Funding of Political Parties

I. Political Party Funding Law No. 26,215

The political party funding system provided by Law No. 26,215 is “mixed”, since the funds that political parties receive may either be:

1. Public, which include regular contributions from the Federal Government through the Permanent Party Fund, administered by the Ministry of Domestic Affairs, Public Works and Housing; or
2. Private, which include contributions from the relevant political party affiliates and donations from third parties.

In addition to regulating contributions separately according to their public or private nature, the Political Party Funding Law also provides for qualitative and quantitative limits, as well as certain restrictions applicable to funding depending on whether it is intended to:

1. Uphold the institutional life of political parties —including all political, institutional and administrative activities carried out by the party, as well as political training; or
2. Finance electoral campaigns.

Among these restrictions, the current Political Party Funding Law bans legal entities from making donations or contributions for electoral campaigns.

II. Modifications proposed by the bill

The bill currently being debated in the Argentine Congress proposes amendments aiming to strengthen the transparency and control of the funding of political parties and of their expenditures. The following amendments are noteworthy:

1. Restriction of the means of making political contributions to allow identification of the donors and traceability of contributions. Cash contributions would no longer be permitted. Contributions may only be made by bank transfer, check, credit card, debit card or digital platforms and applications, provided that these allow for reliable identification of the donor and traceability of the contribution.
2. Contributions by private legal entities to electoral campaigns. The restriction established by the current Political Party Funding Law would be eliminated, allowing private contributions for electoral campaigns not only from individuals but also from private legal entities. 
3. Determination of a limit on private resources that political groups can receive from each donor, per campaign. Up to 2% of the allowable expenditure for the relevant campaign is allowed. This limit would coexist with the limit already established by the Political Party Funding Law, which provides that political parties or electoral alliances may not receive private resources that exceed the amount equivalent to the difference between the maximum limit of campaign expenses and the extraordinary contribution assigned for that electoral campaign.
4. Unification of the limit of private contributions for party financing. The limit for individuals or legal entities would be 2% of the value of the electoral module assessed by each annual budget law multiplied by the number of voters registered on December 31 of the previous year. The Political Party Funding Law which is currently in force provides for a limit of 1% for legal entities and 2% for individuals, in both cases of the total allowed expenditures.
5. Reinforcement of controls in order to detect resources which have an illicit origin. The bill provides for a control procedure —which includes the intervention of the Federal Electoral Justice and a Body of Accounting Auditors, in collaboration with the Anti-Corruption Office (OA), the Financial Information Unit (UIF), the Federal Administration of Public Revenues (AFIP), the Argentine Central Bank (BCRA), the Office of the Attorney General for Economic Crime and Money Laundering (PROCELAC) and the Social Security Administration (ANSES).
6. Political Patronage. A specific section would be incorporated into the Federal Electoral Code. This section would provide the sanction of imprisonment from six months to three years, and disqualification from six months to ten years for the exercise of the right to elect and be elected for public office, to anyone who offers, promises or delivers money or any gift, favor, promise or patrimonial advantage in exchange for making a voter vote in a certain manner.
7. Reduction of the total time that audiovisual media services must grant for electoral purposes. It would fall from 10% to 5%. In addition, a "Registry of Campaign Advertising Providers" would be created.
8. Invitation to other jurisdictions to adhere. The Draft Law establishes that the provinces and the City of Buenos Aires, which conduct their elections according to the system of simultaneity provided for in Law No. 15,262, may adhere to the federal electoral campaign financing regime established by the Political Party Funding Law and the Federal Electoral Code.

III. Final comments

In order to comply with the political party funding regime, companies that make this type of contributions or donations must adjust their practices to the changes to be introduced by the Bill. They must also comply with the charters of each political party to which they wish to contribute, their own internal policies and foreign rules of extraterritorial application including the Foreign Corrupt Practices Act (FCPA).