Federal independent MPs have been in discussions about forming a political party. The irony won’t be lost on some in the Liberal Party, who have long argued the Teal independents already look and act like one. Many independents already coordinate on policy, vote in similar patterns, and draw on shared fundraising vehicles such as Climate 200. But the independents’ reasons for considering a party may have less to do with political strategy and more to do with money. Read more: View from The Hill: would a ‘party of independents’ be a contradiction in terms? Federal member for Warringah Zali Steggall said this week that Australia’s federal donation laws “favour major party structures” and amount to “major parties trying to rig the game for their benefit”. Other crossbenchers, including Senator David Pocock, have signalled openness to the idea, even if several others have already ruled it out.Much of the debate has centred on whether forming a party would betray the independent brand. In a study published in the Australian Journal of Political Science, we examined funding returns spanning multiple electoral cycles for minor parties, independents, and the major parties. Our findings suggest that Steggall’s complaint reflects something deeper than just the recent donation reforms. The financial disadvantages facing independents are enduring structural features of the political finance regime. Financial barriers for independentsConsider public funding. After each federal election, the Australian Electoral Commission distributes money to parties and candidates based on the number of votes they receive. This seems relatively neutral, but it has an inbuilt asymmetry.Parties run candidates across multiple seats and can accumulate votes nationally. Independents contest a single electorate. Even an independent who wins comfortably accumulates a far smaller absolute vote total than a party contesting dozens of seats (successfully or otherwise).Our research found that public funding makes up a smaller share of independents’ total income than it does for parties. For minor parties, public funding is their single largest funding source.Corporate donations tell a similar story. Corporate donors often give strategically, directing money toward actors who can offer policy access and influence. Major parties, as parties of government, are the obvious destination.Independents, who can offer just a single vote – and for those in the House, a single vote in a chamber dominated by government – attract little from corporate donors. Even minor parties with balance-of-power positions in the Senate do marginally better.The result is that independents are overwhelmingly dependent on individual donations – and mostly on a small scale. In many ways, this funding model is genuinely democratic. But it does leave independents with a narrow funding base, and few alternatives when donations fluctuate.The volatility problemThe fluctuation in funds for independents can be severe. We measured how much political parties and independents received in donations from year to year, and found independents tend to experience significantly more volatility than parties. One independent in our study showed year-on-year fluctuation more than four times higher than any other electoral actor in our sample.The explanation is organisational. Parties maintain permanent infrastructure that enables continuous fundraising: membership databases, regular donor programs, associated entities, dedicated staff. Independents typically lack most, if not all, of these advantages. Their fundraising surges before elections and collapses afterwards, creating a cycle of boom and bust.Some minor parties, notably the Greens, have built funding operations nearly as sophisticated as the major parties. The gap between an established minor party and a major party is one of scale. Conversely, the gap between an independent and a party of any size is one of structure.Recent reforms amplify these issuesThese structural disadvantages have long existed. But the Electoral Legislation Amendment (Electoral Reform) Act 2025, due to take effect in January 2027, is set to amplify them.Under the new rules, a single donor can give up to $50,000 a year to an independent candidate. But the same donor could give $50,000 to each branch of a major party, meaning up to $450,000 to the major parties across their state and federal divisions. National spending is capped at $90 million for parties, but $800,000 per electorate for independents. And while parties can move money from safe seats to flood marginal electorates with general advertising, independents have no equivalent mechanism. Public funding has also increased from $3.50 to $5 per vote, a change that disproportionately benefits parties with large national vote totals.Former independent federal MPs, Zoe Daniel and Rex Patrick have launched a High Court challenge to these provisions. Whatever the outcome, the reforms illustrate the broader pattern our research identifies: a regulatory framework built around party structures that treats independents as an afterthought. The independents’ dilemmaThe financial logic of forming a party is clear. A party structure would give current independents access to higher donation caps, national spending allowances, shared fundraising infrastructure (including associated entities), and the organisational capacity to cultivate donors between elections.It would pool electoral support across multiple seats, increasing public funding returns. It could create the kind of permanent organisation that smoothes revenue and reduces the precariousness that currently defines independent finances.But a significant part of what makes independents attractive to voters (and smaller donors) is precisely that they are not a party. The community and Teal independent movements have mobilised support around local identity, independence from partisan discipline, and a rejection of major party culture. Climate 200 emerged specifically to support independents without party structures. Would a “party of independents” retain any of that appeal? The split among independents this week suggests there is no immediate answer.Josh Holloway receives funding from the Australian Research Council. Emily Foley receives funding from the Australian Research Council Discovery for her work on Hiding in Plain Sight: 'Associated Entities' and Australian Democracy.Rob Manwaring receives funding from the Australian Research Council - Discovery project on political parties and associated entitiesNarelle Miragliotta does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.