State funding of political foundations must be based on a separate act of Parliament

Press Release No. 22/2023 of 22 February 2023

Judgment of 22 February 2023
2 BvE 3/19

In a judgment pronounced today, the Second Senate of the Federal Constitutional Court held that the German Bundestag – in adopting the 2019 Federal Budget Act (Haushaltsgesetz 2019) – violated the right to equal opportunities in political competition of the political party Alternative für Deutschland (hereinafter: the applicant) insofar as said legislation enabled general grants to be awarded to political foundations for socio-political and democratic education without this being based on a separate act of Parliament.

The Desiderius Erasmus Foundation (Desiderius-Erasmus-Stiftung) is a political foundation affiliated with the applicant and – unlike the foundations affiliated with the other parties represented in the Bundestag – is currently excluded from state funding. The Foundation’s attempts to obtain state funding for the years 2018 to 2022 were unsuccessful. The applicant regards this as a violation of its right to equal opportunities as a political party.

The failure in the 2019 federal budget to take the Desiderius Erasmus Foundation into consideration when allocating general grants for socio-political and democratic education interferes with the applicant’s right to equal opportunities in political competition under Art. 21(1) first sentence of the Basic Law (Grundgesetz – GG). In order to be justified, such interference would have to be based on a separate act of Parliament. Given that no such legislation currently exists, however, the application directed at the adoption of the 2019 Federal Budget Act is successful.

The application directed at the failure in the 2022 Federal Budget Act to take the Desiderius Erasmus Foundation into consideration when allocating general grants is separated from the rest of the proceedings. The remaining applications are inadmissible. There are no grounds for issuing an order of execution as suggested by the applicant.

Facts of the case:

With budgetary bills pursuant to Art. 110(3) of the Basic Law, it has been established political practice that the general grants awarded to political foundations are listed under Section 06 Chapter 0601 Title 685 12 of the draft budget – the section dealing with the Federal Ministry of the Interior. In the past, the amounts awarded to each foundation were informed by the previous year’s funding and were discussed by the members of the Budget Committee in separate deliberations as part of the parliamentary process. These deliberations often included informal discussions known as “foundation consultations” held at the behest of the funded political foundations. Following the parliamentary deliberations, the parliamentary groups or the Federal Government would submit motions of amendment with regard to the draft budget which, if adopted, became part of the annual Federal Budget Act.

The Federal Office of Administration then issued approval notices to release the funding to the individual foundations. 

On 6 November 1998, the five political foundations that were receiving state funding at that point issued a “Joint Declaration on the State Funding of Political Foundations”. The Rosa Luxemburg Foundation joined as a signatory in 2003. The declaration argued inter alia that in order to fulfil its constitutional obligation of neutrality, the state must give consideration to all lasting and significant political currents when granting funds to political foundations. One possible yardstick here – the declaration suggested – would be the electoral performance of the political parties affiliated with the foundations over a period of four Bundestag elections. In determining whether a given political current qualifies as “lasting”, a suitable indication would be if the party in question managed to enter the Bundestag at successive elections, gaining enough seats to form a parliamentary group on at least one occasion.

The 2022 federal budget included a note stating that general grants for socio-political and democratic education would “only be awarded to political foundations whose statutes and overall activities provide ongoing assurance of their commitment to the free democratic basic order within the meaning of the Basic Law and to the preservation thereof”.

The applicant is a political party with seats in the German Bundestag. It has been represented at different times in all the Land parliaments and is currently also represented in the European Parliament. It entered the Bundestag for the first time in 2017, gaining 12.6% of the second vote. At the next Bundestag election in 2021, it took 10.3% of the second vote. In 2018, the applicant recognised the Desiderius Erasmus Foundation as its affiliated political foundation. The applications for general grants submitted by this Foundation to the Federal Ministry of the Interior have all been unsuccessful.

Key considerations of the Senate:

A. The application under 9. d) that was subsequently filed in October 2022 is separated from the proceedings. It seeks a declaration that the German Bundestag – in adopting the 2022 Federal Budget Act – violated the rights of the applicant because the Desiderius Erasmus Foundation was not taken into consideration when general grants were allocated to political foundations. If this application were to be admitted, the procedural position of the respondents would be impermissibly impaired. Two issues – the inclusion of a note in the 2022 federal budget making eligibility for general grants contingent upon a political foundation’s loyalty to the Constitution, and the applicant’s continued presence in the Bundestag – raise constitutional questions whose factual and legal dimensions have not yet been discussed in the proceedings, or at least not sufficiently. In order to ensure that the other applications are decided upon in a timely manner, while also giving the parties to the proceedings an opportunity to properly respond to the new application, it is necessary to separate this new application from the proceedings.

B. Of the applications decided here, only the application under 9. a) is admissible. It seeks a declaration that the Bundestag – in adopting the 2019 Federal Budget Act – violated the rights of the applicant because the Desiderius Erasmus Foundation was not taken into consideration when general grants were allocated to political foundations. As to the rest, both the originally filed applications and those subsequently added to the proceedings – insofar as these even qualify as applications and are not merely suggestions – are inadmissible. Some of them do not have an admissible subject matter for a dispute between constitutional organs (Organstreit proceedings). The remaining applications concerning the adoption of the 2020 and 2021 Federal Budget Acts were not lodged within the statutory time limit.

