The price of transparency: do campaign finance disclosure laws discourage political participation by citizens’ groups?

Abstract

We surveyed independent citizens’ groups who advertised in either of the Canadian federal elections of 2004 and 2006 to see whether financial reporting laws act as barriers to entry in politics. The most conservative estimates suggest that conforming imposes administrative costs of no more than 9% of group budgets. These small reporting costs and our finding that 61% of respondents believed reporting requirements discouraged independent groups from participating in elections suggest that there may be intangible but substantial costs to disclosure. Our survey indicates these costs arise from the fear of prosecution by authorities for alleged violations of reporting requirements.