55dB

Proposal to Equalize Fundraising Rules

Since January 2006, I have been working on a bid to become an Independent Member of Parliament. Being an Independent, I knew I would face numerous issues that don’t preoccupy those with the protection and resources of parties and constituency associations. I was ready, and continue to be willing, to tackle these issues face on, and to simply deal with the two-tiered fundraising system between party-endorsed candidates and indepedents.

But it seems work is already being done to repair the rules. MP Bill Casey produced a press release on August 2 about the injustices of the electoral financing that face Independents. Casey, you may remember, stood up for his constituents and Atlantic Canada by voting against the Conservative budget - he was subsequently removed from the Tory caucus, and has sat as an Independent since.

After seeing his story in the Hill Times, I decided to contact Casey. As someone with a year and a half of Independent campaign planning under his belt, I felt that I had produced some ideas to try to promote fairness within the fundraising system while still trying to mitigate the number of ’sudden independents’ and without giving independents an advantage that party members don’t see. So, I sent Casey an email asking if he wanted to engage in a dialogue about this.

While I await Casey’s reply, I figured I’d post my thoughts on the weblog and generate an op-ed piece, as needed. I’m still interested in being a part of his Private Members’ Bill in any capacity I can, but I think that posting the distinction between the two sets of fundraising rules and where change could be beneficial is also good.

You see, candidates within a registered party can fundraise on behalf of the consituency association in non-electoral periods. And this isn’t just for the major parties, but for any party candidate whose party is Registered and has a registered constituency association. The monies raised are then held in trust with the Constituency Association. At election time, money is transferred from the association to the candidate. (While all technically true, the money is actually the constituency association’s to do with as they please, although in most cases the majority, if not all, is transferred to the candidate for the election.)

Now, candidates can fundraise for their own campaigns outside of the electoral period - but these contributions do not yield tax receipts. So, there is no incentive for someone to donate. Furthermore, for independents, all money raised is subject to the electoral contribution limit at the time of the event. So, let’s say for argument sake that the election will take place in 2009, and by then the limit is $1,200. If I were to donate $400 to my campaign this year, next year, and then during the electoral period, I would get a tax receipt for $300 (75% of $400 during the electoral period), and have contributed the maximum. The mechanism that party-endorsed candidates use to negate this is the constituency association, who can accept donations and produce tax receipts year round, and transfer monies to a candidate during an election.

The lack of a mechanism like that for independents creates the disparity. Letting me keep the funds raised is no good, but also not letting Independents fundraise is also not good. It produces a dichotomy in the system, and that dichotomy is a barrier to entry for people. Do I submit that there would be more Independents without that barrier? No. In fact, a natural barrier is the chance of winning, no matter the funds raised. If you look at campaign finances for the last election, at who ran as Independent, you will see instances of little money used and lots of votes, and cases of lots of money spent with little results. But this financial barrier is correctable, and what I offer below is some initial thoughts on how we can create a system that ensures accountability for Independents while also allowing them to fundraise in a similar way to parties’ candidates.

1. Independents must be registered with Elections Canada in order to raise funds. The nomination form must be filled out properly, including the 100 signatures of residents of the riding, and Independents must have appointed an Official Agent and Auditor. Once completed and verified by Elections Canada, Independents will be qualified to fundraise.

2. Funds raised outside of an election period should be made out to the Receiver General to be held in trust for the candidate. Any tax receipts will be produced by Elections Canada, and not to be given out by the candidate.

3. Should the Independent decide not to run, any monies received in trust for that candidate will become property of the Receiver General.

4. At the outset of the election, the monies held in trust will be transferred to the candidate within the first few days (48 hours? 72?), and he/she will be able to get tax receipts from the Returning Officer to provide to people who contribute within the electoral period.

5. Any campaign surplus will be remitted to the Receiver General to be held in trust for the candidate. In the case that the candidate becomes a candidate for a party, the funds held in trust will be transferred to the constituency association. Should the candidate not run in the subsequent election, all funds will be forfeited to the Receiver General.

6. With respect to interest generated from any monies held in trust: There are several options here. Given that normally the consituency association would hold the account and produce all tax receipts during a non-electoral period for a party-endorsed candidate, it would make sense for a portion, if not all, of the interest generated be used to mitigate expenses incurred by Elections Canada. However, depending on how pre-writ expenses are treated, this could also change. For example, if candidates are expected to take out a loan to cover pre-writ expenses, incurring interest for that loan, then it would serve that all interest generated by coffers (minus fees for EC?) should be the candidate’s. However, if the candidates can submit their expenses to EC periodically (quarterly or, even monthly), and funds can be remitted to the candidate (or vendor) for out-of-pocket expenses (out-of-pocket is handled officially by the candidate becoming the ‘vendor’), then perhaps it would serve as argument for EC to keep the interest generated. This is all up for debate.

Points 1, 2 and 3 are designed to ensure that we mitigate the number of ‘false’ independents. 1 requires the independent to do at least some leg-work, and 2 and 3 ensures that there is no financial gain to the candidate by running and then dropping out. 2 maintains fairness and transparency by providing a similar mechanism to a constituency association, and, being an organization designed to promote proper electoral processes, serve as a good governing body for trusts.

Point 4 is to ensure that there is a seamless change between pre-election financing and elecoral financing for the independent.

Point 5 addresses the fact that any surplus generated by the campaign, including the remittance of the candidate’s deposit, as well as the portion of paid election expenses returned to the candidate if they receive a certain percent of votes, typically gets given to the Receiver General and is no longer of use to the candidate. This provision would allow the candidate to run again, using the funds that they earned in the previous election to act as a starting point for their campaign. This is an advantage seen by party-endorsed candidates because they can remit all surpluses to their constituency association.