C. The application under 9. a) is well-founded. The right of the applicant to equal opportunities in political competition under Art. 21(1) first sentence of the Basic Law was violated by the adoption of the 2019 Federal Budget Act insofar as the resulting 2019 budget enabled general grants to be awarded to political foundations for socio-political and democratic education without this being based on a separate act of Parliament governing the state funding of political foundations.

I. 1. The status enjoyed by political parties under constitutional law guarantees them the right to participate in political competition on equal terms. Not only does Art. 21(1) first sentence of the Basic Law guarantee that political parties may be freely established and participate in the formation of the political will, but also that such participation is in line with equal rights and equal opportunities.

2. In principle, this guarantee is contravened whenever state organs exert any form of positive or negative influence on individual parties taking part in political competition. It follows that whenever state funding is directly awarded to political parties, the right to equal opportunities is generally affected. However, the principle of strict formal equality does not rule out all forms of differentiation. Bodies exercising public authority are allowed to award different amounts of funding to different political parties in accordance with their relative importance, down to a minimum level that is required in principle.

3. Apart from direct funding, the competitive situation between political parties can also be affected by the allocation of state funds to entities other than political parties. However, such funding cannot automatically be assumed to affect the right of political parties to equal opportunities. Whether the allocation of state funds to other entities has an impact on the competitive situation between political parties is a question that must be separately determined in light of the circumstances of the respective case. Such an impact is most likely to occur in cases where the entity receiving the funds has particularly close ties to a political party.

4. Where state funding is capable of distorting the parameters of political competition, it amounts to interference with the right of political parties to equal opportunities. Such interference requires justification under constitutional law. Not only must the interference comply with strict substantive requirements, but – unless the state action in question is directly legitimated by the Constitution itself – it must also be based on separate and specific legislation. The necessity of such legislation arises from the general requirement, rooted in Art. 20(3) of the Basic Law, that interferences be based on a statutory provision.

This requirement is not entirely satisfied by the adoption of a Federal Budget Act whose legal effects are limited in scope to the sphere of constitutional organs involving Parliament and Government. Given that political parties play a key role in upholding the constitutional principle of democracy, and given that state funding can – either directly or indirectly – affect the position of the parties in political competition and their potential to take action, it is incumbent upon the legislator to enact a separate legislative framework specifying the eligibility conditions and distribution criteria for such funding while observing the principle of equal opportunities. The impact of state funding on the competitive situation between the political parties is a matter of fundamental importance in shaping the democratic order as envisaged by the Basic Law and needs to be addressed in separate legislation, which each year’s Federal Budget Act must then follow. This is the only way to ensure that, prior to any such legislation being introduced, a process takes place during which public opinion can be formed and articulated.

II. Measured by these standards, the failure in the 2019 federal budget to take the Desiderius Erasmus Foundation into consideration when allocating general grants for political education amounts to interference with the applicant’s right to equal opportunities in political competition under Art. 21(1) first sentence of the Basic Law. In order to be justified, such interference would have to be based on a separate act of Parliament. No such legislation currently exists, however.

1. Even if political foundations and parties are legally and organisationally independent from one another, and even if they do maintain the required degree of legal and practical separation, there is nonetheless a special closeness between a party and the political foundation affiliated with it. This stems from the party’s recognition of the foundation as an affiliated organisation, from the links and overlaps that exist between them in terms of personnel – which may exist despite the required degree of separation – and from the fundamental political values and convictions that both organisations share.

2. These particularly close ties allow political parties to benefit from the state-funded work performed by their affiliated political foundations and thereby gain a meaningful advantage in political competition. The Federal Constitutional Court already recognised this in its Foundation Judgment of 14 July 1986 (Decisions of the Federal Constitutional Court 73, 1). As the oral hearing confirmed, political parties continue to derive significant benefits from the work performed by their affiliated foundations in terms of political competition.

The experts invited to give statements at the hearing explained that, even though it is virtually impossible to identify a direct causal link between the work performed by the foundations and the competitive situation of the political parties, the activities of the foundations do nonetheless have a relevant impact on the parameters of political competition. If political foundations organise seminars and discussion events aligned with the fundamental values and convictions held by certain parties, it is obvious that this helps to disseminate the ideas of those parties and thereby affects their positioning in political competition. While the foundations are free to choose the subject matter of their education work, the way they approach the selected topics still reflects the fundamental values they share with the affiliated party. The education work performed by a political foundation is thus an important amplifier lending greater resonance to the affiliated party’s political vision.

The competitive situation between the political parties is also influenced by the fact that the foundations pass on their research findings, making it easier for the parties to fulfil their tasks and enabling them to reach conclusions in the short-term cycle of everyday politics based on knowledge of longer-term social developments. It can be assumed that the political foundations focus their research efforts on topics of particular relevance to the political work of the parties with which they are affiliated.

