first-preference votes it won in the previous election. In 2017, the total funding from this source was nearly €5 million. The second source is annual allowances to party leaders to cover expenses arising from work in parliament. The allowance for each leader is based on the size of their parliamentary party, although the amount given to government parties is reduced by one-third in order to lessen the “resource gap” between governing and opposition parties. Independent members of parliament are also entitled to this funding, which is currently €37,037.

Total funding from these two sources is considerable. In 2015, Fine Gael received €4.7 million, Labour €2.9 million, Fianna Fáil €2.7 million and Sinn Féin €1.7 million. In addition, smaller parties received a combined €330,000, while the 27 independent members of parliament collectively received €814,268. (Standards in Public Office Commission 2016: Exchequer Funding of Political Parties).

The figures above do not cover the reimbursement of election expenses, which are treated separately. In the 2016 general election, each candidate (that secured at least one-quarter of the quota at any point in the count) was entitled to receive a reimbursement of up to €8,700. The total paid following the 2016 general election was €2.7 million.
Combining all of these different funding sources, the total sum paid to political parties and candidates was just over €16 million in 2015. As Liam Weeks comments: state funding “amounts to 84% of parties’ total income and indicates the extent to which they have become dependent on the state for survival.”

While a lack of transparency in the sources of political finance used to be a big problem in Irish politics, the very considerably increased levels of state funding have reduced this problem, and strengthened regulation of political donations and campaign spending during elections. Candidates are required to declare all donations over €600, while political parties are required to declare all donations over €1,500. The amount of private donations to parties is now low, totaling €173,000 in 2015.

During elections (i.e., from the date of dissolution of the Dáil until polling day) there are strict limits on how much candidates can spend. For the 2016 general election, this ranged from €37,650 in a three-seat constituency to €45,200 in a five seat constituency. One caveat is that, outside of the “official” campaign period (defined above), there are no limits on what selected or prospective candidates may spend – which seems to be an odd omission.
Standards in Public Office Commission, 2017. Political Parties’ Statements of Accounts, available at http://www.sipo.gov.ie/

Liam Weeks (2018), ‘Parties and Party System,’ in John Coakley and Michael Gallagher (eds) Politics in the republic of Ireland, 6th edition.
Israel has strict rules concerning party financing and electoral campaigns. The most important are the Parties Law (1992) and the Party Financing Law (1992). The two require all parties to document their finances and report them to the State Comptroller. These two laws state that: party membership dues and fund raising from members remain within the limits allowed by the Party Financing Law; and party income can only come from five sources. These sources are: party membership dues and fund raising appeals among members, within limits allowed by the Parties Financing Law; funds received from the state in accordance with the Political Parties (financing) Law; non-public contributions received in accordance with the Political Parties (financing) Law; funds received for the purpose of elections in the New Histadrut trade union association, as approved by the New Histadrut; and funds obtained from party activities, directly or by means of party associations, involving the management of party property and funds under Article 21 of the law.

Furthermore, all financial activities during elections are subjected to the supervision of the State Comptroller, who has on several occasions issued instructions that have the status of subsidiary legislation. The State Comptroller publishes regular reports regarding party finances and is in charge of ruling whether there has been a breach of the law regarding party financing and election financing. Moreover, it is the State Comptroller who can also rule that a party group must return funds to the state because of divergences in the receipt of non-public contributions.

In 2018, an amendment to the party financing law was passed, limiting the funding that joint parties receive from the state budget. According to the law, joint lists of three or four parties would be given the funding of only two parties. As the only faction with more than two parties is the Joint List, which is an alliance of four Arab parties, it was argued that the law was directly intended to break up the Joint List. A year before, another amendment of the party financing law, known as the V15 bill, aimed at limiting the activities of various non-party-political bodies that seek to influence the outcome of elections in Israel. It requires these bodies to report their funding sources to the State Comptroller. The amendment was named “V15 bill” after V15, an organization that was funded by organizations from the United States and Europe, and which funded efforts during the 2015 election campaign against the Likud party and Prime Minister Netanyahu.
Amendment to the Party Financing Law, 2018: https://fs.knesset.gov.il//20/law/20_ls2_501466.pdf
Hattis Rolef, Susan, Ben Meir, Liat and Zwebner, Sarah, “Party financing and elections financing in Israel, Knesset Research Institute, 21.7.2003 (Hebrew).

Klein, Z. “The State Comptroller: A fine to The Likus and the Bayit Yehudi,” Israel Hayom: 15.10.2018: https://www.israelhayom.co.il/article/599301

“Knesset passes controversial ‘transparency’ law on NGO funding,” Jewish Telegraph Agency, 12.07.2016: http://www.jta.org/2016/07/12/news-opinion/israel-middle-east/knesset-passes-controversial-transparency-law-on-ngo-funding

Levinson, H. and Lis, Y. “Netanyahu: the NGO Legislation is too weak, We Shall forbid Foreign Funding of Organizations, Haaretz, 11.6.2017, https://www.haaretz.co.il/news/politi/1.4161298

Shapira, Asaf. “This is how elections are funded in Israel,” Israel Democracy Institute, 19.7.2019 (Hebrew):

The State Comptroller. “The functions and powers of the State Comptroller”: https://www.mevaker.gov.il/En/About/Pages/MevakerTafkid.aspx
The Political Finance Act of 2007 aims to promote transparency, equal opportunities, independence and the avoidance of conflicts of interest. However, these objectives are only partly achieved in practice. The financial independence of political parties in Luxembourg compared to other countries is one of the strengths of Luxembourg’s party system. However, there is still potential for further improvement in terms of equality and transparency.

The basic principle of the law is that the state finances all political parties that receive at least 2% of the vote nationwide in national and European elections. Qualifying political parties receive a lump-sum subsidy of €100,000 per year. In addition, each political party receives a further €11,500 per percentage point achieved in the previous national and European election.

The state allocates approximately €2.6 million each year directly to political parties. As a result, state aid accounts for a significant proportion of the total revenue of all the above-mentioned parties. According to the law, however, this share may not exceed 75% of a party’s total funding.
Pereira, João N./Zenthöfer, Jochen (2017). Einführung in das luxemburgische Recht. München, pp. 51-57.
New Zealand
Party financing and electoral campaign financing are monitored by the Electoral Commission. Registered parties have upper limits regarding election campaign financing (including by-elections). Upper limits for anonymous donations as well as donations from abroad are comparatively low (NZD 1,500). The long-standing public-private mix of party financing continues to draw criticism. Private funding in particular is criticized for being insufficiently transparent and unfair to less well-off parties or smaller parties lacking access to parliamentary sources of personnel and funding. According to a research report published in late 2017, more than half of all donations over NZD 1,500 in 2011-2016 came as donations of NZD 15,000 or more. Unsurprisingly, the National party received more donations than Labour, NZ First and the Greens combined, mainly due to the large number of donations of more than NZD5,000. In October 2018, the Justice Minister announced that his government would consider changing the political funding rules, including lowering the threshold for anonymous donations (NZD 1,000), introducing a cap for individual donations (NZD 35,000) and banning overseas donations. The latter proposal came amid allegations of Chinese interference in New Zealand politics (i.e., in October 2018, Simon Bridges – leader of the National party – was accused of concealing an NZD 100,000 donation from a Chinese businessman with strong links to Beijing).
Max Rashbrooke. 2017. Bridges Both Ways: Transforming the Openness of New Zealand Government. Institute for Governance and Policy Studies, Victoria University of Wellington.
NZ Herald. 2018..Government considering changing political funding rules. 23 October 2018. https://www.newstalkzb.co.nz/on-air/larry-williams-drive/audio/max-rushbrooke-government-considering-changing-political-funding-rules/
Smyth and White, China donations claims throw New Zealand politics into turmoil, Financial Times (https://www.ft.com/content/7f1eba1c-d1e8-11e8-a9f2-7574db66bcd5)
Party funding oversight lies with the Constitutional Court (Tribunal Constitucional), which has a specific independent body tasked with monitoring party financing and accounts – the Entidade das Contas e Financiamentos Políticos (ECFP). There are two main sources of funds for political parties. First, the state provides funding to all parties that received vote shares above a certain threshold in previous elections (over 100,000 votes in the case of legislative elections). Second, parties receive private contributions, which must be registered with the electoral commissions of each of the parties at the local, regional and national levels.

