Funding of Political Parties in Brazil
Raising money for political organizations is a controversial subject amongst Brazilians. This article explains how fundraising is currently done and who are the main donors.
There is a current debate about political reform in Brazil, and one of the main subjects in relation to this is how parties are able to raise funds for their campaigns and actions.
Many sectors of Brazilian society defend that companies should not be allowed to directly donate money to politicians, saying that all money should come from a public funding of campaigns. Research by the Kellogg Institute of International Studies shows that companies who collaborated financially with political campaigns received up to 850% of the donated amount on subsequent contracts signed with governmental bodies.
Nowadays, a small amount used on the routine of political parties in Brazil come from fundo partidário, which are funds distributed by the federal government.
Donations by corporations correspond to the largest share of funds. For example, in the 2014 national elections, the source of the funds is as follows:
- BRL 933.95 million, which corresponds to 75.1%, came from donations made by companies
- BRL 211.58 million, which corresponds to 17%, came from donations made by individuals
- BRL 96.75 million, which corresponds to 7.7%, came from fundo partidário
Regulation of Fundraising and Donations
Money from fundo partidário is distributed to the political parties differently. A share of what is paid by the federal government is the same for every party, but another part is proportional to the number of elected congressmen, senators and governors by each organization.
Besides that, funds are raised either through donations or through investments by the politicians themselves. It is also possible to raise funds through the promotion of events.
The rules for donations are:
- Individuals in Brazil can donate up to 10% of their gross income of the year before the elections
- Companies can donate up to 2% of their gross income of the year before the elections
- Candidates can use up to 50% of their own patrimony registered in the year before elections
Fiscalization and Penalties
Individuals and companies that exceed the allowed donation limit are subject to various penalties. A fine, varying from 5 to 10 times of the exceeded amount, might be charged. In addition, corporations can be prohibited from participating in public bids for the next five years, as well as signing contracts with governmental bodies.
Candidates, on their behalf, might legally answer for abuse of economic power, being subject to fines, sanctions and even the repeal of their mandate.
Donations cannot be made online. Instead, companies and individuals transfer money directly to a bank account controlled by the political party. The donor must be clearly identified through their CPF or CNPJ number.
After the election day, political parties, candidates and committees have 30 days to send their accountability to the Tribunal Regional Eleitoral (TRE, or Regional Electoral Court). All the information is later consolidated and sent to the Receita Federal (Federal Revenue), which is subsequently responsible for communicating any abuse or irregularities.
The sources of the funds collected by political parties are also informed by the Tribunal Superior Eleitoral (TSE, or Superior Electoral Court) before the elections, through a series of partial accountability reports.
Main Donors and Exceptions
According to information from the journalistic blog Estadão Dados, large corporations donated to multiple political parties in Brazil. Some of them even granted funds for every political party in the country.
There are only two exceptions: PSOL and PSTU. Due to ideological reasons, both of these parties reject any donations from private companies.
The 10 private companies that donated the most for Brazilian political parties for the 2014 national elections are:
- JBS - BRL 93.87 million
- OAS - BRL 66.76 million
- Andrade Gutierrez - BRL 32.95 million
- UTC Engenharia - BRL 28.89 million
- CRBS (Ambev) - BRL 25.67 million
- Queiroz Galvão - BRL 21.92 million
- Odebrecht - BRL 17.52 million
- Cosan - BRL 13 million
- Arcelormittal - BRL 13 million
- Vale Energia - BRL 12.08 million
Note that some conglomerates own various companies, performing different donations. This is the case of Bradesco, for example: they hold multiple CNPJs, and each one of them donate different amounts that, separately, do not put them on the ranking above, but would probably do it if they were all added together.
The NGO Transparência Brasil also analyzed the political parties that received the largest amount of donations from large corporations. The five parties that received the most for the 2014 national elections were:
- PT - BRL 135.05 million
- PMDB - BRL 72.01 million
- PSDB - BRL 66.09 million
- PSB - BRL 36.55 million
- PSD - BRL 29.40 million