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Campaign finance

Campaign finance

Overview
Campaign finance refers to all funds that are raised and spent in order to promote candidates, parties or policies in some sort of electoral contest. In modern democracies such funds are not necessarily devoted to election
Election
An election is a formal decision-making process by which a population chooses an individual to hold public office. Elections have been the usual mechanism by which modern representative democracy operates since the 17th century. Elections may fill offices in the legislature, sometimes in the...

 campaigns. Issue campaigns in referendums, party activities and party organizations are additional items to be funded by political money. When James K. Pollock and Louise Overacker began to analyze the role of money in politics, they started in the United States, looking at the money that was spent in order to influence the outcome of a (federal) election.
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Encyclopedia
Campaign finance refers to all funds that are raised and spent in order to promote candidates, parties or policies in some sort of electoral contest. In modern democracies such funds are not necessarily devoted to election
Election
An election is a formal decision-making process by which a population chooses an individual to hold public office. Elections have been the usual mechanism by which modern representative democracy operates since the 17th century. Elections may fill offices in the legislature, sometimes in the...

 campaigns. Issue campaigns in referendums, party activities and party organizations are additional items to be funded by political money. When James K. Pollock and Louise Overacker began to analyze the role of money in politics, they started in the United States, looking at the money that was spent in order to influence the outcome of a (federal) election. Their take-off point has dominated perception of the subject ever since. Campaign funds is the subject heading under which all books dealing with money in politics are catalogued by the Library of Congress. Other countries have a different experience and use other terms for the subject. All of these terms offer a broader perspective. Cross-national comparisons prefer the more comprehensive "political finance
Political finance
Political finance covers all funds that are raised and spent for political purposes. Necessarily such purposes include all political contests for voting by citizens, especially the election campaigns for various public offices that are run by parties and candidates. Moreover all modern democracies...

", researchers in continental Europe use "party finance". All of them deal with "the costs of democracy", a term that was coined by Alexander Heard for his famous analysis of campaign finance in the U.S.

In the U.S. political action committee
Political action committee
In the United States, a political action committee, or PAC, is the name commonly given to a private group, regardless of size, organized to elect political candidates or to advance the outcome of a political issue or legislation. Legally, what constitutes a "PAC" for purposes of regulation is a...

 (PAC) and campaign are adequate terms to identify the units that raise and spend money for political purposes. Each campaign (for federal office) has to run a PAC that reports revenue and expenses to the Federal Election Commission
Federal Election Commission
The Federal Election Commission is an independent regulatory agency that was founded in 1975 by the United States Congress to regulate the campaign finance legislation in the United States. It was created in a provision of the 1975 amendment to the Federal Election Campaign Act...

 (FEC). Political campaign
Political campaign
A political campaign is an organized effort which seeks to influence the decision making process within a specific group. In democracies, political campaigns often refer to electoral campaigns, wherein representatives are chosen or referendums are decided...

s have many expenditures, such as the cost of travel for the candidate, professional advice on topics like message and voter turnout
Voter turnout
Voter turnout is the percentage of eligible voters who cast a ballot in an election . After increasing for many decades, there has been a trend of decreasing voter turnout in most established democracies since the 1960s...

 (see campaign consulting) and the direct costs of communicating with voters, such as billboard
Billboard
Billboard is a weekly American magazine devoted to the music industry, and is one of the oldest trade magazines in the world. It maintains several internationally recognized music charts that track the most popular songs and albums in various categories on a weekly basis...

s, television advertising, and other channels. The types and purposes of campaign spending will change with the legal and social landscape that the campaign operates in; for instance, in Great Britain
Great Britain
Great Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...

, television advertising is provided to campaigning parties for free, while in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 it is one of the biggest line items in the campaign budget, especially for statewide and national-level campaigns.

For most other democracies (including the European countries, Canada, Mexico, Japan, Australia, New Zealand and Israel) political party is a useful concept to identify and aggregate the multitude of entities that raise and spend political funds. Parties run national headquarters, constituency associations, regional branches and local chapters as well as offices in the field (on the ground). Each of these units collects revenue and incurs expenses that are used to fund political competition.

Although the political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...

 literature indicates that most contributors give to support parties or candidates with whom they are already in agreement, there is wide public perception that donors expect illegitimate government favors in return (such as specific legislation being enacted or defeated), so some have come to equate campaign finance with political corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...

 and bribery
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...

 . These views have led some governments to reform
Campaign finance reform
Campaign finance reform is the common term for the political effort in the United States to change the involvement of money in politics, primarily in political campaigns....

 fundraising sources and techniques in the hope of eliminating perceived undue influence being given to monied interests. Another tactic is for the government, rather than private individuals and organizations, to provide funding for campaigns. Democratic countries have differing regulations on what types of donations to political parties and campaigns are acceptable.

