Competing in an election costs money and election campaigns are becoming more and more expensive. Funds are needed to establish a campaign office, hire staff, do polling, get the campaign message out and for the candidate to travel and meet the voters. One of the main factors in the increase in the cost of campaigns is the increasing reliance on the use of expensive mass media advertising.
In the U.S., for example, the 1998 congressional campaign was estimated to have cost $1.5 billion. Candidates raised $781 million, while the Republican and Democratic National Party Committees raised $445 million in ‘hard money’ (money given directly to them) and another $224 million in ‘soft money’ (money spent on their behalf). In addition, ‘issue advertising’ on television around election issues was estimated at $112 million, and another $11.7 million ‘independent’ expenditures were made in support of candidates by organizations.235
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Integrity problems in campaign financing
With elections costing so much money, and with studies suggesting that winners are the ones who spend the most money,236 political parties and candidates can be absorbed by the issue of raising funds. How campaigns are financed and what candidates and political parties do with donations, can be the source of many integrity problems.
According to Michael Pinto-Duschinsky, ‘corruption and abuses related to the financing of elections and political parties are among the most common dangers confronting democracies today.’ 237 These dangers can include:
- preferential treatment for large contributors. Large donations by wealthy individuals and special interest groups can give them a disproportionate amount of influence. Even if no strings are attached to a donation, accepting large donations can breed perceptions of influence buying and special treatment.
the notion that elections can only be competed by wealthy individuals or those with wealthy friends and supporters- and that those who cannot raise enough money cannot compete. This perception was recently reinforced by the withdrawal of Elizabeth Dole from the U.S. Republican presidential race because she had been unable to raise enough money to take her campaign into the primary stage.
According to Common Cause, a U.S. public interest group which lobbies for accountable government and clean elections:
Regulating campaign financing
Most electoral systems attempt to limit the impact of money and the influence of large donors through the regulation of campaign spending and financing, and by providing public funds for campaign purposes. Regulating assistance to a political campaign, be it in the form of volunteering time and labour to assist a favourite candidate or donating funds and resources, can be sensitive as it touches on issues such as freedom of speech and press.
Most election systems have avoided regulating the fundamental right of a voter or group to support their candidate of choice. Instead they focus on the transparency of the financing process- requiring a maximum of publicity through public disclosure of all donations and expenditures. Campaign finance laws require a regular reporting process, and can sometime limit the amount of funds that can be raised or spent.
In the U.S., for instance, a number of laws have been passed to regulate federal campaign spending. One of these was the Federal Election Campaign Act which created the Federal Elections Commission and was ‘designed to ensure that candidates in federal elections were not- or did not appear to be – beholden to a narrow group of people. Taken together, it was hoped, the laws would sustain and promote citizen confidence and participation in the democratic process.’ 239 Congress enacted this law because it believed that the ‘representative form of government needed protection from the corrosive influence of unlimited and undisclosed political contributions.’ 240
In the case of New Zealand, every registered party is required by law to appoint a qualified independent auditor to audit the financial return of the party. The auditor must have access to all records, document and accounts which relate to the party’s election expenses. The auditor’s report on a party’s return must state whether the return does or does not fairly reflect that party’s election expenses, whether s/he received all the information required to carry out the audit and whether proper records of the party’s election expenses were kept by the party. The appointment of auditors was seen as mechanism to encourage compliance with all recommended measures. 241
Limiting election expenditures
Some systems limit the amount of funds that can be spent on an election. In New Zealand, for example, the law requires that a party competing the election, not exceed $1 million plus $20,000 for each constituency candidate nominated by the party in the three month period preceding the election. 242
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In the case of Nepal, because of the difficulties in ensuring political party compliance with disclosure of actual expenditures, they are working to reduce the level of campaign expenses To reduce costs, and to make competing in elections more affordable, restrictions have been placed on the duration of the electoral campaign, campaign materials that can be used, and the size and number of campaign posters that can be distributed:
Limiting campaign contributions
In addition to limiting expenditures, most systems regulate who can contribute to political campaigns, and how much they can give. These restrictions on ‘hard money’ (money given directly to support a candidate or party) can include:
- limiting donations to citizens or those with permanent residence status. In Canada, for example, political parties and candidates may only receive contributions from Canadian citizens or permanent residents Corporations or associations that do not conduct business in Canada may not contribute, neither may foreign political parties or governments, or trade unions without Canadian bargaining rights. 244
In the U.S., political contributions and expenditures by foreign nationals is prohibited. A ‘foreign national’ is defined as a foreign government, foreign political party, foreign corporation, foreign association, foreign partnership, individuals with foreign citizenship and immigrants not possessing a resident card.245
restrictions on giving by corporations. An example of this are U.S. campaign laws which restrict donations from corporations, labour organizations and federal government contractors. However, these group may create a ‘political action committee’ (see PACs) which can raise voluntary contributions from a restricted class of individuals and use those funds to support federal candidates and political committees. limiting the amount of donations that may be made by a group or individual. This amount varies for each system.
