Topic Guide: Political Finance

Political finance is defined as the legal and illegal financing of ongoing party activities and electoral campaigns[1]. The funding of political parties is an important element of democracy and essential so that parties can carry out their activities throughout the year and during election periods. However many problems may arise if political finance does not take place in a fair manner, including the lack of a level playing field among political parties, unfair representation and overall distrust in political parties and political processes more generally.

In fact, in many countries, the profound crisis of legitimacy faced by political parties has been directly linked to a widespread perception of their allegedly corrupt behaviour. This is reflected by the 2013 Global Corruption Barometer, which found that political parties were seen to be among the most corrupt institutions in 51 out of 107 countries that took part[2].

Corruption in political finance usually “involves the improper and unlawful conduct of financial operations (often by a candidate or a party) for the profit of an individual candidate, political party or interest group”[3]. It can encompass, for instance, the appropriation of political funds by individual politicians, funding from infamous sources such as organised criminal groups, druf-trafficking or terrorist groups, activities in contravention to political finance regulations (for example, contributions from prohibited sources, undisclosed donations or contributions above the established ceiling, among others), use of legally obtained funds for goals other than legitimate political activities, restrictions to funding for opposition parties and contributions from companies or individuals in exchange for favourable policies, among others.

Countries have sought to regulate political finance to guarantee a level playing field and reduce opportunities for favouritism and corruption. Nevertheless, several challenges remain in implementing and enforcing such laws and ensuring fairness in the process.