A second key type of activity undertaken by governments through the use of procedural financial policy tools relates less to the creation of new groups and networks than to the reorientation of older, already existing ones. Again, in the case of think tanks and other such actors, this can be accomplished through various forms of government contracting and procurement, notably consulting (Speers 2007). A significant target for this kind of funding, however, is interest groups.

Interest group alteration/manipulation/co-optation

Cash funds or the tax system are used in many countries to alter interest group behaviour. The aim may be simply to neutralize or co-opt a vocal opponent of government (Kash 2008), but can also be a more broad-based effort to ‘even out the playing field’ for groups which lack the kinds of resources available to other groups (such as business) to mobilize and pressure governments to adopt policies of which they approve (Furlong and Kerwin 2004; Boehmke 2005).4

Governments often use this tool to counterbalance, for example, lobbying on the part of business interests.
Lowry (1999) found that two main types of foundations exist in the USA – company sponsored and independent – and both take active roles not only in interest group creation (discussed above) but also in funding interest group activities. In the United States in 1992 for example, he uncovered 463 grants made by 37 company foundations and 125 independent foundations just to environmental groups, $32.6 million from independent foundations versus only $1.5 million from company-sponsored foundations. Again, given the favourable tax treatment foundations enjoy in the USA, this gives the US government a substantial indirect role in interest group activity as well as their creation.

In other countries, as with interest group creation, foundations are less important and governments also provide ‘sustaining’ funding after groups are created. Stanbury, for example, examined the Canadian federal public accounts for 1986–87 and found 17 federal departments gave $185 million to over 500 groups (excluding non-policy groups like shelters for battered women).5 One hundred and sixty of these groups were defined only as ‘public interest groups’ (or classical pressure groups) and received $24 million from federal departments alone that year. Burt (1990) similarly surveyed the sources of funding received by 144 women’s groups (24 per cent of the estimated 686 such groups in Canada at the time) in the early 1980s and found the government was the single largest donor by far for most types of groups, far outstripping membership dues (see Table 7.2).

In Europe Mahoney and Beckstrand (2009) identified 1,164 civil society groups that received funding from the European Commission in 2003–7. They shared in 120 million euros of funding at the EU level and another 75 million in international, national and sub-national-level funding. These were primarily groups operating at the EU level in areas such as youth, sports, education and cultural activities in support of the EC mandate to develop a supra-national EU civil society.

This funding is almost invisible, can be precisely targeted, and although often considered intrusive in legal and market governance modes, is quite compatible with network and corporatist activities. As a result it is a growing area and a prominent feature of many contemporary policy designs.


The use of financial resources is one of the oldest forms of government activity and instrument use. The use of substantive financial instruments is quite common in designs and in terms of size and impact, it is as significant as direct government service delivery or regulation.

The use of this resource, as Hood (1983; 1986) noted, is sometimes restricted by a lack of treasure resources, either because a country is poor and simply cannot generate revenue or, as has happened in jurisdictions like California, for example, because of various measures which prevent or limit government access to substantial taxpayer wealth. However, notwithstanding these limitations, in general all governments spend considerable sums encouraging certain activities and discouraging others through the use of various kinds of fiscal and monetary tools and techniques. An important trend in this area, noted by Howard (1993; 1995; 1997), is towards the increased use of tax-based incentives rather than subsidies. This is due to a number of reasons but often reflects concerns with visibility and automaticity.

As for procedural financial tool uses, as mentioned above, the use of these techniques in sectors employing corporatist and network modes of governance is also increasing at a substantial rate, although the exact mechanisms used vary from country to country, such as the use of indirect foundations in the USA, compared to more direct government allocations in many other jurisdictions.