electionfinance.net Blog

In 2003, Chile introduced a campaign finance reform that introduced for the first time disclosure of candidates’ campaign income and expenditure, expenditure and donation limits, and direct public financing of parties and candidates. The most interesting feature of the reform were the confidential donations (aportes reservados), one of three categories of permissible sources of income to competitors (along with anonymous and public donations).

Confidential donations are contributions whose source (and amount) are kept secret from the recipient of the contribution. The idea behind these contributions comes from the “patriot dollars” in Ackerman and Ayers’ Voting with Dollars. The idea is to prevent any corrupting influence of campaign finance on legislative behavior – if candidates do not know and cannot verify who gives them campaign contributions, then as policymakers they will not be able or inclined to provide favors in return (e.g. policy, access, etc.). To implement the system, the 2003 reform and subsequent amendments created a system in which Servicio Electoral, the electoral authority, would receive contributions and then anonymously transfer the money to candidates’ and parties’ accounts. These would be sent to competitors once a week during the campaign in a lump sum less a randomly-sized fraction of the sum to be withheld and send with the following week’s transfer. In this way, recipients could not determine the amount of any individual donation, even if they received only one such contribution in a week.

This system was used for the 2004 municipal elections, but just prior to the 2005 congressional elections, a new law was passed that sought to eliminate the random withholding of a portion of the contributions for the following week. This of course may jeopardize the functionality of the system – even if the identities of donors are withheld from recipients, the latter can still identify them if contributors tell them to be on the lookout for particular donations (especially if they are in easily-identifiable amounts). Worse, only competitors would be able to make this identification, since the disclosure reports would not detail the identities of contributors, leaving voters and the media in the dark.

Interestingly, however, due to a legal technicality, the reform of the reform did not come to pass. I do not yet know the precise reason why, but it seems the 2005 amendment was poorly written, and thus not implemented – the original system of confidential donations is still in effect, and was widely used in the 2005 legislative elections. For candidates that ran for the lower house in the right-leaning coalition Alianza por Chile, confidential donations accounted for 48.7% of their reported campaign income. For candidates in the Concertación, the coalition on the left, the figure was 31.1%.