4 out of 5 citizens around the world think that the system is not working in their interests, according to the 2019 Edelman Trust Barometer. A key reason for this is the perception that when it comes to politics, money talks.
Finance is a necessary component of the democratic processes. Money enables the expression of political support and competition in elections.
However, it may be a means for powerful narrow interests to exercise undue influence. For example, newly elected officials maybe pressured to "return the favour" to corporations that funded their campaign.
This can lead to policy capture, where public decisions over policies are directed away from the public interest towards a specific interest.
The possible existence of a link between campaign spending and performance in elections should be enough to put us on our guard, even if there is not yet consensus on whether donations directly influence election outcomes.
Evidence suggests that policy capture has consequences on business competition in some countries, regions or sectors. In some countries swings in market shares of companies can reflect the changing preferences of the political leadership for well-connected businesses.
Financial contributions by lobbyists in the political process also threaten fair and democratic decision-making.
The Framework presented in this report maps a wide range of risk areas and provide policy tools to adequately regulate the financing of political parties and electoral campaigns.
The framework ensures transparency and promote a level playing field on:
The Framework also focuses on the need to foster a wider culture of integrity in the public and private sectors, with codes of conduct, conflicts of interest rules, and a framework for lobbying and asset disclosure among others.
This report on political finance regulation provides a Framework on Financing Democracy with policy options as well as a mapping of risks.