Behind small parties in new German government: Big money

BERLIN — The smaller parties in Germany’s incoming government have big donors to thank for helping them win power.

The pro-business Free Democrats (FDP) and the environmentalist Greens gained the most from donations of over €50,000 to German parties this year, data collated by POLITICO shows.

Such donations climbed to a record overall total of more than €12 million in 2021, raising fresh concerns about the role of wealthy individuals and corporations in politics as they sought to influence September’s election and shape the post-Merkel era.

The FDP banked more than €4.3 million from donations in this category while the Greens received some €3.4 million, just ahead of outgoing Chancellor Angela Merkel’s Christian Democrats, according to the parties’ declarations to the German parliament.

Donations above €50,000 provide an instant snapshot of how big donors are trying to shape German politics, as they have to be declared immediately and are published by parliament.

However, they don’t tell the full story of party finances as smaller donations only become public much later, in annual accounts. Additionally, parties generally receive a larger share of their income from state funding and membership contributions.

The Social Democrats of incoming Chancellor Olaf Scholz, for example, received just €175,000 from large donations. But they traditionally receive a greater share of their income from state funding and membership contributions than other major parties.

Greens drive donations

Donors to the two smaller parties in the new coalition, which takes office on Wednesday, were motivated by the prospect of Greens in government — but in very different ways. Those who wanted more ambitious climate policies donated to the Greens; those who wanted to prevent such policies bankrolled the FDP.

In February this year, Antonis Schwarz, an impact investor and philanthropist who inherited millions through the sale of his family’s pharmaceutical business, donated half a million euros to the Greens.

“This donation was one of the most important things I have done in my life,” the 33-year-old Schwarz told POLITICO.

Although the total sums involved may sound small compared to countries such as the United States, Schwarz noted that a single donor could make a big difference to a German party.

“In Germany, a wealthy individual can fund a significant portion of an election campaign budget,” he said. “I saw an opportunity here to have a particularly large impact.”

Some €8 million of the Greens’ €16 million campaign budget came from donations, according to a party spokesperson.

Schwarz said he felt the publicity around his donation also helped convince others to follow suit, such as software developer Moritz Schmidt, who donated €1 million to the Greens in April, reportedly from profits he made off bitcoin sales.

Steven Schuurman, one of the Netherlands’ richest entrepreneurs, broke all records 19 days before the election by donating €1.25 million to the Greens, citing climate change as his main motivator. “The outcome of the German federal election also affects the Dutch, the Belgians, the French or the Poles, in fact the entire world,” Schuurman told German newspaper Welt.

By contrast, Georg Kofler, an investor and former boss of TV stations ProSieben and Premiere, donated €750,000 to the FDP in April, telling Handelsblatt newspaper the party best represented business people and he wanted “to prevent the Greens being part of government.”

The FDP’s appeal to wealthy people and businesses is reflected in the fact that it received 32 separate donations of over €50,000 in 2021. The Greens’ received 11 donations in that category.

Both parties gained much more from big donations in 2021 than in the last general election year, 2017, when the FDP received around €2 million and the Greens got just €543,000.

Among the FDP’s donors in 2021 were discount department store chain Woolworth GmbH and its sister company TEDI, which each gave €100,000 to the party.

“What particularly impresses us is that the FDP wants to provide [tax] relief to people on low incomes and represents people in marginal employment like no other party,” a spokesperson for the companies said.

A spokesperson for the FDP said it was not possible to say how much of its campaign was financed by donations, as the budget was set before the party knew how much it would receive from donors.

“Our party’s income comes from diverse sources. In particular, that includes state subsidies, membership contributions and donations. Spending on the election campaign is financed from this income,” the spokesperson said.

Great expectations

Transparency campaigners say the record year for big donations should put the spotlight on what donors aim to gain, even as parties and donors strenuously deny any link between financial contributions and influence or access.

“Donations of this magnitude ­— especially when they come from the business community — are, of course, always bound to an expectation,” Timo Lange, a campaigner for German NGO Lobbycontrol said.

Even if pay-to-play is legally forbidden, “one can observe that those who hand over large donations have better chances to present their concerns, to get an appointment with the party leadership,” Lange said.

He noted big donations also raised important questions about the fairness of the election itself. “This leads to a distortion of the election campaign in favor of those who can afford it,” Lange said.

Activists and election experts say German party funding rules don’t stack up well internationally. They note that there’s no upper limit on donations, that annual reports on finances are published too late and that there’s not enough information on funding during campaigns.

“Germany has extremely lax regulations when it comes to party donations,” said Léa Briand from Abgeordnetenwatch, a German watchdog NGO that scrutinizes the work of lawmakers. “As long as companies can make donations, there will always be scandals. This is democratically extremely harmful.”

One loophole often cited by campaigners is that only donations above €50,000 have to be made public immediately, while contributions below that threshold but over €10,000 are published in annual reports over a year later.

When those lower-tier donations are reported, the public can only see the cash was given to a particular party, not which local branch, making it harder to trace any possible quid-pro-quo.

And, of course, there are simple ways to avoid having to report donations at all. Outgoing Health Minister Jens Spahn of the Christian Democrats came under fire for dining last year with entrepreneurs who had been asked to donate €9,999 — one euro below the reporting threshold — to his local party branch to help with his Bundestag re-election campaign.

The incoming government of SPD, Greens and FDP — known as the “traffic light coalition” due to the colors of the parties involved — has pledged to make some changes to party finance rules.

In their coalition agreement, they agreed to lower the threshold for big donations that need to be made public right away from €50,000 to €35,000. They also plan to lower the threshold for donations that must be published in annual reports from €10,000 to €7,500.

Transparency watchdogs have given the proposals a muted welcome, arguing that while they represent progress, the thresholds are still too high. They also note there are no plans to impose a cap on donations — despite both the SPD and Greens campaigning for years to impose a limit.

“It will be interesting to observe whether a traffic light coalition — in which two out of three parties have benefited the most from large donations — will be able to actually bring about real reforms,” said Abgeordnetenwatch’s Briand.

Dive deeper into German political funding with POLITICO‘s data tracker and explainer.