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Political parties and political finance


Political parties are ubiquitous in political systems and are among the central institutions of modern democracy. They are the foundation of a pluralist political society and ensure an informed and participatory electorate. Parties also serve as a bridge between the executive and legislative branches and can push the governments to prioritize the legislative agenda. In both democratic and authoritarian regimes, several types of parties and models of party organization exist, such as mass parties, cadre or elite parties, catch-all parties, cartel parties, anti-cartel parties and business-firm parties (see Caramani, 2017). Their specific definitions centre on their objectives and methods, and emphasize their role in political competition. Particularly in modern democratic systems, political parties fulfil several functions that are central to the performance of States. There is also the rise of ad hoc parties created or driven by social media. These ad hoc parties often do not see or describe themselves as political parties, but their social conduct, goals and actions often achieve political results in a non-traditional way. Examples include the movements associated with the Arab Spring, the Maidan Revolution in Ukraine, and the "yellow vest" movement in France. However spontaneously these actions arise, they quickly take on a political nature and are as susceptible to corruption as any other political group.

The first function of political parties, historically, and one of their most important functions to date, is the coordination between public officials and citizens with common political preferences, and thus, in real terms, between the government and society at large. A second major defining function of political parties is the conduct of electoral campaigns, and political competition more generally. Parties are the central participants in elections, responsible for both the candidates and the issues among which voters will choose. A third major function of parties is recruiting and selecting personnel for both elected and appointed public office. The balance between recruitment (finding someone willing to do the job) and selection (choosing among multiple aspirants) depends both on the party and the nature of the positions to be filled. Furthermore, parties perform a variety of functions that may be classified as representation of social groups and ideological positions. Parties speak and act for their supporters, in electoral campaigns, the corridors of power and the media, and on other public forums of discussion (Scarrow, Webb and Poguntke, 2017). Finally, in democratic contexts, political parties are also responsible for protecting the democracies by restraining the access of non-democratic actors to the political system. Levitsky and Ziblatt (2018) argue that most of the recent democratic breakdowns were caused by elected governments and not by military coups or revolutions. Therefore, in order to keep democracies alive, political parties should refrain from nominating election candidates or getting into coalitions with other parties that are likely to capture the democratic institutions and abuse them in authoritarian ways.    

Political parties are central actors in many authoritarian and totalitarian regimes. Yet, in these systems, parties are the means of governing and not a source of power or a channel through which elections are contested. Studies have demonstrated that political parties in non-democratic systems tend to be organizationally weak, lacking financial and grassroots support, as well as the organizational capability to provide the mobilizational structures necessary for creating social movements against the regime (Yadav and Mukherjee, 2015). Given the weak ability of opposition parties to mobilize public opinion and action against the rulers, incumbent autocrats may not feel threatened by such opposition parties in the legislature in a way that may make them change their rule. As such, even if opposition parties articulate the public demand for actions to curb corruption and demand that the regime act accordingly, incumbent regimes may not feel compelled to make costly concessions on corruption. Thus, the successful articulation of demands to reduce corruption may not result in serious policy changes. Opposition parties with strong preferences to act on sensitive issues such as corruption may fear repression by the regime, and attempts could be made to reduce their political space. A less effective and confrontational opposition will, in turn, reduce the pressure on the regime to act on corruption, thus leading to less genuine anti-corruption efforts (Yadav and Mukherjee, 2015).     

To fulfil their core functions, political parties need appropriate funding and access to media. They need financial means to support their campaigns during the election process (campaign finance) and to carry out their routine activities between elections (routine party funding) (Fischer and Eisenstadt, 2004; Caramani, 2017). Both campaign finance and routine party funding should be regulated to ensure a transparent and fair political financing system; promote accountability; preserve the responsiveness of political parties and candidates; ensure that all parties have the opportunity to compete in accordance with the principle of equal opportunity; guarantee the independence of parties from undue influence of donors; and minimize the danger of corruption, in particular, state capture and influence peddling. In this regard, article 7(3) of the United Nations Convention against Corruption (UNCAC) requires States parties to enhance transparency in the funding of political parties and public office candidates. Yet, there is no consistent practice in this area. While some countries adopt international standards to regulate and promote transparency of political finance, others do not (Smirnova, 2018).

A growing number of countries subsidize political parties, for example, through their tax systems or direct provision of goods and services. This is primarily meant to help the parties perform their functions of policy formulation, public education, and linkage between society and the government. Such State support for political parties is almost universal in liberal democracies (Caramani, 2017). It is generally considered to reduce opportunities for corruption, as parties are not forced to succumb to the interests of private donors in return for funding. Yet, public financing can at times reduce a party's incentive to attract members and also reinforces the status quo because it favours large established parties. It can also be a form of creeping nationalization, creating parties that serve the State, rather than the society. In these ways it can increase the opportunities for corruption, for instance state capture and favouritism. Furthermore, established parties are at a financial advantage over small parties with regard to access to public funding, which can increase the likelihood of the development of cartel parties. Cartel parties develop when "colluding parties become agents of the State and employ its resources to ensure their own collective survival" (Katz and Mair, 1995, p. 5). They can become part of the political establishment, weaken the traditional role as agents of specific groups, and prevent the development and growth of new, young parties (Kuhner, 2016).

Some of the risks mentioned above can be mitigated through regulating political parties in terms of their disclosure obligations, spending limits and impartial enforcement. In 2010, two influential European organizations - the Office for Democratic Institutions and Human Rights of the Organization for Security and Cooperation in Europe (OSCE/ODIHR) and the European Commission for Democracy through Law (Venice Commission) - adopted the Guidelines on Political Party Regulation . This document recognizes the important role of political parties and seeks to reduce the undue reliance of parties on private donors, prevent corruption, and ensure that all parties are able to compete in elections in accordance with the principle of equal opportunity. The document articulates a set of principles that can guide States when regulating political parties, and that ultimately aim at promoting a balance between public and private political party funding, encouraging moderate contributions over unduly large contributions, and allocating public funding in a manner that neither limits nor interferes with political party independence. To illustrate this, below are the specific guidelines for political finance systems that States are encouraged to adopt (as listed in paragraph 160 of the Guidelines):

  • Restrictions and limits on private contributions
  • Balance between private and public funding
  • Restrictions on the use of state resources
  • Fair criteria for the allocation of public financial support
  • Spending limits for campaigns
  • Requirements that increase transparency of party funding and credibility of financial reporting
  • Independent regulatory mechanisms and appropriate sanctions for legal violations.


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