Parties’ annual accounts and separate electoral-campaign accounts are published on the ECFP website and are scrutinized by this entity, albeit with considerable delay. For instance, the reports and decisions regarding the party accounts in 2016 were published in September 2019, with a delay of more than two and a half years.

As noted in previous SGI reports, ECFP reviews do identify irregularities and/or illegalities. However, sanctions for infractions are relatively small and infrequent.

A 2012 study examining oversight of party accounts – based on interviews with both the ECFP and party representatives – noted that the ECFP lacked resources, which limited its capacity to monitor party and election funding fully.

In the previous report, we noted that this situation appeared to have worsened during 2018 due in part to changes to the party financing law, which came into effect in that year. These measures increased the ECFP’s responsibilities, without increasing its resources (particularly staff numbers). In July 2018, it was reported that the fines applicable to political parties for financing irregularities in 2009 had expired, under the statute of limitations. In September 2018, the ECFP took the unprecedented step of publicly stating that it was in a state of “near break down” and that it would almost certainly be unable to assess all party accounts.

This situation has been reversed during the period under review. The budget for the ECFP more than quadrupled, from €351,649 in 2018 to €1,520,639 in 2019, and the ECFP was able to hire additional staff and improve its resources.
Entidade das Contas e Financiamentos Políticos (2019), “2.º ano de mandato – Balanço e Desafios,” available online at: https://www.tribunalconstitucional.pt/tc/file/ECFP%20-%20Relat%F3rio%202o%20ano%20de%20atividade.pdf?src=1&mid=5417&bid=4119

Entidade das Contas e Financiamentos Políticos (2018), Deliberação, available online at: http://www.tribunalconstitucional.pt/tc/file/deliberacao_texto_integral.pdf?src=1&mid=4601&bid=3582

Financiamento dos Partidos Políticos e das Campanhas Eleitorais – legislation, available online at: http://www.parlamento.pt/legislacao/documents/legislacao_anotada/financiamentopartidospoliticoscampanhaseleitorais_anotado.pdf

Público (2017), “A Entidade passa a ter muito mais competências, mas muito menos poderes,” available online at: https://www.publico.pt/2017/12/29/politica/entrevista/a-entidade-passa-a-ter-muito-mais-competencias-mas-muito-menos-poderes-1797503

Relatório de ECFP 2019 09.27.2019
Political parties in Sweden receive public as well as private support. Despite extensive debate, political parties still do not make their financial records available to the public and there is no regulation requiring them to do so.

This lack of disclosure has become increasingly frustrating to the public, as the parties receive extensive financial support from the state. The current support (central, regional and local) amounts to a total of some SEK 440 million (equal to €52 million) per annum. The only information that is made available about party financing is scattered and provided on an ad hoc basis by the respective parties.

In spring 2018, the government passed legislation that substantially increased the transparency of party financing in Sweden. Relating to the 2018 election, public demands again surfaced to further sharpen the rules to clearly document the financial sources of electoral campaigns and further increase monetary penalties for violations.
The rules for party and campaign financing and their enforcement have been a major political issue for some time. In April 2015, the Ministry of Interior eventually submitted an amendment to the law on political parties to parliament. The proposal was based on the Group of States against Corruption of the Council of Europe (GRECO) recommendations to Czechia issued in 2011 and came into force in January 2017. The law introduced financial limits for party financing and electoral campaigns, the mandatory establishment of transparent accounts, and greater revenue regulation of political parties and movements.

When the Office for the Oversight of the Political Parties and Political Movements (Úřad pro dohled nad hospodařením politických stran a politických hnutí, ÚHHPSH), the independent regulatory authority in charge of monitoring party and campaign finance, scrutinized the campaign for the 2019 European Parliament elections, it found that only half of the participating parties and movements had met the deadlines for publishing the required reports regarding their founding. The other half, including one parliamentary group, failed to release this report on the internet. In November 2019, the ÚHHPSH identified repeated misconduct and noncompliance on the part of 39 political parties and movements. It recommended suspending the activity of 35 parties and the dissolution of four parties (whose activities had already been suspended).
Political and campaign financing in Latvia is regulated by the Law on Financing Political Organizations, the Law on Pre-election Campaign, and the Law on Corruption Prevention and Combating Bureau. In 2017, changes were made to the Law on Financing Political Organizations, which introduced an electronic data entry system, simplifying submission of party and donor reports. In addition, it introduced a limit on donations by political party members or third parties.

Political parties are financed primarily through individual donations and public financing, although a recent legislative amendment increasing state funding for party financing has been approved and will be introduced in 2020. To achieve this, €4 million will be allocated over the next two years, keeping the previous criteria that parties must secure 2% of the vote in the preceding Saeima election to qualify. The rate for payment will be set at €4.50 per vote (previously €0.71 per vote), with an additional €0.50 per vote for municipal and European Parliament elections. If a party attracts more than 5% of the votes, €100,000 a year will be provided until the next elections. State support for a single party will not exceed €800,000 annually. This change is a step in the right direction, although it has raised some concerns about the limitations it may set on political competition, keeping the new, smaller parties out.

Parties can also be financed by membership fees and income earned through parties’ economic activities in Latvia, according to certain set limits. Donation amounts are capped, while legal entities (e.g., corporations), and anonymous and foreign donors are prohibited from financing political parties. Parties are also not allowed to take or issue loans. Candidates are permitted to donate to their own campaign, but according to the limits established for donations from individual persons. All donations must be made through bank transfers, expect for cash donations of less than €430.

Financing is transparent, with donations required to be publicly listed online within 15 days. Campaign spending is capped. As of 2012, paid television advertisements are also limited, with a ban on advertising for a 30-day period prior to an election.

Political party and campaign financing are effectively monitored by the Corruption Prevention and Combating Bureau (Korupcijas novēršanas un apkarošanas birojs, KNAB), with local NGOs playing a complementary role in monitoring and ensuring transparency.

Infringements have been sanctioned, with political parties facing sizable financial penalties. The court system has been slow to deal with party-financing violations, enabling parties that have violated campaign-finance rules to participate in subsequent election cycles without penalty. Ultimately, however, those parties that have faced stiff penalties have been dissolved or voted out of office.

