Foreign Money Exploits Loophole in State Ballot Initiative Funding
A gap in federal election law lets foreign billionaires and NGOs spend on state ballot measures, and half the states have not yet closed it.
Under current federal law, foreign nationals cannot donate to political candidates, yet the same restriction does not automatically apply to state ballot initiatives and referenda. This loophole enables wealthy foreigners, exemplified by Swiss billionaire Hansjörg Wyss, to channel vast sums through domestic nonprofits that then spend on issues ranging from abortion to redistricting in many states. Although 25 states have adopted full or partial prohibitions on foreign-sourced funding, the remaining half retain openings that can be exploited, and the Federal Election Commission has declared the matter outside its jurisdiction.
Recent legislative action includes the House's passage of the Stop Foreign Funds in Elections Act, which would broaden the ban to state and local ballot measures, but the measure awaits Senate consideration. States such as California and Arkansas have enacted broader bans, yet loopholes remain, for example when a foreign subsidiary's spending decisions are made by U.S. citizens. Experts argue that foreign influence in ballot measures threatens democratic control over state laws and election rules.
Why it matters
Foreign funding can shape state laws and election rules without voter oversight, affecting American democracy.
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