The Role of Money in Democratic Elections

A paper prepared for the Organisation for Economic Co-operation and Development (OECD) in 2013, entitled Money in Politics: Sound Political Competition and Trust in Government, identified the role of money in democratic politics as both an enabler and a risk to fairness.  As has been pointed out (, a democracy cannot function properly without an effective opposition – but funding and access to resources are necessary for this to happen.  On the other hand, money can be used to give one party an unfair advantage over another.  The OECD paper goes through the arguments for and against different types of funding.

For a democracy to work properly, people have to be informed of the policies of the politicians whom they are asked to support.  During an election, this is usually done by advertising and the advertisements have to be paid for.  Campaign funding is therefore essential.  The OECD paper “recognizes the role of money as a vehicle for more participative and more inclusive democracies” (para 63), in that political parties provide a launching ground for politicians: “Without political parties, active political engagement in full time politics was a luxury for a few.” (para 42)

There are democratic benefits in a system of government grants that incentivise political parties to attract a large number of individual members.  Political parties and election campaigns can be funded by allocating government funds, by membership fees paid to political parties, by political donations, or by a combination of these methods.  The OECD paper analyses several options for government funding, including equal amounts for each party above a threshold size, or payments based on past votes received, or proportional to party membership, or proportional to a party’s total income including donations up to a modest ceiling (paras 118-121).

Governments can also place limits on political donations though, either capping the amounts given or barring certain organisations from giving, and this can put opposition parties at a disadvantage.  For example, the British Conservative Party tried to increase its chances of staying in power by legislating to reduce the funding available to the Labour Party – as described in an editorial, The Guardian view on fair play in politics: a Conservative coup:

“Under the guise of requiring more democracy and transparency, the bill makes it harder for unions to collect membership fees and allocate them for political causes.”

The Labour Party relies on trade-union funding, whereas the Conservative Party gains most of its funding from wealthy individuals and corporations.

Many European countries restrain political donations but wealthy donors can give large amounts in Britain, as described in George Monbiot’s article: Billionaires bought Brexit – they are controlling our venal political system.  There are limits on how much can be spent on British elections, though, as the Full Fact charity has reported: Democratic deficit? The rules on election spending.

Political donations are much higher in America following the Citizens United vs. FEC ruling, which “effectively opened the door for corporations and unions to spend unlimited amounts of money to support their chosen political candidates, provided they were technically independent of the campaigns”.

The ‘Citizens United’ ruling was highly contentious; much has been written about its impact, including the following:

Political donations can be made in order to promote a particular ideology or legislative outcome, but in some cases the giver is seeking financial benefits.  Such kickbacks are the subject of the next sub-section (



This is a current page, from the Patterns of Power Edition 3a book, © PatternsofPower.org, 2020.  An archived copy of it is held at https://www.patternsofpower.org/edition03/6451a.htm