The causes and effects of different campaign finance rules are studied in a number of disciplines including political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...

, economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 and public policy
Public policy
Public policy as government action is generally the principled guide to action taken by the administrative or executive branches of the state with regard to a class of issues in a manner consistent with law and institutional customs. In general, the foundation is the pertinent national and...

.

Private financing


Some countries rely heavily on private donors to finance political campaigns. In these countries, fundraising is often a significant activity for the campaign staff and the candidate, especially in larger and more prominent campaigns. For example, one survey in the United States found that 23% of candidates for statewide
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...

 office surveyed say that they spent more than half of their scheduled time raising money. Over half of all candidates surveyed spent at least 1/4 of their time on fundraising.
The tactics used can include direct mail
Direct mail
Advertising mail, also known as direct mail, junk mail, or admail, is the delivery of advertising material to recipients of postal mail. The delivery of advertising mail forms a large and growing service for many postal services, and direct-mail marketing forms a significant portion of the direct...

 solicitation, attempts to encourage supporters to contribute via the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

, direct solicitation from the candidate, and events specifically for the purpose of fundraising, or other activities.

Most countries that rely on private donations to fund campaigns require extensive disclosure of donations, frequently including information such as the name, employer and address of donors. This is intended to allow for policing of undue donor influence by other campaigns or by good government
Good government
Good government is a normative description of how government is supposed to be constituted. It has been frequently employed by various political thinkers, ideologues and politicians.- Thomas Jefferson and Good government :...

 groups, while preserving most benefits of private financing, including the right to make donations and to spend money for political speech, saving government the expense of funding campaigns, and keeping government from funding partisan speech that some citizens may find odious (see http://www.washingtonpost.com/wp-dyn/content/article/2005/12/09/AR2005120901716.html). Supporters of private financing systems believe that, in addition to avoiding government limitations on speech, private financing fosters civic involvement, ensures that a diversity of views are heard, and prevents government from tilting the scales to favor those in power or with political influence.

These kind of donations can come from private individuals, as well as groups such as trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...

s and for-profit corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

s.

However, critics of this system claim that it leads to votes being "bought" and to large gaps between different parties in the money they have to campaign with.

Public financing


Other countries choose to use government funding to run campaigns. Funding campaigns from the government budget is widespread in South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...

 and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

. The mechanisms for this can be quite varied, ranging from direct subsidy of political parties
Political party
A political party is a political organization that typically seeks to influence government policy, usually by nominating their own candidates and trying to seat them in political office. Parties participate in electoral campaigns, educational outreach or protest actions...

 to government matching funds for certain types of private donations (often small donations) to exemption from fees of government services (e.g. postage) and many other systems as well. Supporters of government financing generally believe that the system decreases corruption; in addition, many proponents believe that government financing promotes other values, such as civic participation or greater faith in the political process. Not all government subsidies take the form of money; some systems require campaign materials (often air time on television) to be provided at very low rates to the candidates. Critics sometimes complain of the expense of the government financing systems. Libertarian
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...

 critics of the system argue that government should not subsidize political speech. Other critics argue that government financing, with its emphasis on equalizing money resources, merely exaggerates differences in non-monetary resources.

In many countries, such as Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, campaigns can be funded by a combination of private and public money.

In some electoral systems, candidates who win an election or secure a minimum number of ballots are allowed to apply for a rebate to the government. The candidate submits an audited report of the campaign expenses and the government issues a rebate to the candidate, subject to some caps such as the number of votes cast for the candidate or a blanket cap. For example, in the 2008 election, candidates for the Legislative Council of Hong Kong
Legislative Council of Hong Kong
The Legislative Council is the unicameral legislature of Hong Kong.-History:The Legislative Council of Hong Kong was set up in 1843 as a colonial legislature under British rule...

 were entitled to a rebate up to HK$11 per vote.

Regulation


The concept of political finance can affect various parts of a society's institutions which support governmental and social success. Correct handling of political finance impacts a country's ability to effectively maintain free and fair elections, effective governance
Good governance
Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. Governance describes "the process of decision-making and the process by which...

, democratic government and regulation of corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...

. The United Nations convention against Corruption
United Nations Convention against Corruption
The United Nations Convention against Corruption is the first legally binding international anti-corruption instrument. In its 8 Chapters and 71 Articles, the UNCAC obliges its States Parties to implement a wide and detailed range of anti-corruption measures affecting their laws, institutions and...