The ODIHR report on the 2018 parliamentary elections expressed confidence in the party and campaign finance rules, but recommended that electoral contestants open dedicated bank accounts for campaigning transactions to enhance the mechanisms. In addition, it was suggested that all KNAB decisions related to the election campaign be made publicly available and that all electoral contestants (including third parties) provide public reports on campaign income and expenditures during the campaign period.
1. Ministry of Justice (2019) Initial Impact Assessment Report of Amendments to the Law on the Financing of Political Organizations (Parties) (Abstract), Available at: http://tap.mk.gov.lv/doc/2019_10/TMAnot_081019_PFF[1].1802.docx, Last assessed: 04.11.2019

2. OSCE: Office for Democratic Institutions and Human Rights (2019), Parliamentary Elections 6 October 2018: ODIHR Election Assessment Mission Final Report, Available at: https://www.osce.org/odihr/elections/latvia/409344?download=true, Last assessed: 04.11.2019

3. Amendments to the Criminal Law Regarding Illegal Party Financing (2011), Available at (in Latvian): http://www.likumi.lv/doc.php?id=236272, Last assessed: 04.11.2019

4. Law on the Financing of Political Organizations (Parties), Available at (in Latvian): http://www.likumi.lv/doc.php?id=36189, Last assessed: 04.11.2019

5. KNAB (2015) “Overview of Violations of Campaign Finance Regulations in the 2014 Saeima elections,” KNAB (published in Latvian). Available at: https://www.knab.gov.lv/upload/free/parskati/12.saeimas_finansu_parbaudes_1.07.2015.pdf, last assessed: 04.11.2019

6. The Corruption Prevention and Combating Bureau (2017), General report 2017, Available at: https://www.knab.gov.lv/upload/2018/knab_01022018_zinojums_2017rezultati.docx, Last assessed: 04.11.2019
Political parties may receive financial support from the state budget, membership fees, bank loans, interest on party funds and through citizens’ donations of up to 1% of their personal income tax, as well as through income derived from the management of property; the organization of political, cultural and other events; and the distribution of printed material. State budget allocations constitute the largest portion of political parties’ income, as corporations are no longer allowed to make donations to political parties or to election campaigns. All donations exceeding about €11,800 must be made public and there is an expenditure limit (about €765,000) linked to the number of voters. Attempts by the ruling parliamentary majority in 2018 to change state budget allocation rules to secure funding for the newly established Lithuanian Social Democratic and Labor party, part of the ruling parliamentary coalition, failed after the president vetoed the parliament’s effort to borrow additional funds.

Campaign-finance regulations are detailed, and sanctions for violating the law were increased. However, since third parties can potentially circumvent the legal prohibitions and directly finance electoral campaigns, following the 2016 parliamentary elections, the OSCE suggested clarifying the term “third parties” for campaign-finance purposes, and extending regulations affecting donations, expenditure limits and reporting requirements to cover these groups. For instance, the Lithuanian Central Electoral Commission found the Liberal Movement guilty of gross violations of the law on campaign financing because of a financial donation received from a third party during the electoral campaign. Furthermore, implementation of the rules should be more closely monitored and enforced. For example, the Labor party, part of the 2012 to 2016 coalition government, was taken to court for failing to make public about €7 million in income and expenditure through the 2004 to 2006 period. After several years examining the case, the appeals court found two party members and one party official guilty of fraudulent bookkeeping, though they escaped prison sentences. The Lithuanian Prosecutor General’s Office has appealed this ruling to the Supreme Court. Also, in November 2018, the Central Electoral Commission ruled that the Lithuanian Social Democratic party had seriously violated campaign-finance regulations by exceeding spending limit for political advertising during the 2016 parliamentary elections. As a penalty, regulators imposed a six-month suspension funding suspension on the party. The party announced that it would appeal the decision. A more recent controversy had to do with the attempt by one of the government coalition parties, Lithuanian Social Democratic Labor, to amend party-funding rules to allow it to benefit from state support despite the fact that it had not taken part in previous parliamentary elections as a separate party (after the elections, it split from the Lithuanian Social Democratic Party, with the latter leaving the ruling coalition and moving to the opposition, and the former staying in the coalition).
OSCE/ODIHR Election Assessment Mission Final Report on the 2019 presidential election in Lithuania, see https://www.osce.org/odihr/elections/lithuania/433352?download=true
OSCE/ODIHR Election Assessment Mission Report on the 2016 parliamentary elections in Lithuania, see http://www.osce.org/odihr/elections/lithuania/296446.
According to the Act on Political Parties, parties can be financed by membership fees, donations, estate revenues, the profits of their companies’ revenues and public subsidies. Party financing or donations from abroad are prohibited. If a political party wins at least 1% of all votes in the previous parliamentary elections, it is entitled to financial resources from the national budget: 25% of the total budget amount is divided equally between all eligible parties. The remaining 75% is divided among the parties represented in the National Assembly according to their vote share. In addition, parliamentary party groups can obtain additional support from the national budget for their parliamentarians’ education purposes, and for organizational and administrative support. All political parties must prepare annual reports and submit them to the National Assembly. The reports, which are submitted to the Agency of the Republic of Slovenia for Public Legal Records and Related Services, must disclose aggregate revenues and expenditures, detail any property owned by the party, and list the origins of all donations that exceed the amount of five times Slovenia’s average gross monthly salary (i.e., around €8,700 in 2019). The legislation puts the annual ceiling for party loans from individuals at ten times the value of the average gross monthly salary (i.e., about €17,400 in 2019). Parties are also required to submit post-electoral reports to the Court of Audit, which holds official responsibility for monitoring party financing. Following many calls to further increase transparency and strengthen the monitoring and sanctioning of party financing, legislation on the issue was finally amended in January 2014, barring donations from private companies and organizations. During local elections, municipalities autonomously set campaign financing for political parties.
Political-party financing in Austria has been characterized by unsuccessful attempts to limit the ability of parties to raise and spend money. Austrian electoral campaigns are among the most expensive (on a per-capita basis) in the democratic world, thanks to the almost uncontrolled flow of money to the parties. These large flows of money create dependencies, in the sense that parties tend to follow the interests of their contributor groups, institutions and persons.

However, some improvements have been made in recent years, for instance by making it necessary to register the sums given to a party. An amendment to the Austrian act on parties made it mandatory for parties to declare the sources of their income, beginning in 2012. Additionally, parties are required to keep records of their accounts and publish a yearly financial report. This annual report must include a list of donations received. Therefore, and for the first time, policymakers have sought to render the flow of private money to parties transparent. The yearly reports are subject to oversight by the Austrian Court of Audit, and violations of the law can be subject to penalties of up to €100,000. The fact that some parties violated set limits during the 2013 and 2017 campaigns has prompted a new debate regarding stronger oversight and sanctions.

This regulatory structure does have loopholes, however, as parties do not need to identify the sources of donations below the amount of €3,500. As long as parties can spend money without oversight or limitations, it can be assumed that they will find ways to raise money outside the system of official scrutiny.

A system of public political-party financing on the federal, state and municipal level was established in the 1970s. This can be seen as moderating the dependencies established by private funding, but has not significantly changed these private flows as can be seen in the overspending of parties (like the ÖVP) during the electoral campaign 2017.

