General Blog


Crowdfunding Is Democratic, Current Political Funding Methods Are Not!


“Democracy is when the indigent and not the men of property who are rulers” – Aristotle

Democracy is not just about conducting timely elections and choosing representatives. It is lot more than that. The true spirit of democracy lies not in the processes but the underlying values that it promotes – accountability, transparency and equality.

However, sometimes it is conveniently forgotten that democratic governance is not limited to the government but also to the political organisations that eventually form the government. It makes little sense if the process of forming the government is democratic but the internal functioning of organisation out of which government is carved isn’t.

Given the fact that political parties are the major stakeholders in a democracy and they seek to undertake activities that are in interest of the general public, they must be accountable to public at large.

Political parties have multiple sources of funding and thus accountability and transparency becomes all the more important. It is essential to have comprehensive and transparent accounting methods and systems which would reveal the true financial position of these parties to the public.

Along with fiscal positions, it is also important to analyse the sources of finance, for all the obvious reasons. The total income of national and regional political parties between 2004-05 and 2014-15 reached uptoRs. 11,367 crore. 69% of this income was from unknown sources. The income of national parties from unknown sources increased by 313% during the decade; for the regional parties, it went up by 652%.

As per the donation analysis report commissioned by ADR (Association Democratic Reforms) For four years since 2012-16, as many as 1,933 donations – amounting to Rs. 384 crore – were not accompanied by PAN (Permanent Account Number) details. In the same period, 1,546 donations, amounting to Rs. 355 crore, came without the donor’s address.

Image result for crowdfunding platform

Moreover, this is not the only source of concern regarding political funding. The corporate funding of political parties is increasing day by day. Business houses donated Rs 956.77 crore (89 % of known donations) to the 5 National Parties during this period, as per ADR.

To worsen the situation, the new finance bill, proposed recently, seeks to remove the limit of how much a business house can donate to a political party (which currently stands at 7.5%). It also proposes to do away with the current requirement of mentioning the name of political party to which it donated.

This paves the way for crony capitalism where businesses will thrive not as a result of risk taken by them, but rather, as a return on money amassed through a nexus between the business class and the political class. Needless to say that this hampers democracy, harms the economy and worsens the political situation for an entire nation, undermining democratic values. Responsible, accountable and transparent fundraising is the only way to avoid such havoc. Online crowdfunding can help this cause for specifically these reasons.

As online crowdfunding receives donation from digital payment gateways, the are easily traceable. The fundraisers hosted on a crowdfunding platform are visible to all, the level transparency will shoot straight up. Due to the crowdfunding campaign, the accountability of political parties too will be higher as they will have to abide by the promises they make in their fundraiser story. Funding money for political campaigns through crowdfunding should accelerate rapidly. Political parties should gear up and know how crowdfunding works, soon!

Crowdfunding will also be a blessing to the small regional and budding parties which do not funds from the mainstream sources. The AamAadmi Party successfully crowdfunded for various political campaigns and election expenditures in early days of its inception. It raised Rs. 10 lakhs within two days for Delhi assembly election. The party’s Karnataka state unit raised close to Rs. 2 crore, while in Maharashtra they managed to raise close to Rs. 91 lakhs.

This proves that people would love to donate to parties that they think has potential to make a difference.

For the world’s biggest democratic nation-state, getting political funds through online crowdfunding will be a feather in the cap, especially in the days when we are vigorously moving towards establishing benchmarks in good and accountable governance.

Leave a Reply

Your email address will not be published. Required fields are marked *