1. Sources and Forms of Financing
Germany's political foundations are very largely financed by federal and Land government funds. 99 % of the Konrad-Adenauer-Stiftung's funds come from public remittances, while 0,8 % are derived from admission charges and miscellaneous revenues. In addition, private revenues (income from funds and donations) account for another 0,2 % (status: budget of the Konrad-Adenauer-Stiftung for 2017).
Most public remittances are project-related funds. Thus, project-related remittances account for 78 % of the entire revenue of the Konrad-Adenauer-Stiftung. Specifically, the following activities are financed on a project-related basis:
- Measures to promote international cooperation;
- Scholarship programmes for German undergraduate and postgraduate students;
- Scholarship programmes for foreign students; and
- Editing important archive material.
Next to project-related funds, political foundations also receive institutional subsidies, which account for 21,7 % of the budget of the Konrad-Adenauer-Stiftung. Institutional subsidies form the basis on which the financing of political foundations rests; without them, it would be impossible to plan human resources and financial requirements with any degree of consistency. The Konrad-Adenauer-Stiftung, for instance, uses these 'global funds' to finance
- Congresses, meetings, and seminars on political education;
- Research, consultation, and documentation relating particularly to the Christian Democratic movement and the fundamental rules of political activity;
- Publications and exhibitions; and
- Payroll costs, expenditures on goods and services, and investments.
In these times of shrinking public finances, the importance of supplementary funds from private sources increases correspondingly. The Stiftung has three funds originally financed by bequests. Money from the Else Heiliger Fund is used to finance cultural events and artists within the framework laid down in her will. The yield of the Theodor and Elisa Weimar Fund is used by the Stiftung to finance support for students within the framework of its scholarship programme. Revenues from the Werner Hintzler Fund are employed in regional political education.
2. Legal Framework Conditions of Public Financing
The sums to be paid by federal ministries in annual remittances to political foundations are fixed by the Budget Committee of the German Federal Diet. When the act establishing the federal budget is passed in parliament, it includes both global subsidies and project-related funds. The total amount is distributed among foundations in conformance with a matrix in which all enduring political movements of any weight in the Federal Republic of Germany are given due consideration. Currently, the Friedrich Ebert Foundation receives 30,29 %, the Konrad-Adenauer-Stiftung receives 29,57 %, while the Friedrich Naumann Stiftung and the Heinrich Böll Stiftung receive 10,51 % each and the Hanns Seidel Stiftung 9,71 %. The Rosa Luxemburg Stiftung receives a baseline global subsidy of 9,71 % of the total estimate in the federal budget. This matrix, which is submitted by the political foundations to the Budget Committee by consent, applies to global subsidies as well as to project-related remittances, with a few exceptions applying in the latter case.
Once the Budget Act has been passed, government ministries assume responsibility for granting remittances to the political foundations. The procedure by which remittances are granted to political foundations is governed by Sect. 23 and 44 of the Federal and Land Budget Codes as well as numerous supplementary administrative regulations, the General Supplementary Provisions for Institutional Subsidisation Remittances, and the General Supplementary Provisions for Project Subsidisation Remittances. Global subsidies handled by the Federal Ministry of the Interior and the Federal Office of Administration are subject to the principles governing the management of federal subsidies for socio-political and democratic education.
There are no fundamental reservations about the constitutionality of the funding of political foundations by the government. In its judgement of July 14, 1986 (2 BVE 5/83), the Federal Constitutional Court ruled that institutional subsidies for political foundations paid under the federal budget (global subsidies) are constitutional, provided that the political foundations act in conformance with the model provided by the constitution, and that they are indeed institutions which are legally and materially independent and address themselves to their task autonomously, responsibly, and in a spirit of intellectual receptiveness. Moreover, they need to maintain a proper distance between themselves and their respective political parties in their practical work (guiding principle formulated by the Federal Constitutional Court).
Following a decision by the Federal Constitutional Court on the funding of political parties in 1992, Federal President Richard von Weizsäcker set up a commission of independent experts on party financing. In addition to this issue, the commission investigated the public financing of political foundations in some detail. In its opinion of February 17, 1993, the commission affirmed that political foundations constitute an essential element in the political culture of the Federal Republic of Germany, and that their work is useful to the polity as a whole.
Without waiting for any legal regulations regarding these matters, the political foundations implemented some of the commission's recommendations, formulating their perception of themselves and their position in society. This was done in a Joint Declaration, which is in fact a pledge that serves to inform the general public. In November 1998, this Joint Declaration was signed by the executives of the Konrad-Adenauer-Stiftung, the Friedrich Ebert Stiftung, the Friedrich Naumann Stiftung, the Hanns Seidel Stiftung, and the Heinrich Böll Stiftung.
3. Reviews and Public Accountability
There is hardly another organisation that is so intensely scrutinised by external auditing bodies as a political foundation. Reviews are carried out by remittors, the Federal Court of Audit, the Land courts of audit, the Internal Revenue Office, and chartered accountants.
Compliance with the legal regulations that govern remittances as well as the proper use of funds are monitored directly and on an ongoing basis by the remitting agencies as well as by the federal and Land courts of audit. In addition, parallel efficiency checks are carried out. Some of the remitting agencies, including particularly the Federal Ministry of the Interior and the Federal Office of Administration (global subsidies) as well as the Federal Court of Audit, have been intensifying their reviews in recent years.
