Do large donations to parties and election campaigns influence election results?

Further to my comments in Sunday Star-Times:

Since May 2012, Colin Craig has contributed at least $2,594,500 to the Conservative Party, plus $675,000 from Laurence and Katrina Day of Hamilton. Kim Dotcom pumped $3,250,000 into the Internet Party in May this year. At least the Electoral Act makes these donations transparent, and voters can judge for themselves. But what do we know about the link between finances and election results? Most of the research on this question comes from the US, where money and politics are intimately intertwined. But they have completely different electoral and governmental systems from ours, so comparisons are not easy. In any case, the research shows (unsurprisingly) that it's complicated.

Campaign spending may positively affect vote share sometimes, but it can also have a negative effect if voters disapprove of the sources or suspect favour-trading (think Bretherens and National, 2005), and it may make no difference if there was little contest anyway.

The lesson for NZ may be that campaign finance matters more to your vote share if you are not yet in parliament, or if you are in opposition. But there is no straight line linking finance with results. Craig's investment could turn out to be a colossal waste (as it was in 2011). Perhaps he’d achieve more if that money were donated to charities.

So, the sky is not the limit, but there must be a floor, or a war-chest sum below which it is impossible to have any electoral impact at all, or no chance of winning even one seat. And apparently that 'floor' is quite a high one nowadays. Long gone are the days of independents winning electorates, whereas that was quite common up until the 1930s.

As for the link between donations and policies, it can be hard to tell which came first, the policy or the donation. Think of the couple who donated to the Conservatives because they want binding referenda. Did Craig push that policy because of the donation, or did the donor come forward because of the policy? Or were they in cahoots all along? And will we ever know the truth?

Some research shows that (in the US) donations do influence voting patterns of congressmen. But, in NZ, individual legislators can't be influenced so easily, as they almost always obey the party whip. So, it's not clear how much influence donors in NZ have on parties' policies or support for legislation. Outright bribery of an MP regarding a Bill is of course a crime.

We do have strict limits on spending on election advertising by parties and by local electorate candidates. This is alongside state funding for parties’ electoral campaign broadcasts. But should we also put a cap on the amounts of money that any private donor can donate or on the total amounts that parties can collect from donors in an electoral cycle?

A strict cap on private donations may increase the numbers of donors, as parties would have to look further afield. This may be a good thing. Oddly enough, it could actually turn out to be in the interests of the fat-cat funded parties (such as ACT) if there were caps on private donations, as this would reduce voter suspicion of policy-influence by wealthy individuals.

At least it's now transparent who is donating large sums to whom. If all donors (great and small) had to be named, then a huge list of names would come out into the public arena, and many would be deterred from donating as a result (which would be a pity, I think). Also, should we then demand to know who is donating in-kind? e.g. on the phone banks, door knocking, items for auction, etc. Where does it end?

Allowing for private gifts (of time and money) to political parties is beneficial, as it connects supporters with party leaders. Anonymity for small donors helps to keep them donating. We have presently a mixed public-private system. But do we need to cap big private donations and move political party finance more towards state funding? It’s worth a debate.

Here's another informative article.