Campaign Finance

Campaign Finance

What is campaign finance?

Competitive elections require that electoral contestants have a means for financing their election campaigns and routine operations. Campaign finance, an element of broader political finance, refers to all funds raised and spent in order to promote candidates, political parties or policies in elections, referendums, initiatives, party activities and party organizations. The main features of a campaign finance system vary considerably across countries. Generally speaking, there are two sources of funds for parties and candidates: public financing and private financing. Limits may apply to each of these funding types. Systems may also dictate expenditure (spending) limits, rules for reporting and disclosing contestants' financial information, mechanisms to monitor and oversee whether contestants comply with regulations, and ways to apply sanctions to those who violate them. Countries may adopt campaign financing regimes based solely on public financing, on private financing or a mix of both.

Why does public campaign financing matter?

When electoral contestants receive public funding for their campaigns, the funding can help provide a more level playing-field and enhance the competitiveness of elections. It can also reduce opportunities for private sources to use their contributions to unduly influence contestants, which is a form of political corruption. Public campaign financing includes both direct and indirect funding to political parties or candidates. Direct public campaign financing refers to funds allocated by the state to electoral contestants. Indirect public financing is when candidates or parties are granted access to some services free of charge or at a reduced rate, such as access to public media, use of state property for the purpose of campaigning, printing of electoral materials or use of state postal services. State resources belong to the whole population and should not be used to favor any political party or candidate. Use of state resources in the context of an election campaign should be considered a type of campaign finance contribution and be reported accordingly to help avoid their abuse. Information about direct and indirect public funding for candidates and parties during an election campaign allows citizens, contestants and officials to assess whether state resources were used in a fair and appropriate manner.

Example public campaign financing data

Public campaign financing data includes information about public campaign finance limits and regulations, the amounts disbursed to each candidate or party (through direct campaign financing mechanisms) and allocations of public resources to each candidate or party (through indirect campaign financing mechanisms).

Why does private campaign financing matter?

Private campaign funding encourages citizen participation in the electoral process and allows voters to express political opinions by supporting contestants who represent their interests. Private campaign financing can reduce the role or interference of government in campaigning, reducing the potentials for incumbent governments to manipulate public funding for its electoral advantage. Private campaign financing refers to funding or free or reduced rate materials and services ("in-kind" contributions) from private donors, such as individuals or companies. Additionally, political parties may make donations to candidates, and candidates may use their personal resources to finance their campaigns. Parties and candidates may also take out loans to finance campaign activities. Candidates and parties should be required to report on the private donations they receive, including the source, date, and amount of the donation. Access to information about donations from individuals and other private donors can reveal any potential conflict of interest the candidate or party may have when making a policy or acting in government. Likewise, information about private funding for candidates and parties, including limits on individual donations, allows citizens, contestants and officials to monitor private campaign financing activities in relation to legal restrictions.

Example private campaign financing data

Data about private campaign financing includes information about private campaign finance limits and regulations, as well as the source of private donations, and the amounts and dates of donations.

Why do campaign expenditures matter?

Campaign expenditures generally include any expenditure for electoral purposes, monetary or in-kind, by a candidate or party during an electoral campaign. In some countries, there are campaign expenditure "ceilings" or limits for candidates and parties. These limits can promote a level playing-field for candidates, but must be balanced with the equally legitimate need to protect other rights, such as freedoms of association and expression. The maximum spending limit usually consists of an absolute sum or a relative sum, determined by factors such as the voting population in a particular constituency and the costs of campaign materials and services. Whichever system is adopted, such limits should be clearly defined in the law and, ideally, be indexed for inflation to ensure that they stay relevant for subsequent elections. Limitations should also apply to all electoral contestants, to prevent them being used as vehicles to circumvent spending limits. Electoral contestants must be permitted to expend sufficient resources to convey their political message. Campaign expenditure limits should be clearly defined by law. Contestants use limit information to ensure they act within the law, while citizens can use it to hold parties and candidates accountable. Expenditure data at the most primary level should include transaction-level information including cost and recipient of funds or goods. Citizens can use information on campaign expenditures to make more informed choices among contestants.

Example campaign expenditures data

For expenditure data, it is good practice to report on the date, purpose, amount and recipient of each transaction.

Why does reporting and disclosure matter?

Reporting and disclosure of campaign finance information makes candidates and political parties accountable to both the campaign finance oversight body and to the general public for how they finance their campaigns. While the frequency and content of reporting on campaign finance varies, reporting by candidates and parties to the campaign oversight body should always be timely and transparent. The law should set out precisely what reporting is required, the timeframe, and the method of public disclosure. It is good practice to require initial, interim, and final reports on campaign financing. The reporting of information to the oversight body enables the campaign finance oversight body to monitor compliance with the rules.

Generally, candidates and parties must meet certain public disclosure requirements when they run for public office. This may include public disclosure of assets and liabilities at the time of registration or throughout the campaign. In some cases, the oversight body publishes disclosure information, while in other cases the candidates or parties must publish it themselves. Disclosure requirement vary from country to country, and are balanced with privacy and data-protection concerns. Access to campaign finance information helps inform citizens about where political parties and candidates receive their financial support, allowing voters to make more informed choices.

