Party finance in Germany

German parties spend most of their funds on the routine operation of an impressive full-time organization, nationally and in the field.

17/12340 During the 2006–2009 election cycle, the six parties represented in the federal parliament (Bundestag) had an aggregate budget of €1.8 billion, an average of €450 million per calendar year.

Taking the rate of creeping inflation into account, German parties have had a hard time to keep up their previous spending levels.

Parties in Austria, Israel, Italy, Japan and Mexico spend between two and three times the annual per capita amount of their German counterparts.

As far as reliable data are available, this international rank order of party spending levels has been fairly stable during the second half of the 20th century.

In Germany, campaigns at all levels of the federal system (national, state and municipal) are run by parties rather than candidates.

An important impact on this distribution among spending items is certainly caused by the fact that during a campaign for all states, the federal and the European Parliaments public networks provide free airtime on radio and TV to all competing parties.

[5] Even in 2009, a year with two nationwide elections (for the European and the federal parliaments), the six Bundestag parties spent between 41 and 50 percent of their total budgets on campaigning.

About 15 percent of the annual total expenses was operational spending for running a party organization on at least 3, sometimes 4 levels (national, regional, county and township[7]).

Because the threshold for access to public subsidies (0.5 percent of the national vote) is quite low, about 20 different parties receive a cash grant from taxpayers' funds.

Four events or decisions may have been influential: (1) tax benefits for political donations were limited to individual donors and small amounts by Supreme Court (Bundesverfassungsgericht) ruling, (2) various scandals have raised awareness of parties, donors, media and the general public, (3) parties get reliable funding of their most important needs via public grants and (4) there is no need to "buy" access to politicians or influence peddling because sufficient non-financial channels for both types of lobbying are available.

This has, however, to be supplemented by an indirect source of public funding, the assessments of office-holders to those who nominated them (e.g. transfers of a proportion of the salaries of members and their allowances to party coffers.

Finally, a note of reservation is appropriate: the share of public funding elaborated in the previous paragraph includes only cash that flows into the coffers of the party organization proper (at all levels of the political system).

Moreover, party election campaigns are supported by free airtime on radio and TV as well as billboards paid for by municipal authorities.

Transparency has two aspects: annual reporting on all party funds (income, expenditure, debts and assets) and disclosure of donors' identity.

Thus, today, financial reports in Germany provide the only set of comprehensive data on party funds in a modern democracy.

Besides there are tax benefits for small and medium-sized political contributions (including donations, membership dues and assessments of office-holders.

The continuous rise of the SPD vote (despite the joint efforts of state oppression and social security legislation) triggered a wave of financial support for bourgeois parties.

[19] In the final years of the Weimar Republic (1932/33), industrialists no longer limited their financial support to democratic parties.

[20] As a consequence of German industry's role in Hitler's rise to power in the early 1930s, party finance became an issue of political discourse in Germany after 1945.

As the assembly agreed, a transparent flow of funds into party coffers has been stipulated by the German constitution (Grundgesetz) ever since.

Article 21 of the new post-war constitution, the Basic Law of the Federal Republic of Germany, stipulated in 1949 that "political parties must disclose the sources of their funds to the general public.

"[21] However, between 1949 and 1966 this remained inconsequential because no legislative action provided for a binding schedule of party revenue to be revealed and a procedure for the disclosure of major donations.

Finally, in 1984 a general format for the comprehensive reporting of income and expenditure, debts and assets by each party organization was implemented.

Challenges to the current legislation and occasional scandals (e.g. the influence-seeking donations by Friedrich Karl Flick, the slush funds of chancellor Helmut Kohl and the funds anonymously held in a foreign bank by the Hessian CDU state party) have helped to improve the political finance regime up to a point that is equalled by few older democracies.

[24] Each party involved had to face sanctions by the enforcement agency, the speaker of the federal parliament (Deutscher Bundestag), and by voters in elections that followed the specific scandal.

The supreme court ruling of 1958 [25] ended a practice of tax benefits for plutocratic funding of parties by corporate donations.

A more recent ruling of 1992 allowed general subsidies but provided for two kinds of limitation: a matching provision and a maximum amount for direct state funding.

[28] Finally Sections 23b, 25 and 31d of the Political Parties Act 2002 tried to perfect the rules, especially by timely publication of large donations.

ISBN 3-7890-7340-7 (12) Pinto-Duschinsky, Michael/ Schleth, Uwe: 'Why Public Subsidies Have Become a Major Source of Party Funds in West Germany, but Not in Great Britain'.