Political donations provide many benefits to democracy but raise the risk of corruption. The optimal policy is to set the contribution limits as low as possible without causing a funding shortfall or incentivizing illegal or immoral behavior. Public funding could help make donation restrictions more viable by counteracting the monetary shortfall caused by a ban or limit, but since the public generally wants the benefits to come cheaply, it is not always easy to adequately fund such a program. This article argues that creating a "democratic enhancement fund" (DEF) would provide a better outcome for democracies that, for either financial or political reasons, cannot provide sufficient funds to run a public funding program. A DEF is a fund into which donors can make contributions, which are then allocated across all parties according to the prevailing public funding rules. The money received by the DEF is used to offset the cost of a public funding program. DEF money may be necessary to adequately fund public funding programs in jurisdictions where taxpayers are unwilling to shoulder the full cost of doing so. Nonpartisan donors seeking political access, particularly corporate donors, might prefer to donate in that manner, as it leaves them less open to charges of trying to corruptly influence decision making. While parties could still incentivize donors to contribute to the fund by offering benefits to donors such as invitations to functions attended by senior legislators, any funds raised would also be shared by their political competitors. In this way, all legislators benefit from a donation but lack sufficient motivation to show undue favor to contributors.
- campaign finance
- political donations