The majority of Latin American countries legally require that financial information from parties and candidates is made public. Costa Rica has an electronic portal with easy access to this financial information, presented in standardized formats that allow it to be managed easily in data software. In Peru, the 2005 political party finance regulations requires parties to report on finances on a bi-monthly basis during an election period[1]. The 1997 electoral law[2] requires all candidates to report election expenses within 60 days of the announcement of results. Summary-level and granular, individual information on income and expenses for each candidate is disclosed and available for download on the website of the National Office of Electoral Processes.

Example reporting and disclosure data

Relevant data includes rules for reporting and disclosing campaign finance information, who is reporting and disclosing that information, and the actual information for public disclosure. In some cases, the actual reports and disclosures of parties and candidates may be available to the public. The regulations for reporting and disclosure should include the information political parties and candidates must submit about their campaign contributions and expenditures, and when and how those reports must be submitted. Disclosure requirements may include public disclosure of assets and liabilities at the time of registration or throughout the campaign. As for data relevant to public campaign financing, private campaign financing and campaign expenditures, disclosure data should include the identity of donors and the dates, amounts, and types of contributions and expenditures.

Reports should clearly distinguish between the party as a whole, individual candidates and, where applicable, lists of candidates. They should contain enough detail to be useful and understandable to the general public. It is good practice for authorities to introduce a standard template and guidance for reporting, which enables timely analysis and meaningful comparison between different parties and candidates. Reports should clearly distinguish between contributions and expenditures. Further, reporting formats should include the itemization of all contributions and expenditures into standardized categories as defined by the regulations. Itemized reporting should include the date and amount of each transaction, as well as copies of proof of the transaction (for example, receipts, checks, bank transfers and loan agreements).

Why do oversight and monitoring matter?

Oversight and monitoring of compliance with campaign finance rules are important mechanisms for enhancing the transparency and effective implementation of regulations. States often provide for an independent oversight body that monitors the implementation of campaign finance regulations, including the publication of reports. The regulatory authority's degree of independence varies, which can affect public confidence in campaign finance scrutiny and effectiveness. Legislative safeguards may be incorporated into the rules governing the selection, composition and mandate of the authority, so as to avoid partisan influence or government pressure. To increase effectiveness, an oversight body may also have the right to issue directions and guidance, investigate alleged breaches of the rules and either impose or seek sanctions for violations. Relationships between the campaign finance oversight body and other electoral authorities and government bodies, as well as between national and local stakeholders, should be clearly defined. The oversight body's mandate and areas of responsibility should be clearly delineated to avoid conflicts of interest or overlapping jurisdiction.

Monitoring of timely campaign finance and expenditure reports by the public, journalists, and/or civil society organizations allows them to assess the fairness of electoral competition. It also allows them to review the potential influences on contestants when they gain elected office. Additionally, they can use the information to hold the oversight body accountable, which can contribute to its performance.

Example oversight and monitoring data

Oversight data includes information on whether each contestant submitted their report on time, late, or not at all, whether reports were complete as well as data on which contestants are subject to sanctions. In addition, oversight data includes information on the number of instances where sanctions were applied and whether the parties and candidates complied with the sanctions.

Why do sanctions and appeals matter?

Effective enforcement of campaign finance regulations is crucial to maintaining the integrity of the campaign finance system, strengthening public confidence in the electoral process, and holding political parties and candidates accountable. Sanctions are penalties imposed by the campaign finance oversight body or other regulatory body, and in some cases a criminal court, on electoral contestants who violate campaign finance regulations. Sanctions aim to eliminate any benefit obtained from failing to comply with the law, punish those who fail to comply, and deter future non-compliance. Sanctions must at all times be clearly defined in law or regulation, known to the public and electoral contestants, enforceable and proportionate to their specific purpose. A range of sanctions may be applied, including warnings, administrative fines, partial or total loss of public funds, and, in the case of significant violations, criminal prosecution. All decisions should be recorded in writing and justified, and the parties involved should be informed of the decision in a timely manner.

Whenever sanctions are imposed, the parties involved should have the right to access an appeal process and have recourse to judicial review of the appeal. The legal framework should provide reasonable deadlines for submission, consideration, and resolution of appeals. With access to information about sanctions and appeals, political parties can make sure they are treated fairly and also identify a means to appeal imposed sanctions. Meanwhile, data on any sanctions applied provides citizens with information about whether candidates and parties are complying with campaign finance regulations and if they have received appropriate penalties for violations. With access to information on legislation about penalties, civil society can measure if the law provides for an adequate range of sanctions to address non-compliance. When coupled with disclosure data, civil society can explore whether sanctions are applied in an unbiased manner.

Example sanctions and appeals data

Proceedings on sanctions and appeals, as well as information about the overall process, should be transparent and accessible to the public. Relevant data includes who, how, and why a particular candidate or party was sanctioned and which parties appealed the decision, why they appealed, and the outcome of the appeal process. Data should include substantive reasons and explanations supporting sanction and appeal decisions. Other relevant information about the appeals process includes any legislation defining the legal ways to appeal the oversight body's decisions and the deadlines by which appeals should be filed and decisions granted.

  1. Article 71. ↩︎

  2. Article 183. ↩︎