Campaign financing laws in democracies around the globe

Over the last fortnight, Kenya’s electoral agency published some regulations that seek to limit the amounts that may be spent on election campaigns in the country. This was done under the Campaign Finance Act, which was passed by the National Assembly in 2013. Although it was enacted in 2013, the operation of the Campaign Finance Act was suspended in 2017. This meant the law did not apply to the election campaigns in 2017.

The Independent Electoral and Boundaries Commission (IEBC) published the proposed regulations and sought their approval by the National Assembly Committee on Delegated Legislation as required by law. The committee declined to approve the regulations, insisting that they were not brought in time and should have been in place at least one year prior to the date of the next elections. 

This means that Kenya may go to next year’s elections without regulation on the amount of financial resources that candidates and political parties may spend on their campaigns.

Opinion is divided on whether there is need for campaign finance regulations. The second divisive issue is how, if there is justification for campaign finance regulations, the limits would be arrived at for the respective positions.

The proponents of the need for a campaign finance law often argue that regulation of the amounts that individuals, political parties and interested parties can spend on political causes and electoral offices are necessary to level the playing field. This, the argument goes, serves to reduce the influence of money in public offices and ensures that all levels of society have a fair chance at getting elected to public offices irrespective of the financial capability of the individual.

The thinking here is that democracy is best served if the right to hold political offices is not fettered or predetermined by an individual’s capability to raise money to seek the political office. This thinking goes ahead to say that campaign finance limits serve to limit influence of big-money lobbyists on political offices as a way of influencing policy and administrative actions after they influence election results.

The regulations by the IEBC, for example, sought to prescribe a limit of about Sh4.4 billion for a presidential candidate. The amount for a governor or senator is to be Sh21.9 million for a small county like Lamu to more than Sh100 million for a larger county like Nairobi.

Size of election unit 

But Kenya is not the only country with campaign finance legislation. India, for example, has passed comprehensive laws on campaign finance and disclosure. The laws require that candidates and parties disclose the sources and the amounts spent by parties and candidates during elections. 

The Representation of People Act of 1951 establishes limits on campaign spending by parties. This depends on the size of the constituency or election unit and ranges between 600,000 and about 1.5 million rupees for candidates. 

However, there are no limits on the amount that the political parties can spend. The flexibility on this is such that the parties can even spend on supporting the election of a candidate without this contribution being considered as part of the individual candidate’s expenditure limits.

However, the Foreign Contribution Act of 1976 prohibits political parties from receiving foreign donations for political campaigns. There is also a prohibition against receipt of political campaign donations from state-owned enterprises. 

In South Africa, the landscape on political party campaign funding was changed when President Ramaphosa signed into law the Political Parties Finance Act in 2018. The Act sets a threshold amount which must be disclosed by a party on receipt from a donor. The legislation also establishes the ceiling amount that an individual or entity may donate to a political party.

Unlike most countries, the South African law permits parties to receive donations from outside the country and by persons who are not citizens of South Africa. The only limits are that the monies received from foreigners must be used strictly for training and policy development and may not be from any government department or a state-owned entity. The legislation, however, does not set limits on the amount that a political party may spend in election campaigns.

The Political Parties, Elections and Referenda Act of the United Kingdom passed in 2000 contains limits for what parties may spend during campaigns in England, Wales and Scotland. It limits both candidates and the political parties to the specified amounts that may be spent on the elections. For the political party, the limit is a multiplier based on the number of constituencies in which the party has fielded candidates. There are also limits that the individual candidates may spend in seeking to be elected in their constituencies.

Come a cropper

But it is in the United States where campaign finance laws are most interesting, from a legal perspective. Attempts at regulating campaign finance have often met challenges, some of them based on the constitution, with the result that such laws have come a cropper.

The best example is the case of the Citizens United against the Federal Election Commission. In that case, a non-profit corporation released a documentary on then-Senator Hillary Clinton, who was a candidate in the Democratic Party’s  2008 presidential primaries. This was made against the Bipartisan Campaign Reform Act of 2002, which had prohibited corporations and Trade Unions from using their funds to make electioneering communications, essentially political campaigns.

In January 2010, the US Supreme Court held that the law had the effect of chilling political speech, contrary to the first amendment of the US Constitution, which prohibited the passing of any law that abridged free speech. 

It stated that the payment of money towards a political cause was itself an expression of an idea by the spender. The court noted that the government had no basis for limiting corporate independent expenditures, including those on election campaigns. The court held that there was no compelling public interest served by a law, which sought to limit the right of speech for a private corporation to make political communication using its own money. The law was struck out as unconstitutional.

Defenders of free speech would support this holding and would argue that however noble the intention of campaign finance laws may be, they do not serve any purpose. That they, in fact, lead to infringement of the rights of supporters of a political cause to put their money where their interests and mouths are, and quite literally so.

This shows, and the writer shares the view, that there is no real democratic ideal served by controlling campaign finance or who may contribute to the political causes. Rather, the regulation should be on disclosures and endeavours to ensure that sources are legitimate, which the various laws on illicit financial flows already deal with.

Neither is the argument that the unrestrained expenditures will necessarily lead to purchase of political office borne by the reality. An apt illustration here is the 2020 presidential elections in the United States. Incumbent and presidential candidate Donald Trump raised 1.96 billion dollars compared to 1.69 billion dollars by Joseph Biden, who ultimately got elected president.

These are huge sums by any measure, but the fact that Trump lost the election despite having out-raised his opponent and in spite of his incumbency, may lend some credence to the sceptics who argue that the contention that unlimited campaign finance is retrogressive for democracy as it permits persons capable of raising money to buy public offices is not always true. 

The writer is Head of Legal at Nation Media Group Plc. [email protected]