Party funding in Israel covers all funds which are raised and spent to influence political competition between Israeli parties, especially the campaigns for national (Knesset) and municipal elections as well as the routine operation of party organizations. Ever since the Yishuv. the pre-state formation of Jewish life in Eretz Israel, political parties have been the foremost organizations of the polity.
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Spending on politics
Although it is widely believed that Israel is "the most expensive democracy per voter in the world" authors rarely provide summaries of the overall expenses for party competition. In 1960 Alexander Heard mentioned more than US-$5.00 per voter. Arnold Heidenheiomer (1963) allocated an index value of 20.50 (both the highest values in their sample). In 1984 Howard Penniman reported US-$4.34 per citizen (much lower than Venezuela's US-$20.35). Based on data for the 1990s a German study ranked Israel together with Austria, Italy and Japan among the top spenders on party politics.
For the period between 1973 and 1992, Mendilow assumes a relative decline of ongoing expenses as compared to the escalation of campaign spending. Between 1973 and 1984, current operations of parties amounted to US-$2.8 and US-$7.0 million. If the legal spending limit was equal to actual campaign spending, US-$26 million per year were needed for current operations in 1989.
Both in election and non-elections years, parties incur different kinds of expenditure. During non-election periods, most party funds are spent on salaries for paid party workers and expenses for permanent offices. Over time, the outlay for public meetings in Israel has declined, whereas the importance of advertising and media has grown considerably. However, on election day, Israeli parties continue to spend on taxis to bring voters to the polls and to pay for party workers' food and time. "Such expenses can amount to between 25 and 33 per cent of campaign expenses."
Regulation of money in politics
Public law stipulates a variety of rules for the flow of money in politics. Israeli laws restrict both donations and expenses. Most of the rules concern political parties. However, as candidates run their own campaigns in party primaries, these under surveillance for 30 days, too. For candidates in primaries donations by foreign individuals are permitted. Applicable are the Political Parties (Financing) Law, 5733-1973, and the Parties Law, 5752-1992.