The “Ibiza video” shown on Austrian TV of secret negotiations between former FPÖ leader Karl Heinz Strache and a (fake) representative of a Russian financial interest group highlighted the loopholes that all political insiders were already aware of. The Austrian system still allows significant amounts of money to flow from hidden entities (e.g., foundations) to parties, with the federal audit office (Rechnungshof) unable to monitor these funds. Parliament tried to change the rules in summer 2019, but failed – due to the interests of the big parties – to give the audit office the right to directly investigate party finances.
Hubert Sickinger, “Politikfinanzierung in Österreich.” Vienna 2009 (Czernin)
Frederik Obermaier, Bastian Obermayr, “Die Ibiza-Affaire. Innenansichten eines Skandals. Wie wir die gejhimen Pläne von Rechtspopulisten enttarnten und darüber die österreichische Regierung stürzte.” Köln 2019 (Kiepenheuer&Witsch)
In general, party and campaign financing processes have not been very transparent in the past. Upper limits to campaign financing are set by law, but enforcement and oversight are not very effective. Electoral campaign expenditures are financed by public funds and private financing, but ineffective monitoring often enables the latter to be rather opaque. No real mechanisms exist for applying penalties in the event of irregularities. Law No. 20,640, approved in October 2012, made it possible for a political coalition to support candidates on a joint basis. This process is voluntary and binding, and joint campaign expenditures are limited by the current public-transparency law (Ley de Transparencia, Límite y Control del Gasto Electoral). This limit is set at 10% of the amount allocated for normal elections.

At the end of 2014, wide-ranging evidence of corruption in political-party funding came to light. As the investigation progressed, more and more politicians and political parties across the ideological spectrum turned out to be involved. However, the courts have tended to impose fairly insubstantial penalties. As a response to the crisis, former President Bachelet convened an anti-corruption council that proposed several anti-corruption measures, including new restrictions on private campaign funding, which were largely enacted in April 2016. With Law No. 20,900, which modifies former Law No. 19,884, a higher base amount is provided by the state for electoral campaigns, but enterprises are barred from providing funding to political parties or campaigns. In addition, anonymous donations became illegal and all donations must be transparently registered.


Party financing for national elections is regulated by law 4304/2014, which adheres to guidelines established by the Council of Europe, constrains the size of budget outlays to parties, increases transparency regarding donations to parties and bars the practice of parties’ obtaining bank loans against future revenue which the parties expect to receive from the state. Every year, the interior minister issues a ministerial ordinance which distributes funds to parties which have received at least 1.5% of the total vote in the most recent elections.

Ιn the past, state-owned and private banks lent millions of euros to Greek political parties. However, the banks proved unable to force the parties repay their loans, as successive governments protected over-indebted parties. For example, while the aforementioned 2014 law provided that banks could confiscate assets from political parties up to 90% of the debt owed to them, in July 2017 the Syriza-ANEL coalition government reduced this value to 60% of the total debt owed.

A new state committee tasked with monitoring electoral campaign spending was established by an August 2016 decision of the Greek parliament. Under pressure from the Council of Europe and other international organizations, Greece has over time improved national legislation on party financing. Νew legislation was passed during the period under review (laws 4472/2017 and 4509/2017). This legislation was necessary because previous reform efforts had not been fully implemented. Despite improvements, there remains an implementation gap regarding rules for party financing; Greece’s record on this front remains mixed.

For the most part, monitoring remains ineffective, and the real sources of party financing are not fully known. This inefficiency is attributable to both the governing and opposition parties. For instance, in 2018, the parliamentary committee in charge of controlling party finances asked all parties to reveal the names of sponsors who had donated more than €5,000. However, the Communist Party of Greece (KKE) refused to submit any relevant information.
The reactions of the Council of Europe to Greece’s changing legislation are available at https://www.coe.int/en/web/greco/-/greece-council-of-europe-anti-corruption-group-offers-praise-and-criticism
Party and campaign financing regulation as such is clear and regulated by the 2001 Political Parties Act and the 2011 election code. Parties depend heavily on public funding, which is provided only to parties that win at least 3% of the vote or at least one seat in parliament. Party spending is monitored by the National Election Office (KBW), the executive body of the National Election Commission (PKW). Monitoring is strict, but focuses exclusively on spending financed by public funds. According to the election code, only registered voters’ electoral committees can be financed from private funds, parties have to rely on party budgets, private donations are limited and anonymous donations are forbidden. There is also a maximum spending limit for campaign purposes of approximately €7 million. In practice, separating party and campaign financing has sometimes turned out to be challenging. Other problems include the insufficient coverage of pre-campaign spending – there is only a post-election reporting requirement on campaign financing – the short window of time in which objections can be raised by the National Election Commission, and the lack of detailed transparency in commission reports of electoral committee revenues and finances. The changes to the PKW and its more partisan composition have raised doubts about its independence, and might make the control of party and campaign financing more selective. In addition, there is the broader problem of distinguishing between the money PiS has at its disposal in accordance with party finance rules and the semi-formal support that comes through various forms of financial assistance from state-owned enterprises controlled by PiS.
OSCE/ODIHR (2020): Limited Election Assessment Mission Final Report: Republic of Poland, Parliamentary Elections 13 October 2019. Warsaw (https://www.osce.org/odihr/elections/poland/446371).
After long debate and various failed attempts, new rules on campaign finance were eventually adopted in May 2014 and became effective in July 2015. In October 2018, further amendments to the Act on Political Parties were passed, some of them related to party financing. Financial gifts to political parties from a single donor can no longer exceed €300,000 a year. Other amendments have obliged parties to publish detailed information on loans accepted on their website and to open a central account at the State Treasury to which all financial contributions from the state will be transferred. In the 2020 general elections, parties are not allowed to spend more than €3 million, including VAT, on their campaigns. This sum also includes money spent on promotional materials more than 180 days before the announcement of the election day.

In July 2019, just eight months before the 2020 elections, the ruling coalition with the help of the far-right, extremist party ĽSNS and Sme Rodina hastily (in only two days) passed a further amendment on party financing. Following the amendment, political parties will only be allowed to accept €3.5 million in membership fees (which are limited to €10,000 for a single party member), donations and loans within a parliamentary term. This relatively low ceiling, which approximates the sum that a party receives from the state if it gains 5% of votes in an election, has complicated the financing of new parties. The amendment was widely perceived as being directed against Andrej Kiska, the former president, who founded the new party For the People (Za ľudí) at the end of September 2019.
Under the current rules, political parties are deemed private associations with a mixed revenue system. They are assigned funds from the public budget in proportion to their parliamentary representation, but can also collect private money from individuals (including in the form of largely insignificant membership fees) and corporations. The law was reformulated in 2015 as part of an anti-corruption plan aimed at increasing transparency and imposing sanctions following the emergence of a significant number of scandals in previous years. It imposes spending thresholds in electoral campaigns, and contributions made by businesses are at least in theory subject to limits and conditions (e.g., anonymous donations are forbidden, and companies that supply goods or services to the state cannot contribute to campaigns). The OSCE Office for Democratic Institutions and Human Rights noted that the current legal framework for political party financing, especially following the 2015 legal reform, represents a significant improvement over earlier legislation and contains many positive additions. However, there remain areas of concern that should be addressed. The OSCE office recommended a review of the balance between public and private funding, and ensuring that the system of public funding of both statutory and campaign-related activities of parties does not disproportionally favor larger, established parties. Despite efforts by the Spanish parliament to review party and campaign finance regulations in 2019, no legislative amendments were adopted.