Independent campaign expenditures
Independent expenditures made by an individual or group on behalf of a campaign are usually protected as part of freedom of speech or press. This funding, known as ‘soft money,’ is a way for large contributors to help their party, candidate or issue without being restricted by the funding limits in most campaign finance laws.
According to Common Cause, ‘soft money corrupts for a simple and obvious reason. Soft money donations are given in such huge amounts-$50,000, $100,000 or more- that the donors typically expect to receive something in return for their investment.’246
In the U.S., for example, individuals or groups may make unlimited ‘independent expenditures’ in connection with federal elections or for ‘party building.’ It can be done by corporations, unions, and large – ‘$100,000, $250,000 or even $1 million- contributions given by wealthy individuals.’ 247 To be considered independent, the expenditure may not be made with the cooperation or consent of the candidate or his/her campaign; nor may it be made upon a request or suggestion of either the candidate or the campaign.248
Each system has its own mechanism to deal with independent expenditures. In the case of New Zealand,
In the fall of 1999, Common Cause asked U.S. presidential candidates in the 2000 presidential race to sign a pledge ‘not to violate federal campaign finance law by waging soft-money funded shadow’ campaigns.’ The pledge read in part:
Neither of the major candidates for President signed the pledge and both Governor Bush (Republican) and Vice President Gore (Democrat) went on to raise record-breaking amounts of soft-money to support their campaigns.
Public disclosure requirements
Many election systems require public disclosure of campaign financing so that the voter will know who is financially backing a candidate and whether this might influence future decisions once in office. Public disclosure of financing is usually done through periodic reporting by candidates, political parties, political action committees and lobbyists.
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These reports disclose the amount of funds raised and spent. Enough information should be required in the report so that the authorities can determine whether the campaign finance laws are being respected, and for voters to know who is financially supporting the candidates. Disclosure reports are usually made available to the public and monitored closely by NonGovernmental Organizations.
Reporting requirements have been challenged by political parties and candidates. Some of their complaints focus on the amount of information required by the reports. In New Zealand, for example, the Court of Appeal, upheld the need for adequate financial reporting by political parties. The judge ruled:
The Commission affirmed that it is perfectly legitimate and, indeed, highly desirable that those interested in the political process raise and spend money to further their political objective. Those activities should not, however, be completely uncontrolled. Resources, it said, should not be used in a way which is unfair or likely to distort the proper working of a democracy.
In order to enable the electoral process to be fair and enable voters to make informed judgements, therefore, the Commission believed it important that the electorate be fully informed both about significant sources of political finance and about the uses to which it is put. The Commission observed that, whether or not improper practices occur in the absence of disclosure requirements, disclosure ensures public confidence in the integrity of the system. The information which is obtained is also relevant to the voter’s overall evaluation of parties and candidates.’ 252
In the case of Denmark, political parties that received public financial support from the government, previously only had to file a written declaration to the Ministry of Interior stating that ‘the amount has been used for political purposes within Denmark, and that such activities will be carried on.’ However, since 1996, they now must list all contributions. 253
In Argentina, only public funds to political parties are disclosed. The Argentinean chapter of Transparency International, Poder Ciudadano (PC), has attempted to determine the source of private money into these campaigns:
They estimate that the governing Partido Justicialista received $2.4m in public funding but spent $13.7m in total. The origin of the remaining $11.3m unaccounted for by public funding is unknown. Who made these contributions? What sort of favours were asked in return? How do these favours effect a representative democracy? Who do politicians represent- citizens or economic groups?’ 254
Enforcement of campaign finance laws
To ensure campaign laws are respected, a credible and effective enforcement system is usually an integral part of the campaign regulation package. This is needed, because, as stated by Michael Pinto-Duschinsky, ‘where high stakes are involved and where ambitious, clever politicians vie against each other, they will always try, often successfully, to evade the law or at least to circumvent the aims of the law.’255 To maintain the fairness of the electoral process and integrity in the campaign finance system, good enforcement of well designed regulations is critical.
Most systems delegate enforcement responsibility to their election policy body or other specialized institution. Good enforcement requires staff, adequate funds and appropriate penal sanctions.
In Brazil, for example, court reviews are undertaken, but there are no legal sanctions or funding limits. The Electoral Court only has the power to verify the information provided by the political parties by doing an administrative review of the reports to determine conformity to established principles of accounting and the general provisions of the campaign finance law. If the financial report is rejected, there are no sanctions placed on the candidate or on their eligibility to compete. 256
In the U.S., on the other hand, the Federal Election Commission (FEC) has exclusive jurisdiction over the civil enforcement of the federal campaign finance law. If an FEC review of a financial disclosure report, or a complaint made by a citizen, indicates that a violation has occurred, the commissioners will authorize an Investigations.
If the investigation confirms that a violation has taken place, the FEC attempts to reach a conciliation agreement with the respondents. If an agreement cannot be reached, the FEC may file suit against the appropriate persons in court.
In Canada, compliance with campaign finance laws is enforced through the Commissioner of Canada Elections. Noncompliance is found through the auditing of reports. Penalties can include a fine, imprisonment, loss of the right to vote or to be a candidate in a federal elections for 5 years. 257
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