Topic Guide: Political Finance

Fighting corruption in political finance requires measures aimed at establishing an adequate legal framework, enhancing transparency and ensuring strong enforcement and oversight. Specific features of the national politics and legal environment should be taken into consideration to ensure adherence to the law and change in behaviour.

According to the International IDEA Database on Political Finance, all 180 countries assessed have some sort of regulation on the flow of money in politics. Nevertheless, in many cases implementation is hampered by ambiguous rules, lack of political will or simply because the rules are not suitable for the country’s context.

While international evidence shows that there is no universal prescription ensuring the effectiveness of political finance regimes, regulations on party funding play an important role in strengthening democracy, curbing opportunities for corruption and undue influence and enhancing transparency and accountability.

In the absence of international standards on political finance regulation, international and non-governmental organisations operating in the field have recognised the adoption of a series of measures regulating key aspects of political party financing to be fundamental to curb corruption and ensure a level playing field. They include:

Bans on certain types of donations

Restrictions on the source of funding helps to prevent inappropriate influence and the abuse of state resources. Such restrictions usually include the prohibition or limitation of anonymous contributions, foreign contributions, contributions from legal entities and donations from state enterprises or firms which provide goods or services to the public administration.

Contribution limits

Limits to the maximum permissible amount of the contribution aim at reducing the excessive influence of private money in politics. More than 40 per cent of the countries assessed by International IDEA establish limits to how much an eligible donor (individuals or companies) can contribute to a political party and/or individual candidate. In-kind donations should also be regulated.  

Spending limits for political parties and candidates.

Spending ceilings aim at regulating the amount a political party or candidate can spend as well as the type of expenditure they can incur. Approximately 30 per cent of countries assessed limit the amounts that political parties may spend, and more than 40 per cent have limits regarding individual candidates[1]. Limits on the type of expenditure may range from the prohibition of using party funds for personal use to restrictions of the use of paid-for media advertising.

Provision of public funding

Public funding aims at preventing the dependence of political parties on private donors as well as at guaranteeing equality of chances among parties and enhancing institutionalisation in the long term. In order to avoid abuse, a successful public funding scheme requires strong reporting rules on how funds are used and strong sanctions for non-compliance.

Comprehensive disclosure and reporting obligations

Disclosure and reporting requirements with regard to donations to candidates and political parties aim at increasing transparency and accountability. It is also a prerequisite for the enforcement of spending ceilings, contribution limits and the allocation of public subsidies. Ideally, reports have to be verified by an independent institution and be made available online in a user-friendly format allowing public scrutiny. In addition to the disclosure of donations and activities during election campaigns, political parties should be required to keep proper books and accounts and publish audit accounts of all income and expenditures. Approximately 90 per cent of countries assessed by International IDEA have reporting requirements for both political parties and candidates. Nevertheless, 20 per cent of countries do not require the public disclosure of financial reports, which seriously hampers the ability of monitoring by civil society and interested parties.

Establishment of an independent and autonomous oversight agency

The existence of independent and autonomous institution is key for the success of any political financing regulation. Nevertheless, close to 25 per cent of the countries for which information is available do not have an institution with the legal mandate to receive financial reports or investigate violations of political finance regulations[2]. In others, bodies responsible for receiving these reports are not necessarily responsible for reviewing their content and investigating wrongdoings. These reports have to be scrutinised beyond formalities, and oversight agencies should have the necessary investigative powers and resources to use them to be able to identify violations.