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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 campaigns. Issue campaigns in referendums, party activities and party organizations are additional items to be funded by political money. When James K. Pollock [1] and Louise Overacker [2] 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", 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.[3]
In the U.S. political action committee (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 (FEC). Political campaigns have many expenditures, such as the cost of travel for the candidate, professional advice on topics like message and voter turnout (see campaign consulting) and the direct costs of communicating with voters, such as billboards, 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, television advertising is provided to campaigning parties for free, while in the United States 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 literature indicates that most contributors give to support parties or candidates with whom they are already in agreement,[4] there is wide public perception that donors expect illegitimate government favors in return[5] (such as specific legislation being enacted or defeated), so some have come to equate campaign finance with political corruption and bribery . These views have led some governments to reform 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, economics and public policy.
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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 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.[6] The tactics used can include direct mail solicitation, attempts to encourage supporters to contribute via the Internet, 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 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 [1]). 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 unions and for-profit corporations.
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.
Other countries choose to use government funding to run campaigns. Funding campaigns from the government budget is widespread in South America and Europe.[7] The mechanisms for this can be quite varied, ranging from direct subsidy of political parties 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 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 and the United States, 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 were entitled to a rebate up to HK$11 per vote.
The concept of political finance can affect various parts of a society's institutions which support governmental and social success.[8] Correct handling of political finance impacts a country's ability to effectively maintain free and fair elections, effective governance, democratic government and regulation of corruption.[8] The United Nations convention against Corruption, 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."[9] Throughout the world countries have identified the problems which improper use of political finance could entail.[10] 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:[10]
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."[10]