Foreign billionaires and well-funded nongovernmental organizations can use a gap in federal election law to pour money into state ballot-measure campaigns. Half the states have yet to ban the practice, and some of those that have acted still leave openings for foreign-linked spending.
Federal law flatly bars foreign nationals from contributing to political candidates. State ballot initiatives and referenda, however, are treated differently under the Federal Election Campaign Act. Unless state law says otherwise, foreign nationals can spend to influence those measures. Because ballot campaigns can rewrite state constitutions, alter election rules, redraw districts, and affect turnout in candidate races, that distinction is no small matter.
No foreign government, foreign national, or foreign interest should have a hand in deciding the laws Americans live under.
One of the best-known examples involves Swiss billionaire Hansjörg Wyss. Americans for Public Trust has documented hundreds of millions of dollars in Wyss giving to U.S. political nonprofits. The Honest Elections Project notes that the left-wing Sixteen Thirty Fund alone received $243 million from Wyss and spent more than $130 million on ballot issues in 25 states.
Those figures deserve one qualification. Nonprofit funds are commingled, so they do not prove that Wyss’ dollars paid for any particular ballot campaign. But money is fungible. The fact remains that current federal law permits an organization that receives enormous sums from a foreign national to spend heavily on domestic ballot measures.
Through that ballot-measure gap, the Honest Elections Project argues, foreign nationals can influence issues ranging from abortion and energy policy to redistricting and election law, while partisan groups can use ballot campaigns to help drive turnout in candidate races.
The legal history is clear. In Bluman v. FEC, a three-judge federal court upheld the federal ban on foreign nationals’ spending in candidate elections, and the Supreme Court summarily affirmed in 2012. But the district court also noted that the law does not bar foreign nationals from issue advocacy, including spending on ballot initiatives.
In a 2015 enforcement matter, FEC commissioners who voted to dismiss a complaint relied on that distinction. They wrote that the act “does not bar foreign nationals from issue advocacy” and that state and local ballot initiatives do not constitute an “election” under the 1971 Federal Election Campaign Act.
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The FEC is unlikely to solve the problem on its own. The commission’s website notes that election laws outside the financing of federal elections are generally beyond its jurisdiction. In the 2015 matter, the commissioners were even more explicit: “The Commission has no authority to otherwise interpose itself as arbiter of who can participate in state and local ballot initiatives.”
A later FEC case reinforced the same approach. In 2021, the commission voted 4-2 to dismiss allegations involving foreign-national donations to a Montana ballot initiative committee. That leaves Congress and the states to close the gap if they choose.
States are free, subject to constitutional limits, to restrict foreign funding of ballot initiatives and referenda. Twenty-five states now have full or partial bans on foreign-national or foreign-government funding of ballot-measure campaigns.
Some laws are broader than others. California law, for example, bars foreign governments, foreign principals, and foreign nationals from funding state and local ballot measures. But a domestic subsidiary of a foreign corporation is treated as a foreign principal only when the decision to spend is made by a foreign officer, director, or management employee who is neither a U.S. citizen nor a lawful permanent resident — a limitation very easy to evade.
Arkansas offers a broader model. Its law applies to persons who are not citizens or lawful permanent residents, foreign governments, foreign political parties, and entities organized under foreign law or based abroad. It also bars direct or indirect donations to ballot-measure committees and requires committees to certify that they have not knowingly accepted prohibited funds, according to Ballotpedia.
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Congress has moved as well. On July 13, the House passed the Stop Foreign Funds in Elections Act by voice vote. The bill would extend the federal foreign-national ban to state and local ballot initiatives, referenda, and recall elections. The Senate received the measure the next day and referred it to the Committee on Rules and Administration, where it remains.
“No foreign government, foreign national, or foreign interest should have a hand in deciding the laws Americans live under,” co-sponsor Rep. Brian Fitzpatrick (R-Pa.) said in a statement after House passage. Ballotpedia likewise reported the measure’s passage and its referral to the Senate.
States need not wait for Congress. Lawmakers can review their own statutes and close gaps that permit foreign nationals or foreign-controlled entities to fund ballot campaigns. Citizens and members of the press can use Ballotpedia’s state-by-state chart to see which restrictions are already in place and which proposals remain pending.
Foreign funding of referenda and ballot initiatives gives people with no vote in the matter a legal avenue to spend heavily on the laws Americans live under. States should exercise their power to curb the practice, and the public should insist that they do so.
S.T. Karnick