In addition, political parties benefit from other activities carried out by their affiliated foundations. In particular, the scholarship programmes run by the foundations provide the affiliated parties with an opportunity to recruit and foster the next generation of talented individuals.

3. In light of the above, the granting of general funds for socio-political and democratic education to political foundations affiliated with the parties represented in the German Bundestag while failing to take the Desiderius Erasmus Foundation into consideration interferes with the applicant’s right to equal opportunities under Art. 21(1) first sentence of the Basic Law.

a) In the 2019 fiscal year, the total amount of federal funding awarded to political foundations was approximately EUR 660 million. This made it by far the largest source of financial revenue for the supported foundations. The specific area of funding at issue here – general grants for socio-political and democratic education – accounted for approximately EUR 130 million of that amount.

It would be unrealistic to assume that this funding has no impact on political competition. The six foundations that receive funding can deploy these resources across the entire spectrum of their activities, enabling them to organise numerous seminars, discussions and other initiatives for disseminating information. Although the resulting impact on the formation of the political will is impossible to quantify, there is no doubt that the general grants received by the foundations have the potential to spread the fundamental convictions and political ideas of the affiliated political party to a larger target group. The grants can also help with formulating new arguments or refining existing standpoints, thereby improving the affiliated party’s position in political competition.

b) The failure to take the Desiderius Erasmus Foundation into consideration when awarding state funding for socio-political and democratic education thus amounts to interference with the applicant’s right to participate equally in the formation of the political will.

In the 2019 fiscal year, the applicant had the third largest parliamentary group in the Bundestag. It was furthermore represented in all the Land parliaments. It gained 7.1% of the vote in the 2014 European elections and 11.0% in 2019. Yet despite this, the Desiderius Erasmus Foundation was completely excluded from the state funding awarded to political foundations. This altered the competitive situation between the political parties to the detriment of the applicant.

4. a) Based on the above, any possible justification for the interference with the applicant’s right under Art. 21(1) first sentence of the Basic Law (resulting from the Desiderius Erasmus Foundation’s exclusion from state funding) is ruled out by the fact that the necessary statutory basis for such interference is lacking. The sole basis for the Desiderius Erasmus Foundation’s exclusion from state funding in the 2019 fiscal year was its non-inclusion in the list of supported foundations – a list that forms part of the explanatory notes on Section 06 Chapter 0601 Title 685 12 (“General grants for socio-political and democratic education”) in the adopted 2019 budget.

This does not satisfy the requirement that interferences be based on a statutory provision. In view of the amount of state funding involved and the fact that the activities of the foundations have a considerable impact on the formation of the political will, and thus on upholding the principle of democracy within the meaning of the Basic Law, the legislator is obliged to lay down general and abstract criteria determining which entities are entitled to receive the state funding intended for political foundations and how much the respective grants will be.

b) Counter-arguments invoking the “Joint Declaration on the State Funding of Political Foundations” of 6 November 1998, the conventions of parliamentary practice based thereon, or the “foundation consultations” previously held in the run-up to the budget’s adoption are not valid here. The declaration of 6 November 1998 is merely a statement of opinion with no binding effect beyond the actual group of participants. The parliamentary practice established by this declaration does not satisfy the requirement that interferences be based on a statutory provision. In the same vein, the informal “foundation consultations” that have been held in the past with members of the Budget Committee do not obviate the need for a special statutory framework governing the funding of party-affiliated foundations.

c) If the legislator wishes to stand by its fundamental decision of providing state funding to party-affiliated foundations, it must create a statutory framework upon which this can be based. The legislator is afforded a degree of latitude in designing such a framework. However, the constitutional requirements arising from Art. 3(1) of the Basic Law with regard to political foundations must be observed, as must the constitutional requirements arising from Art. 21(1) first sentence of the Basic Law with regard to the political parties with which they are affiliated.

aa) In designing the necessary framework, it is unobjectionable under constitutional law to require that foundations represent a “lasting and significant political current” in order to qualify for state funding, and to assess this criterion on the basis of voter turnout figures and the affiliated party’s election results, since this does not alter the existing parameters of political competition.

However, when determining the relevant type of elections and the proportion of votes that a party must achieve in order to qualify as representing a lasting and significant political current, particular importance must be attached to the right of political parties to equal opportunities under Art. 21(1) first sentence of the Basic Law. If a foundation is affiliated with a short-lived political party that has no more than temporary influence on the formation of the political will, excluding it from state funding would be unobjectionable – and perhaps even required – under constitutional law. At the same time, the legislator must ensure that the formation of the political will remains an open process as guaranteed by the Basic Law.

bb) If the legislator interferes with the equal opportunities of political parties in political competition by structuring the state funding of political foundations in a way that alters the existing competitive situation, such interference is only justifiable if it is based on statutory provisions that are suitable and necessary to protect constitutional interests of equal value. In particular, one such constitutional interest of equal value is the protection of the free democratic basic order. What this entails in terms of the specific requirements and consequences for the state funding of political foundations need not be decided here.