Germany’s public financing system for political parties aims to promote election transparency and fairness

The Act on Political Parties of 1967 (“Parteiengesetz” or “ParteienG” in German) created a system of public financing for political parties in Germany called the matched party financing system. This system promotes fairness in elections by providing government funding and increasing transparency by mandating all donations above EUR 10,000 (USD 11,000) be publicly disclosed.¹

Alongside the requirement that all private donations above EUR 10,000 (USD 11,000) must be declared, Parteiengesetz dictates that the amount of state funding received by each party is dependent on their “rootedness in society,” which is determined by how many votes a party gained in the most recent election, in addition to the amount of money raised through member contributions, and legally obtained donations from private entities.² Parteiengesetz applies to European, national, and subnational elections. The funding obtained through state financing is used for party management and elections.

The amount of public financing received cannot exceed the amount of private funds raised by the party itself–that is, i.e., parties must obtain at least 50 percent of their funding from sources other than the state. ³ Donations from abroad are permissible up to EUR 1,000 (USD 1,110), however the donor must be a German citizen or a company with a majority German ownership.⁴ Anonymous donations of more than EUR 1,000 are not allowed.⁵

Implementation

The matched party financing system was implemented under Section IV and V of the Political Parties Act (“Parteiengesetz,” ‘ParteienG’ in German) in 1967.⁶ The implementation of these regulations and public financing are under the purview of the President of the German Federal Parliament and The Federal Constitutional Court.

According to the Act, political parties in Germany must provide an annual public statement of their accounts to the President of the Bundestag (Federal Parliament). This statement lists the sources and uses of all funds received during the year and includes a listing of party assets.⁷ Donations of EUR 10,000 or more made to a party or its regional branches must be recorded on the statement, along with the donors’ names and addresses.⁸ If a donation exceeds EUR 50,000, it must be immediately reported to the President of the Bundestag, who publishes the information on the parliament’s website.⁹ There is no limit on the amount of personal or corporate donations that can be made.¹⁰

The funding received is distributed at a flat rate per vote, with the first four million votes worth EUR 1, each and subsequent votes worth EUR 0.83.¹¹ Additionally, the state adds EUR 0.45 for every euro received from other sources, such as donations, membership fees, or contributions from elected office-holders, up to a maximum of EUR 3,300 per donor.¹²

Cost

Each year, the president of the Bundestag sets a maximum limit on the state funding available for political parties. The total amount of state funding to political parties has increased significantly in recent years, with a total of EUR 133 million (USD 147 million) in 2010 and over EUR 200 million (USD 220 million) in 2021.¹³ This large increase in public funding for political parties was made possible by an amendment to the party law in Germany in 2018. The ruling parties (Christian Democratic Union of Germany (CDU)/Christian Social Union in Bavaria and The Social Democratic Party) argued that new developments such as social media and digitization required additional funds for political parties.¹⁴ Despite opposition from all other parties in parliament, the amendment was passed.

Assessment

The concept is that political parties which have greater influence on society require more neutral financing. In the German system, this means that smaller or newer parties are at a disadvantage because they have less relevance and thus receive less neutral financing.¹⁵ The matching funds scheme has helped to stabilize the proportion of membership fees on the total revenues of German political parties.¹⁶ This has reduced funding disparities between majority and minority parties, despite a drop in grassroots support over the past few decades as political party membership has been in a state of decline.¹⁷

Additionally, the system has increased transparency by requiring political parties to submit an annual public statement of fundraising, allowing citizens to see who is financing political parties and to hold them accountable for their actions. As a result of this, according to The European Public Accountability Mechanisms, Germany scores 100/100 points on reporting, oversight, and sanctions on public financing, compared to the European average of 86.¹⁸ The system also reduces the influence of private donors, by adding alternative revenue sources through public financing that is primarily based on votes gained and member donations, while also limiting private revenues to 50 percent of total revenues. Transparency requirements have resulted in a long-term decline of corporate contributions as a source of political funding.¹⁹ These factors have limited the opportunities for state capture by private companies, reducing their influence on political decision-making.

However, the “rooted in society” criteria for public funding does mean that parties with extreme views will also receive state funding. For example, the National Democratic Party of Germany (a neo-Nazi political party) received EUR 350,000 (USD 386,000) in 2020 and 2021 from political party public financing.²⁰

In addition, there are concerns that regulations are not strict enough and can be easily circumvented. An non-governmental organization called Lobbycontrol reported that in 2018, the CEO of a gambling machine company donated EUR 120,000 to Bavaria’s Christian Social Union by making one donation as an individual and five more through his businesses, each under the EUR 50,000 limit.²¹ This allowed him to avoid immediate public disclosure of his donations.

Additional Information

Due to the role of powerful industrial donors in Hitler’s rise to power in the 1930s, party finance transparency and regulation became an important political issue after 1945. Following this, the German constitution (Grundgesetz) has required, since 1949, that all political parties publicly disclose the sources of their funds. However, this requirement was largely symbolic until 1967, when the first law was passed to establish specific rules for this disclosure.

Tags

• Corruption & Transparency
• Europe
• Germany
• High-Income Country
• Political & Civic Participation