, recognizing this, encouraged its members to "enhance transparency in the funding of candidatures for elected public office and, when applicable, the funding of political parties." Throughout the world countries have identified the problems which improper use of political finance could entail. When conducting a study pursuing and understanding of what international civil society has determined integral to regulation of political finance, Magnus Öhman and Hani Zainulbhai identified several common understandings by these organizations:
  1. Money is necessary for democratic politics, and political parties must have access to funds to play their part in the political process. Regulation must not curb healthy competition.
  2. Money is never an unproblematic part of the political system, and regulation is desirable
  3. The context and political culture must be taken into account when devising strategies for controlling money in politics
  4. Effective regulation and disclosure can help to control adverse effects of the role of money in politics, but only if well conceived and implemented
  5. Effective oversight depends on activities in interaction by several stakeholders (such as regulators, civil society and the media) and based on transparency.


Their study also affirmed the perspective laid down by the Council of Europe, when discussing the concept of effective regulation of campaign financing: "[We are] convinced that raising public awareness on the issues of prevention and fight against corruption in the field of funding of political parties is essential to the good functioning of democratic institutions."

See also

  • Campaign finance in the United States
    Campaign finance in the United States
    Campaign finance in the United States is the financing of electoral campaigns at the federal, state, and local levels.At the federal level, the primary source of campaign funds is individuals; political action committees are a distant second. Contributions from both are limited, and direct...

  • Campaign finance reform in the United States
  • Clean elections
    Clean elections
    "Clean Elections" is a term used to describe a particular system of government financing of political campaigns, in which the government provides a grant to candidates who agree to limit their and private fundraising efforts and limit their campaign-spending.- In the United States :Clean Election...

  • Election promise
    Election promise
    An election promise is a promise made to the public by a politician who is trying to win an election. They have long been a central element of elections and remain so today...

  • Hatch Act of 1939
    Hatch Act of 1939
    The Hatch Act of 1939 is a United States federal law whose main provision is to prohibit federal employees in the executive branch of the federal government, except the President and the Vice President, from engaging in partisan political activity...

  • Investment theory of party competition
    Investment theory of party competition
    The Investment theory of party competition is a political theory developed by University of Massachusetts professor Thomas Ferguson. The theory focuses on how business elites, not voters, play the leading part in political systems...

  • Money loop
  • No-bid contract
    No-bid contract
    The term "no-bid contract" is a popular phrase for what is officially known as a "sole source contract". A sole source contract implies that there is only one person or company that can provide the contractual services needed, and any attempt to obtain bids would only result in one person or...

  • Pacific scandal
    Pacific Scandal
    The Pacific Scandal was a political scandal in Canada involving allegations of bribes being accepted by the Conservative government in the attempts of private interests to influence the bidding for a national rail contract...

  • Party finance in Germany
    Party finance in Germany
    Party finance in Germany became an issue of political discourse, when in 1949 the concept of transparency was discussed in the constitional convention in connection with a new article to be entered into the constitution...

  • Political donations in Australia
    Political donations in Australia
    The term political donations refers to gifts to a politician, a political party, or an election campaign.In Australia, the majority of political donations come in the form of financial gifts from corporations, which go towards the funding of the parties' election advertising campaigns. Donations...

  • Political finance
    Political finance
    Political finance covers all funds that are raised and spent for political purposes. Necessarily such purposes include all political contests for voting by citizens, especially the election campaigns for various public offices that are run by parties and candidates. Moreover all modern democracies...

  • Political funding in Japan
    Political funding in Japan
    In Japan, the problem of political funding was intensely debated during the late 1980s and early 1990s, partly as a result of revelations following the Recruit scandal of 1988-89...

  • Political funding in the United Kingdom
    Political funding in the United Kingdom
    Political funding in the United Kingdom has been a source of controversy for many years. There are three main ways a political party is funded. The first is through membership subs; the second is through donations; the third is through state funding.-History:...

  • Political financing in Canada
    Federal political financing in Canada
    The fair and transparent financing of political parties, candidates, and election campaigns is a key determinant in the health and proper functioning of a democracy...


Further reading

  • Alexander, Herbert E. "Campaign Financing in International Perspective" in
  • Goodliffe, Jay Extensive list of articles on Money in Politics New York mayoral candidate who lost to Bloomberg.
  • Sandler, Joseph
    Joseph Sandler
    Joseph Sandler is a Washington, D.C. attorney who served as in-house general counsel for the Democratic National Committee from 1993 to 1998 and continued in this role at his firm Sandler, Reiff & Young through 2009...

      "The Campaign Finance Minefield." An analysis of the impact of the Bipartisan Campaign Reform Act on state and local party committees. Campaigns & Elections Magazine, May 2004 PDF

External links