The Audit Office (Tribunal de Cuentas) is the body charged with auditing the party accounts, and is empowered to undertake investigations on its own initiative and upon complaint, but does not have the capacity to control the investigations effectively. Although there have been certain improvements, the office suffers from a lack of political independence, since its members are appointed by the parties themselves. It also lacks staff resources, with the publication of audit reports often delayed. Moreover, there is no oversight during the campaign or before the submission and review of campaign reports.
Ahumada, (coord.) (2018), Informe sobre la Democracia en España 2017, Fundación Alternativas. http://www.fundacionalternativas.org/public/storage/publicaciones_archivos/c4ce50790447eaa82d49984032c55b91.pdf
The Electoral Commission oversees all political financing in the United Kingdom. The commission is an independent institution set up by parliament, which publishes all its findings online to make them easily accessible. Although all donations above a certain threshold must be reported to the commission, the fact that political parties are largely dependent on donations for their ever-increasing spending on national campaigns has repeatedly led to huge scandals in the past. There have also been highly publicized cases where individual party donors have been rewarded by being granted honors. Changes have also been made to prevent donations from individuals not resident in the United Kingdom. Although these cases have generated considerable media interest, there is not much evidence that donations have influenced policy.

In 2011, the Committee on Standards in Public Life published a report recommending a cap of £10,000 on donations from individuals or organizations. This recommendation was welcomed, at the time, but has not been introduced.

Contributions from party members or local associations (through local fundraising) are relatively minor, though still useful to parties, compared to the amount parties receive from institutional sponsors (trade unions in the case of the Labour Party, business associations in the case of the Conservative Party) and individual donors. There is also some state financing of parties (known as “Short Money” after the politician who initiated it in the 1970s), which will be cut following the latest government expenditure review. The amount of Short Money received by a party is linked to the party’s representation in the House of Commons, which means that parties that lose seats in a general election will face a funding squeeze during the next parliament. The 2010 – 2015 coalition government pledged to reform party financing, but made no substantial progress on the issue. The Conservative government elected in 2015 passed a Trade Union Act, which includes new restrictions on trade union financing for political parties. This will reduce the Labour Party’s income.
The state provides that donations to political parties shall be published. Party financing is subject to some degree of independent monitoring but monitoring either proves regularly ineffective or proportionate sanctions in case of infringement do not follow.
The 2006 law regulating the financing of political parties provides three types of public grants. First, an annual grant, proportional to the national vote share in the previous election, is awarded to any party or independent group with at least one member of parliament or attained at least 2.5% of the national vote in the last election. Second, an annual grant, proportional to the number of seats in parliament, is awarded to all parliamentary parties or independent groups. Third, a grant is awarded to any party or independent group, in a municipality of 500 inhabitants or more, with at least one member in the local council or attained at least 5% of the vote in the last municipal election. The law also regulates private contributions to political activity. For example, parties are not allowed to accept more than ISK 400,000 (€2,900) from any private actor, company, or individual.

The National Audit Office (Ríkisendurskoðun) monitors party and candidate finances, and publishes annual summaries that include total expenditure and income. Income must be classified by origin, identifying companies or other entities contributing to party finances before and during election periods.

Before the 2007 election campaign, political parties reached an agreement that a maximum of ISK 28 million could be spent on TV, radio, and newspaper advertisements. Moreover, there is legal limit on electoral spending. Since 2009, regulation on party finances has been under review, but no final agreement has been reached.

The law on party financing was originally drafted by a committee comprising party representatives, including the chief financial officers of the main political parties. This followed the disclosure by the National Audit Office that, among other things, fishing firms gave 10 times as much money to the Independence Party and the Progressive Party between 2008 and 2011 as to all other parties combined. The Independence Party and the Progressive Party have been and remain particularly generous toward the fishing industry. Similarly, the Special Investigation Committee disclosed that huge loans and contributions were provided by the Icelandic banks to political parties and politicians between 2006 and 2008, on a per capita scale significantly greater than in the United States.

The extent to which the rules are circumvented is not well known. Even so, a new method of circumvention came to light in 2018 when it was disclosed that some members of parliament received considerable sums of money from parliament to pay for travel costs, including travel to visit voters before elections.
Lög um fjármál stjórnmálasamtaka og frambjóðenda og um upplýsingaskyldu þeirra, nr. 162/2006 (Law on the finances of political organizations and candidates and about their information duties nr. 162/2006).

Lög um breytingu á lögum nr. 162/2006, um fjármál stjórnmálasamtaka og frambjóðenda og um upplýsingaskyldu þeirra nr. 119 21. september 2010.

Kristinsson, G. H. (2007), Íslenska stjórnkerfið. 2. útgáfa. Reykjavík, Háskóli Íslands. (The Icelandic political system. Second edition)

Special Investigation Committee (SIC) (2010), Report of the Special Investigation Committee (SIC), report delivered to Althing, the Icelandic Parliament, on 12 April. See http://www.rna.is/eldri-nefndir/addragandi-og-orsakir-falls-islensku-bankanna-2008/skyrsla-nefndarinnar/english/. Accessed 22 December 2018.
State financing was regulated until February 2014 by a 1993 law (Legge del 10 Dicembre 1993 no. 515) and was monitored by an independent judiciary organ – the Court of Accounts (Corte dei Conti) – which checked the accounts provided by parties and could levy penalties for infringements.

A new reform (Law 21 February 2014, no. 13) has significantly reduced public financing for parties. It has introduced a new regime of fiscal exemptions for private contributions and created a new oversight institution, the “Commissione di garanzia degli statuti e per la trasparenza e il controllo dei rendiconti dei partiti politici,” whose members are nominated by judicial bodies. The new system only became fully effective in 2017. The main financial source should be the “due per mille” policy, which enables citizens to nominate a political party to receive 0.2% of their income tax. So far, this system has proven highly unsuccessful. In 2015, only 1.1 million out of 41 million people who paid income tax (2.7%) exercised this option. In 2018, this number declined to 1.05 million, a sign that Italians’ sympathy for political parties has not increased. A total of €14 million was disbursed to parties from this source. The volume of private donations is also very low despite tax advantages, consisting mostly of contributions of their parliamentary salaries by members of parliament. An important source of party funding are the resources distributed by the two chambers to parliamentary groups, totaling approximately €50,000 for each member of parliament. A portion of these funds are transferred to the party organizations.

Existing rules governing the public and private financing of parties, as well as the current system of enforcement, do not produce a fully transparent system. The degree of transparency given to private contributions is largely left to the parties, and in many cases is minimal. In recent years, cases of individual or institutional abuse, or even fraud associated with the public party funding, have emerged in almost all of the political parties.
Infringements of the law governing political-party financing are common in Japan. To some extent, the problems underlying political funding in Japan are structural. Under the electoral system that existed until 1993, most candidates tried to elicit support by building individual and organizational links with local voters and constituent groups, which was often a costly undertaking. Over time, these candidate-centered vote-mobilizing machines (koenkai) became a deeply entrenched fixture of party politics in Japan. Even under the present electoral system, many politicians still find such machines useful. The personal networking involved in building local support offers considerable opportunity for illicit financial and other transactions. While the Political Funds Control Law requires parties and individual politicians to disclose revenues and expenditures, financial statements are not very detailed.