Lastly, the Internal Revenue Office conducts audits to investigate whether public as well as private funds have been employed by the political foundations in conformance with the non-profit requirements laid down in the Fiscal Code. The standard used in this context is the extent to which foundations use their funds to comply with their statutory duties as outlined in the above-mentioned foundation ruling of the Federal Constitutional Court of July 14, 1986. In particular, the tax law regulation that defines the nature of a commonweal organisation prohibits political foundations from using their funds to finance other organisations that cannot or have not been recognised as non-profit organisations (e.g. political parties or party groups). Any infringement would entail the retroactive forfeiture of charity privileges which, in turn, would have far-reaching consequences with regard to taxation. The Konrad Adenauer Foundation has been recognised under tax law as working pro bono publico ever since its establishment.
Similar audits are conducted by public accountants, the question being in this case whether public funds have been used by a foundation properly and economically. This demand is laid down in the terms and conditions of the two biggest remittors, the Federal Ministry of the Interior/Federal Office of Administration and the Federal Ministry for Economic Cooperation and Development. Chartered accountants issue their own reports and certificates covering these additional reviews, which are passed on by the foundations to the remitting agencies together with a report covering the facts of the matter.
Furthermore, the foundations' statutes contain provisions requiring their annual reports to be reviewed by a chartered accountant. These reviews are identical in type and scope with those that are obligatory under commercial law but contain additional information on manpower plans and the staffing of governing bodies (Joint Declaration, Sect. 6, Sub-par. 2).
In addition to all this, the Konrad-Adenauer-Stiftung has been checking the efficiency of its development-policy projects and measures for many years, following generally-recognised procedures established in consultation with its remitting agencies.
It is the most important concern of all political foundations to inform the public regularly and comprehensively about their work, and to ensure that the way in which they use their funds is transparent to the public (Joint Declaration, ibid.). Even in the absence of any legal obligation to disclose their results, the foundations have been following the practice of publishing the purposes for which their funds were used for some years. Having been audited by a chartered accountant, their annual reports, consisting of a balance sheet and a financial statement in conformance with Sect. 264 of the Commercial Code, are regularly published together with some supplementary data in the Federal Gazette as well as in their respective directors' reports. Following the recommendations made by the expert commission, supplementary information on the number of jobs compared to the preceding year as well as on the staffing of the foundations' governing bodies is included with these publications. The Konrad-Adenauer-Stiftung's annual reports also include its economic plans for the following year in the form of a general overview.
4. Legitimation of Public Funding
Political foundations are an important element in the political culture of the Federal Republic of Germany. As their work is useful to the polity as a whole (according to the opinion of the commission), their subsidisation with government funds is in the public interest (FCC 2 BVE 5/83).
The legitimacy of the political foundations' claims becomes clearer if we draw a dividing line between their functions, the functions of the political parties, and the educational duties of the state.
a) Political foundations are private-law organisations which independently, responsibly, and in a spirit of intellectual receptiveness provide services which are in the public interest but cannot be supplied by the state. The activities of the political foundations are constitutionally legitimised by Art. 9 Par. 1 of the Basic Law with regard to their organisation as associations, and by Art. 12 Par. 1 of the Basic Law with regard to their function, which is to provide professional and sustainable education in the fields of social policy and democracy.
Art. 21 of the Basic Law, on the other hand, furnishes no constitutional legitimisation for the work of the political foundations. The political parties which the article refers to participate in forming the political will of the people, mainly through and with a view to contesting general elections. They pool interests, opinions, and ambitions that aim at attaining and exercising political power, harmonise them internally, and form them into alternatives for the citizens to choose from. They influence the will of the state by extending their reach into the system of governmental institutions and offices, particularly by influencing the decisions and activities of parliament and government (FCC 2 BVE 5/83; FCC 52, 63 – 82ff.).
There is a marked difference between the activities of the political parties, which aim to achieve and exercise political power, and those of the political foundations. Through their political-education activities, they aim to motivate citizens to concern themselves with political matters and provide a platform for the discussion of political issues that is accessible to all citizens (FCC 2 BVE 5/83).
b) While the socio-political education activities conducted by the political foundations at home and abroad are in the public interest, they are not a public function. This becomes clear if we look at the principle of subsidiarity, which is of particular importance with regard to the duty to provide education in a liberal polity:
Based on the freedom of its citizens and the plurality of societal forces, a constitutional polity depends on freedom rights being exercised to the benefit of the community. Exactly what is beneficial to the community is not defined ab initio, apart from a few ethical and constitutional rules. Rather, these issues are negotiable on the political plane, forming the object of democratic debate. Political discussions and political decisions, in turn, are predicated on information and an ethical political orientation. Freedom can be asserted responsible only by persons educated along these lines. Consequently, political education is a necessary counterpart of political freedom.
From this, we may conclude that political education is one of the constitutional mandates of a liberal state. However, its jurisdiction in this field is neither exclusive nor comprehensive. A liberal state is no educational dictatorship, and its competence in matters educational is subsidiary to that of any holders of fundamental rights that may form in a spirit of free self-determination and open communication. The state must respect the autonomy of its citizens and societal forces that is protected by the constitution. It is not allowed to marginalise private education by measures of its own (cf. FCC 44, 125 – 138ff.). Governmental institutions are not permitted to arrogate to themselves any functions that can be and are being fulfilled just as well by other holders of fundamental rights (FCC 38, 281 – 302). Thus, the remit of political education work is limited in constitutional law by the principle of subsidiarity.
This being so, the state is restricted in its educational mission to general matters, the fundamental consensus of society, the core of which is formed by the fundamental values laid down in the constitution. At the same time, it draws nourishment from the political culture whose societal and political roots lie beyond its reach. Political education work feguards the existence of any liberal and pluralist polity. Financially supporting the educational work of other holders of fundamental rights does not constitute an infringement of the state's obligation to remain neutral. The state is perfectly free to lend its financial support to any activities from which it is prohibited, and to suggest others that it never could compel by force.