Electoral fund: where do parties get so much money to finance campaigns?

According to the TSE, in 2022, the Electoral Fund will reach the historic value of R$4,9 billion.

Popularity can influence a candidate's election, but in most cases, electoral victory is related to an effective campaign. Specifically in legislative elections, for deputies, senators and councilors, those who invest more financial resources usually emerge victorious.

To illustrate, in 2018, political parties spent a total of R$2,9 billion from the electoral fund. Of this amount, 40% was directed to campaigns for federal deputies and 30% to campaigns for state deputies. In addition to the expenses associated with the campaigns, it is necessary to consider that the parties must maintain their structures throughout the year, which includes expenses with headquarters, employees and advertising.

You may be wondering where the resources that support campaigns and party maintenance come from. The answer is simple: the Party Fund and the Electoral Fund. Let's explore these concepts in more detail below!

What is the Party Fund and what is its importance?

The Special Fund for Financial Assistance to Political Parties, known as the Party Fund, was officially established in 1995. This fund aims to provide financial assistance to political parties to cover their operating expenses and maintain their structure.

All parties registered with the Superior Electoral Court (TSE) are entitled to receive funds from the Party Fund. All money raised by the party is allocated to this fund, which is used to finance the party's daily expenses and needs, and may also be used to finance political campaigns.

The Party Fund is funded by two main sources: government funds and private donations. Public funds are provided by the government, coming from electoral fines and budgetary allocations (basically, taxes). The distribution of funds takes into account the number of members of each party; the more members, the more money they receive.

Private donations, that is, from individuals, can also contribute to the Party Fund. This is because, with the Electoral Reform of 2015, companies were prohibited from making donations for electoral purposes due to corruption scandals in which companies financed parties in exchange for favors, such as bidding contracts.

Electoral Fund: the financial basis of elections

With the changes introduced by the Reform, many political parties lost financial resources and began to depend on the Electoral Fund to finance their campaigns. Created in 2017, the Special Campaign Financing Fund (FEFC) is exclusively intended to finance parties' electoral campaigns.

In short, the FEFC is made up of public resources transferred to political parties and is used exclusively for electoral campaigns. Given the high cost of campaigns, parties depend on this fund to elect their candidates, making this resource very valuable in the political arena.

FEFC resources come from the National Treasury, that is, they come from taxes paid by the population. Therefore, the discussion on politics becomes relevant when considering that these resources come from citizens' taxes.

Of the total FEFC, 2% is distributed equally among all parties, while the remaining 98% depends on the party's performance and size. Thus, 35% is distributed among the parties that have at least one representative in the Chamber of Deputies, 48% is distributed proportionally based on the number of federal deputies, and 15% is distributed proportionally, considering the number of senators in the Senate.

In short, the distribution of FEFC resources is quantitative, favoring larger parties that have more representatives. This creates a cycle in which parties with more resources are able to carry out more impactful campaigns and, consequently, elect more candidates, while smaller parties have fewer possibilities for growth.

To give an idea of ​​the size of the available resources, in 2022, an amount of R$4,9 billion was made available for transfer to all parties, the highest amount since the creation of the FEFC. The largest beneficiaries of this transfer were União Brasil (União), the Workers' Party (PT) and the Brazilian Democratic Movement (MDB), with R$782 million, R$503 million and R$363 million, respectively. Parties that do not fully use their resources must return the money to the government, which will then transfer it to the National Treasury.

Therefore, understanding political campaign financing is essential to understanding the political system and the importance of financial resources in politics. Now that you are more informed, how about exploring other content categories on the Valor&Carreira website? We offer rich, quality materials in several areas, including economics. Check out our options!