It is very disappointing that no action has been taken to revise existing laws despite the recurrence of problems. In late 2018, several cases of allegedly incorrect funding reports came to light, involving two cabinet ministers among others. In September 2019, Education Minister Koichi Hagiuda was accused of receiving illicit donations, and in August 2019, Vice Health Minister Hiroshi Ueno resigned due to a scandal relating to illicit payments.
Philip Brasor, Fundraising loopholes, a political norm, The Japan Times, 15 July 2017, https://www.japantimes.co.jp/news/2017/07/15/national/media-national/fundraising-loopholes-political-norm/

Vice health minister resigns, denies seeking illicit payments, The Asahi Shimbun, 29 August 2019, http://www.asahi.com/ajw/articles/AJ201908290052.html

Thisanka Siripala, Japan’s Latest Cabinet Reshuffle Plagued by Bribery Scandal, The Diplomat, 18 September 2019, https://thediplomat.com/2019/09/japans-latest-cabinet-reshuffle-plagued-by-bribery-scandal/
The legal framework for party and campaign financing was amended in 2016. One important amendment has required parties to declare all contributions received along with the sums earmarked for television ads and posters while identifying the contributors. A second amendment strengthened the obligation of parties to document the use of public funds, which constitute a significant portion of party resources. While these amendments have enhanced the transparency and accountability of party financing, other changes have pointed in the opposite direction. In early 2016, the two biggest parties, PSD and PNL, both highly indebted, colluded and reduced the possibility for creditors to get their money back from parties. However, the main problem still is lagging implementation. Parties circumvent regulations through a variety of methods such as the creation of fictitious positions and party structures, thus enabling them to hide additional sources of income. As a result, spending by parties and candidates surpasses their declared resources, and true donor support exceeds parties’ stated income. Sanctions are rare even in cases of blatant legal breaches.

During the period under review, there have been no significant legislative or political developments with respect to party financing in Romania. However, the Standing Electoral Authority conducted an audit of the ruling Social Democratic Party’s finances in 2019. No irregularities were found. The audit was triggered after documents indicating potential problems in the party’s financing were presented to the National Anti-corruption Directorate in December 2018 and January 2019. The Directorate is investigating the Social Democratic Party’s treasurer for potential embezzlement. The former Standing Electoral Authority’s president is also being probed in relation to the embezzlement case.
South Korea
Since being enacted in 1965, the Political Fund Act in Korea has undergone 24 revisions for the purpose of guaranteeing that political funding is fairly and transparently provided. According to financial reports submitted by political parties in 2015, the total amount of membership fees collected from party members was $52 million, representing only 25.8% of the parties’ total income of $201.3 million. Parties also receive public subsidies according to their share of the vote in the most recent previous election. However, a larger share of campaign financing comes from private donations. Today, many election candidates raise funds in the form of special investments. A system encouraging people to report illegal electoral practices, introduced in 2004, has played a positive role in reducing illegal campaign financing. Although election laws strictly regulate political contributions, efforts to make the political funding process more transparent have had only limited success. Many violations of the political funding law emerge after almost every election, and many elected officials or parliamentarians have lost their offices or seats due to violations. By law, lawmakers lose their National Assembly membership and are not allowed to run for public office for five years if they receive a fine of KRW 1 million or greater due to violations of the election laws. However, if breaking the election law still often carries little stigma, monitoring systems and sanctions are becoming more effective.
OECD. Korea – Financing Democracy. February 4, 2016.
“People’s Party lawmaker appears for questioning over rebate allegation,” The Korea Herald, 23 June 2016.
“People’s Party falls into crisis as Ahn resigns,” The Korea Times, 29 June 2016.
The U.S. system of political finance has evolved to become only partly transparent. At the federal level, campaign-finance law is enacted by Congress and enforced by the Federal Election Commission (FEC). The Federal Election Campaign Act of 1974 and the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold Act) established a regulated and transparent system to monitor contributions to candidate campaigns and political parties. However, so-called independent expenditures have been subject to fewer and diminishing constraints. In the 2010 Supreme Court ruling Citizens United v. Federal Election Commission, the court rejected any limits on private advertising in election campaigns.

As a result, recent elections have seen the rise of so-called Super PACs – political action committees able both to make unlimited expenditures on behalf of parties or candidates – without being allowed to coordinate with candidates’ campaigns – and to receive unlimited contributions from individuals, corporations, unions or other entities.
Neither the contributor nor the candidate or party can be held accountable for how contributions are spent, and contribution recipients are no longer required to disclose how a Super PAC is funded. In the 2014 McCutcheon case, the Supreme Court went further, striking down the limit (then set at $123,200) on aggregate contributions by an individual directly to political parties or candidates (as opposed to independent groups).

Candidates of both parties, though especially Republicans, have relied increasingly on independent expenditures originating from extremely wealthy individuals or large businesses. In some cases, the donations are laundered through intermediary organizations to avoid publicity regarding their source.

In 2018 and 2019, evidence emerged of potentially substantial illegal foreign contributions being made to electoral campaigns. The National Rifle Association has been implicated in funneling Russian money to Republican candidates. In September 2019, two Ukrainian associates of Trump’s personal attorney Rudolph Giuliani were indicted for several crimes – including illegal, Russian-sourced contributions to political campaigns such as that run by House Republican leader Kevin McCarthy. Meanwhile, the Trump administration has failed to make appointments to the Federal Election Commission, depriving it of the quorum needed to undertake enforcement action.
Party financing in Bulgaria is regulated by the Political Parties Act. The party-financing regime was given a significant overhaul in 2019, in part due to the results of a national referendum in 2016 in which a proposal dramatically decreasing the amount of parties’ public subsidies received very broad support. The annual subsidy was decreased from BGN 11 to BGN 1 per voter in the last parliamentary elections for parties obtaining more than 1% of the vote. To compensate for this loss of revenues, the prohibition on donations from businesses was eliminated. Thus, party financing will probably shift from predominantly state subsidies to a system in which most funding comes from private donations dominated by firms, with no legal maximum on donations by private persons or firms. The decline in state subsidies for parties is likely to weaken the parties with high vote shares. At the same time, the greater reliance on business-sector money will facilitate the creation of crony-style party-business nexuses.

Party financing is overseen by the Audit Office. Every year, parties are obliged to submit a full financial report, including a description of all their properties and an income statement. Reports must also be submitted after each electoral campaign. Reports from parties with budgets larger than €25,000 must be certified by an independent financial auditor. The Audit Office is obliged to publish all these reports online, audit them and publish the auditing reports. Parties are subject to penalties for irregularities in their financial reporting. The likelihood that political consequences will result is increased by the fact that all reports are made available online.

