Chapter 7: Political party funding and the enigma of trust
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Party funding regulations are often implemented with the main objective of improving flailing public trust in political institutions. This is not an easy task. It appears that citizens are uncomfortable with parties that are funded by special interests or public subventions yet are unwilling to contribute their own money as an alternative. How, then, can political finance legislators design the optimal regulations to regain citizen trust? First, we need to know whether different sources of party funding actually have an empirical effect on public opinion, and if so, in what direction. Despite common assumptions of a relationship between party funding and citizen trust, the link has not been adequately explored. This chapter posits that this might be due to a major shortcoming: by focusing on regulations, studies overestimate public knowledge of political finance. To counter this deficiency, the chapter focuses on party funding proportions. Even though citizens are largely unaware of particular regulations, they may have a general sense of how parties in their country generate money. Using multiple regression analysis, a relationship is established between trust in parliament, and three party revenue streams – public funding, private contributions and membership fees. The analysis is based on data from 1980 to 2014 in four countries: Denmark, the Netherlands, the UK and Germany. The findings suggest that public funding implemented with effective anti-cartelisation conditions improves public trust in political institutions.

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