An analysis of the annual reports of political parties by the Corruption Prevention and Combating Bureau (KNAB) shows that the funding model change implemented more than four years ago has increased the parties funds and reduced their dependence on private donors. Simultaneously, parties use most of the state budget funding for party pre-election campaigns, thus disregarding proportionality between other expenditure items and insufficiently implementing activities for communication with the public, including attracting new members and young people.
On 1 January 2020, a new model for financing political parties was introduced. Among other things, the changes provide for political parties to receive more funding from the state budget, thus reducing their dependence on private donors. In order to find out what changes can be observed in the parties' finances after the new model became effective, KNAB analysed the annual reports submitted by 12 political parties and their associations receiving state budget funding from 2018 to 2022.
The KNAB's analysis of revenues shows that following the changes, the amount of state budget funding paid to political parties increased eightfold, while the amount of donations received decreased threefold and the amount of membership fees paid decreased twofold. Given that the new funding model of the state budget imposed restrictions on the acceptance of donations, such changes are logical and justified.
An analysis of donations and membership fees shows that donations play a larger role in the parties' financial structure. In particular, during the reporting period, three times more money was donated to parties than members paid in joining and membership fees, and the amount of membership fees paid to parties has been decreasing year on year. Overall, KNAB concludes that parties have become less dependent on private donors, and this is particularly noticeable for parties that receive more state budget funding.
An analysis of political parties' spending shows that declared spending has increased by one-and-a-half times since the changes. The parties spent three times as much on salaries, twice as much on other expenses and one-and-a-half times as much on advertising. The analysis of expenditure also shows that parties have spent most of their funding on campaigning in election years and have not respected proportionality between all expenditure groups for which they are entitled to use state budget funding.
KNAB calls on the parties to observe proportionality between all the items for which they are entitled to use the state budget funding, as well as to more actively implement measures, for example, to ensure the content of their activities - research, youth activities, etc. In KNAB's view, parties should also be more active in communication activities and awareness-raising of the public in the periods between elections. This way parties would attract new members and involve young people in the political process, which would strengthen both the parties and the political culture in Latvia.
KNAB also draws attention to the fact that the public has limited possibilities to get a detailed picture of the state budget funding used by parties, which reduces transparency. Therefore, KNAB encourages political parties to inform the public more about the state budget funding used, the measures taken and the goals achieved.