Despite legal prohibitions, non-regulated party financing seems to be available in practice. The most recent allegations of illicit financing involve claims by whistleblowers who previously worked for the state agency serving Bulgarians abroad, indicating that the agency sells Bulgarian citizenship, with the proceeds going to one of the parties in the ruling coalition.
The legal framework for the financing of parties and campaigns has undergone frequent changes over time. The new law on the financing of political activities, election campaigns and referendums, adopted in March 2019, has regulated the financing of referendum campaigns for the first time. It has increased the limits on private and corporate donations to political parties, and campaign financing limits, and has also introduced a new system for publishing the reports of parties and candidates. However, it has failed to close a number of loopholes. The new legislation has suffered from a lack of a proper parliamentary and public debate. It was adopted only a few weeks before the 2019 European Parliament elections.
Malta passed its first party-financing law in July 2015, which requires that political parties should be subject to international standards of accounting and auditing; cannot accept donations from companies associated with the government; cannot accept donations from entities, foundations, trusts and nominees whose beneficiaries are unknown; donations in excess of €7,000 must be recorded online and reported to the Electoral Commission; and donations from individuals must be capped at €25,000. As a consequence of this legislation, political parties have been required since 2016 to publish details on the financing of their electoral campaigns. However, the effectiveness of this legislation has been challenged by the Nationalist Party (PN), which has pursued various schemes intended to bring down its considerable debt. The Electoral Commission lacks the power to ensure compliance since it is unable to control sources of income beyond donations. Other flaws of the new legislation include the absence of a requirement to use a designated bank account or to disclose donations to entities owned by political parties as well as an excessive disclosure threshold, a failure to cap spending at €2 million, and a lack of detailed and timely reporting. It has also been noted that there is insufficient harmonization of the regulations relating to the Financing of Political Parties Act (FPPA) and General Elections Act, raising concerns over which act would take legal precedence. The role of the Electoral Commission as the appropriate body to act as investigator and adjudicator with regard to the FPPA has also been undermined by a Constitutional Court ruling stating that this concentration of authority breaches Article 6 of the European Convention. As a consequence, the precise role of the party-financing watchdog currently remains uncertain, and the Act urgently needs to be revised.
Party Financing a lost opportunity Malta Today 23/07/2015
tvm.com.mt 09/12/15 Malta off GRECO blacklist thanks to legislation on party financing
Times of Malta 07/11/17 Four Electoral Commission Members opted not to apply party financing law fearing human rights breach.
Malta Today -8/10/12 Constitutional Court finds for PN in party financing case
Times of Malta 14/10/18 State of limbo looming for party financing watchdog
The Malta Independent 05/06/19 PD Warns of dormant financing of Political Parties Act
Mexico’s elections are highly regulated by the state. This reflects a history of electoral fraud and rigged elections which resulted in distrust between parties and a desire to formalize rules. The National Electoral Institute (INE) is in charge of monitoring party compliance with electoral rules and regulations. It is also responsible for administering and auditing the public funding of parties.

By international comparison, public funding of political parties in Mexico is extremely generous. Political parties are mostly financed by the state and there are restrictions on the amount of fundraising permitted. INE also coordinates campaign advertisements for parties. Electoral expenditures have been similarly controlled. INE can and does impose significant sanctions on political parties if they fail to comply with funding rules. However, oversight is incomplete and INE audits have revealed illegal undisclosed funding to parties.

In 2018, registered parties received more than MXN 2 billion for campaigning and more than MXN 4 billion for permanent activities, a total of more than MXN 6.5 billion. PRI received more than MXN 1.6 billion, PAN more than MXN 1.2 billion, PRD a bit less than MXN 800 million, MORENA a bit more than MXN 600 million. The campaign 2018 was the most expensive in Mexican history.

While INE’s bureaucracy is by and large efficient and impartial, the weak rule of law and ineffective criminal courts undermine the integrity of elections. According to media reports concerning illegal campaign financing, for every peso spent legally, an estimated MXN 15 was spent illegally. Funds are often misused for vote-buying. Shortly after the elections, INE fined MORENA MXN 197 million for misusing a solidarity fund for victims of the 2017 earthquake. Almost MXN 65 million were spent without records. Morena’s main rivals, PRI and PAN, were also fined, although their fines were not as high. As previous examples of party financing scandals have shown (e.g., PRI MONEXGATE 2000, PAN AMIGOS DE FOX 2000 and PEMEXGATE 2012), illegal campaign financing had been proven and sanctioned years later, but without any effect on elections or campaigns.
The Dutch government spends less money than its counterparts in most other European countries on financing political parties, at €1 per voter (compared to €9.70 for Iceland). Based on GRECO estimates, Dutch political parties are also less reliant on government money (receiving between 35% and 50% of their funding from this source) than are most other European political parties, with the exception of those in Germany.

Until about a decade ago, political-party finances were not a contested issue in Dutch politics. Party funds come largely through membership contributions (40% – 50%), a “party tax” applied to elected members’ salaries, event revenues and donations, and government subsidies. However, relatively new like the Pim Fortuyn List (Lijst Pim Fortuyn, LPF) and the Party for Freedom (Partij voor de Vrijheid, PVV), as well as the very successful Forum for Democracy, have received substantial gifts from businesses and/or foreign sources, while the Socialist Party (Socialistische Partij, SP) has made its parliamentarians completely financially dependent on the party leadership by demanding that their salaries be donated in full to the party.

As government transparency became a political issue, these glaring opacities in the Dutch “non-system” of party financing were flagged by the Council of Europe and the Group of Countries against Corruption (GRECO) – resulting in increasing pressures to change the law. Political expediency caused many delays, but the Rutte I Council of Ministers introduced a bill on the financing of political parties in 2011, which was signed into law in 2013. GRECO has also addressed the procedure for monitoring party finances (particularly when the rules are improved), noting that this task should rest not with a minister or political figure, but with an independent body.

The 2013 law eradicates many – but not all – of the earlier loopholes. Political parties are obliged to register gifts starting at €1,000, and at €4,500 they are obliged to publish the name and address of the donor. This rule has been opposed by the PVV as an infringement of the right to anonymously support a political party. Direct provision of services and facilities to political parties is also regulated. Non-compliance will be better monitored. The scope of the law does not yet extend to provincial or local political parties. The law’s possible discrimination against newcomer political parties remains an unresolved issue.

In 2018, an ad hoc advisory commission evaluated the 2013 law. It argued that anonymous donations (especially from foreign donors) should be prohibited, and that the threshold and conditions for non-disclosure should be changed in favor of greater transparency. It additionally recommended that state subsidization should in the future be based on the number of party members rather than the number of parliamentary seats, with the aim of strengthening political parties’ societal roots. Furthermore, it said that provincial and local political parties should be brought within the scope of the law. The government only partially followed the commission’s advice. Foreign donations were limited to within-EU donations, but the idea of privileging membership numbers more than the number of seats held was put on hold. Recently, an alleged corruption case involving aldermen in the municipal government of The Hague has placed the issue back on the political agenda, particularly given concerns about growing criminal influences within local governments.
Wet financiering politiek partijen: einde in zicht – maar wat een gaten! (montesquieu-instituut.nl, consulted 5 november 2014)

Parlement & Politiek, Partijfinanciering, 2016 (parlement.com, consulted November 9 2016

I. van Biezen, 2017. De financiering van politieke partijen – een internationale vergelijking (kennisopenbaarbestuur.nl, accessed 3 November 2019)

NRC Handelsblad, 26 January 2019. Kabinet: verbod op partijfinanciering van buiten de EU.

Nieuwsuur, 2 October, 2019. ‘Nederland is het Wilde Westen van de partijfinanciering’

RTL Nieuws, 21 August 2019. Politieke partijen bij Ollongren op het matje over partijfinanciering (rtlnieuws.nl, accessed 3 November 2019)
Article 60 of Law 2820 requires political-party organs at every level to keep a membership register, a decision book, a register for incoming and outgoing documents, an income and expenditure book, and an inventory list. According to Article 73 of Law 2820, political parties must prepare yearly statements of revenues and expenditures, at both the party-headquarters and provincial levels. However, Turkish law does not regulate the financing of party or independent-candidate electoral campaigns. Presidential candidates’ campaign finances are regulated by Law 6271; these candidates can legally accept contributions and other aid only from natural persons having Turkish nationality. However, the Supreme Election Board (SEB) has allowed political parties to organize campaign activities and purchase advertisements for their candidates in a way unregulated by law. Thus, the state aid provided to the political parties can be used indirectly for presidential-campaign activities. The SEB has not published the accounts of Turkey’s main parties since 2015. Therefore, it is unknown how much political parties spent on campaigning over the last two presidential elections. Excluding Erdoğan, presidential candidates collected about €5.3 million (TRY 32 million) in donations from eligible people.

