New Israeli Parties Face Financial Hurdles Beyond Election Threshold

New and smaller political parties in Israel face significant financial challenges beyond the electoral threshold, requiring them to raise millions of shekels in guarantees to fund effective campaigns. While established parties receive substantial state funding, new parties must secure these guarantees, which are crucial for obtaining loans and advances from the state. If a party fails to cross the 3.25% electoral threshold, these guarantees can be forfeited to cover budget deficits.

This financial hurdle is particularly critical for candidates like Yaron Zelekha, Yoaz Hendel, and Ofer Winter. The key is not just crossing the 3.25% threshold, but also reaching the 1% mark, which entitles a party to one funding unit worth approximately 1.83 million shekels. For parties that have raised millions, this fraction of a percent can mean the difference between covering expenses and having to forfeit guarantees to repay debts. A party receiving less than 50,000 votes could be left with a substantial financial burden.

Dr. Assaf Shapira, Director of the Program for Political Reforms at the Israel Democracy Institute, explained that this system is intended to encourage serious parties with a chance of crossing the threshold, but who are uncertain, to run without fear of financial barriers. However, parties failing to reach even 1% receive no funding at all. Zelekha's party, for instance, received about 0.8% of the votes in 2021 and received no funding.

Financial data reveals the scale of economic exposure. Yoaz Hendel and Yaron Zelekha, running together, provided significant financial backing: Hendel raised 3.5 million shekels in guarantees and about 256,000 shekels in donations, while Zelekha raised 3.2 million shekels in guarantees and about 398,000 shekels in donations. Ofer Winter, chairman of the 'Amkha' party, took a larger financial risk, raising 8.4 million shekels in guarantees, taking out loans of about 7 million shekels, and receiving only 42,000 shekels in donations.

The difference in these financial models is critical for the post-election period. For a new party that receives an advance and fails to be elected or qualify for funding, the guarantees can be forfeited, a scenario reminiscent of the financial collapse of Eli Yishai's 'Yahad' party in 2015. Shapira noted that typically, guarantees are given to parties expected to cross the threshold and repay advances with public funding. However, parties with marginal chances pose a real, conscious risk to those providing guarantees.

For parties from the outgoing Knesset that receive advances without guarantees, if they do not cross the threshold or withdraw, there is no one to forfeit funds from. If such a party must repay funds already spent on a campaign, the Knesset is exposed to potential bad debt. The withdrawal of the Blue and White party chairman, who announced his party would not run for the Knesset despite receiving millions in advances, raises questions about the repayment of these funds in the absence of guarantees.

New parties like Gadi Eisenkot's 'Yashar' are less concerned about crossing the electoral threshold, with polls predicting around 20 seats. Eisenkot raised over 5 million shekels in the past week alone, bringing 'Yashar's' total guarantees to over 33.2 million shekels, along with about 2.3 million shekels in donations. These guarantees are backed by prominent figures in the Israeli economy and venture capital community, including Marius Nacht and Israel Rozman. Naftali Bennett's party has also raised about 30 million shekels in guarantees from business and high-tech leaders. For parties like Bennett's and Eisenkot's, these guarantees are a tool to gain initial leverage against established parties, rather than an existential financial gamble as they are for Zelekha or Winter.