Party funding

Political parties are funded by contributions from party members, individuals and organizations which share their political ideas or who stand to benefit from their activities or governmental public funding. Political parties and factions, especially those in government, are lobbied vigorously by organizations, businesses and special interest groups such as trades unions. Money and gifts to a party, or its members, may be offered as incentives.

In the United Kingdom, it has been alleged that peerages have been awarded to contributors to party funds, the benefactors becoming members of the Upper House of Parliament and thus being in a position to participate in the legislative process. Famously, Lloyd George was found to have been selling peerages and to prevent such corruption in future, Parliament passed the Honours (Prevention of Abuses) Act 1925 into law. Thus the outright sale of peerages and similar honours became a criminal act, however some benefactors are alleged to have attempted to circumvent this by cloaking their contributions as loans, giving rise to the 'Cash for Peerages' scandal. Such activities have given rise to demands that the scale of donations should be capped. As the costs of electioneering escalate, so the demands made on party funds increases. In the UK some politicians are advocating that parties should be funded by the State; a proposition that promises to give rise to interesting debate. Along with the increased scrutiny of donations there has been a long term contraction in party memberships in a number of western democracies which itself places more strains on funding. For example in the United Kingdom and Australia membership of the two main parties in 2006 is less than an 1/8 of what it was in 1950, despite significant increases in population over that period. In Ireland, elected representatives of the Sinn Féin party take only the average industrial wage from their salary as a representative, while the rest goes into the party budget. Similarly elected representatives of the Socialist Party (Ireland) take only the average industrial wage out of their entire earnings.

Public financing for parties and candidates during elections has several permutations and is increasingly common. There are two broad categories of funding, direct, which entails a monetary transfer to a party, and indirect, which includes broadcast time on state media, use of the mail service or supplies. According to the Comparative Data from the ACE Electoral Knowledge Network, out of a sample of over 180 nations, 25% of nations provide no direct or indirect public funding, 58% provide direct public funding and 60% of nations provide indirect public funding. Some countries provide both direct and indirect public funding to political parties. Funding may be equal for all parties or depend on the results of previous campaigns or the number of candidates participating in an election. Frequently parties rely on a mix of private and public funding and are required to disclose their finances to the Electoral Management Body.

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