The cap on donations to political parties from private individuals is reviewed each year. In 2018, the limit was approximately €7,072 (TRY 42,434). However, donations are rarely properly and systematically recorded. For example, cash donations and in-kind contributions to, and expenditure on behalf of parties or candidates during elections are not recorded. The funds collected and expenditure incurred by elected representatives and party candidates (e.g., during election campaigning) are not included in party accounts. There is no legal ceiling on campaign spending. The finances of candidates in local and parliamentary elections are not regulated by law. There is no specific reporting obligation for campaign contributors, apart from a general requirement, based on the Tax Procedure Code, for individuals to declare expenses (which could include political contributions) to the tax authorities.

Party accounts published in the Official Gazette provide only general figures and potential infringements. The accuracy of the financial reports posted by political parties online needs to be examined. Pursuant to Article 69 of the constitution, Article 74 of Law 2820 stipulates that the Constitutional Court, with the assistance of the Court of Accounts, examines the accuracy of information contained in a party’s final accounts and the legality of recorded revenues and expenditures on the basis of information at hand and documents provided. Only three out of approximately 800 auditors of the Court of Accounts are mandated to audit party and campaign finance.
GRECO, Fourth Interim Compliance Report on Turkey, 4-8 December 2016, https://rm.coe.int/third-evaluation-round-fourth-interim-compliance-report-on-turkey-incr/1680792e28 (accessed 27 October 2018)
OSCE – ODIHR, Early Presidential and Parliamentary Elections Republic of Turkey 24 June 2018, ODIHR Election Observation Mission Final Report, https://www.osce.org/odihr/elections/turkey/397046?download=true (accessed 27 October 2018)
Ö. Faruk Gençkaya, “Financing of Political Parties and Electoral Campaigns in Turkey,” S. Sayarı, P. Ayan-Musil and Ö. Demirkol, Party Politics in Turkey: A Comparative Perspective, Routledge, 2018.
“İşsizlik Sigortası Fonu Seçimler İçin Kullanılıyor,” 21 June 2018, https://m.bianet.org/bianet/siyaset/198366-issizlik-sigortasi-fonu-secimler-icin-kullaniliyor (accessed 27 October 2018)
Ç. Bircan and O. Saka, “Lending Cycles and Real Outcomes: Costs of Political Misalignment,” LEQS Paper No. 139/2018 December 2018.
Political parties and affiliated organizations receive annual and extraordinary state funding since 1989. The most recent amendment of the law in November 2015, in response to GRECO and other organizations’ recommendations, sought to regulate private funding and fight corruption. Financial or other donations up to €50,000 are allowed; the list of donors must be published, except for sums below €500. Parties and candidates must submit their accounts, including election-related (i.e., income, expenditures, assets and debts), to the director general of the Ministry of Interior (registrar of political parties). The auditor general annually audits the accounts and publishes reports. Parliamentary candidates have an electoral expenditure cap of €30,000; for candidates for the presidency the ceiling is €1 million. The law lists activities that would constitute corruption and must be avoided by candidates. Non-compliance and corruption are subject to fines and/or imprisonment, depending on the offense.

In its Addendum Compliance report published in April 2018, GRECO concluded that its recommendation on transparency in party funding had been implemented satisfactorily. On the basis of the 2015 law, the auditor general audited party and candidate accounts for the 2016 parliamentary and municipal elections. His report found problems that limit the scope and efficiency of control; among others, the lack of a legal obligation for submitting payment documents and no clear definition of the term “personal expenses.” Published accounts of presidential candidates in the 2018 election were met with skepticism.

The caps set for donations and per-candidate expenses seem excessively high given the small size of the electorate (550,000 voters) and the market. Also, both criteria and procedures for setting the level of annual or extraordinary state subsidies to political parties remain opaque. Despite these weaknesses, adopted regulatory measures constitute a positive step, though they do need improvement.
1. Our View: Published campaign spending figures far removed from a full disclosure, Cyprus Mail, 4 June 2018 https://cyprus-mail.com/2018/04/06/view-published-campaign-spending-figures-far-removed-full-disclosure/
2. Council of Europe – GRECO, Addendum to the Second Compliance Report on Cyprus, April 2018 https://rm.coe.int/third-evaluation-round-addendum-to-the-second-compliance-report-on-cyp/16807baf93
The Orbán government has kept the public financing of bigger, parliamentary parties low. An amendment of the law on party financing in 2013, shifted funds toward individual candidates and smaller parties, thus contributing to the large number of candidates in the 2014 and 2018 parliamentary elections. While it has become easier for small parties to enter the political arena, the political landscape has got more fragmented, to the detriment of bigger opposition parties. With membership declining, the non-governing parties have lost revenues from membership fees and have become dependent on rich donors, but the time of tycoons with leftist leanings has passed. Even more importantly, Fidesz has been able to circumvent the restrictions on campaign spending by involving formally independent civic associations and by blurring the boundaries between itself and government campaigns. The government also succeeded in weakening opposition parties by punishing them for alleged financial irregularities. For example, in December 2017, the ÁSZ, the state audit office, pushed Jobbik, its main contender, to the wall by imposing a fine of HUF 600 million. Some other opposition parties were concerned, too, and there was no opportunity to appeal the ÁSZ decisions, which left all opposition parties with limited financial resources for their election campaigns. After the 2019 municipal elections, ÁSZ launched an action against Momentum, the strong new opposition party, but failed to prove that campaign funding had been illegally managed.
The rules for party and campaign financing do not effectively enforce the obligation to make the donations public. Party and campaign financing is neither monitored independently nor, in case of infringements, subject to proportionate sanctions.
Switzerland does not finance parties with public money on the federal level. In return, there are no constraints applied to party fundraising. There is some financing of parties on the cantonal level in Geneva and Fribourg.

National parties won recognition only in the constitutional revision of 1999 and there remains a deep-seated aversion to public financing. In consequence, there is little to no public scrutiny of party activities, since no public money is at stake. However, a considerable portion of political parties’ revenues comes from the subsidies given to party factions in the national parliament or through reimbursement for services; these together amount in some cases to 30% of total party income. Another important source of income is the attendance fee granted to members of parliament, which can be considered a form of party financing.

External observers, such as GRECO (Group of States against Corruption) have repeatedly argued that there is a lack of transparency in political party financing.

In 2017, the required number of signatures for a vote on a popular initiative for transparency have been collected. It would lead to a new constitutional article, stipulating that political parties must name any donors who donate at least CHF 10,000. Similarly, if a person spends more than CHF 100,000 on a federal election or a popular campaign, they must inform the Federal Chancellery and name any donors who gave at least CHF 10,000. The Federal Council has recommended rejecting this initiative; the parliament has begun discussions on the initiative. The respective commission of the Council of States proposed in October 2019 that political parties with representation in the federal parliament be required to publish their income as well as donations exceeding CHF 25,000 on an annual basis. Similarly, the Council of States proposed that campaigns conducted in the context of popular votes or elections be required to publish their budget and final ledgers should either exceed CHF 250,000.
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