More than one billion dollars were spent in 2024 elections supporting or opposing state and local ballot measures. With high-profile and contentious issues expected to be on the ballot, such as congressional redistricting, AI regulation, minimum wage increases, and more, that number promises to be even larger in 2026. As state legislatures become more polarized and more focused on national political issues, ballot measures are increasingly seen as an alternative avenue for businesses, interest groups, and citizens to change state laws.
But ballot campaigns—whether initiatives, propositions, referenda, constitutional amendments, tax levies, bond issuances, or other decisions put to the voters—are among the most complex and highly-regulated types of political activity. As companies, trade associations, nonprofits, high net worth individuals, political consultants, and others face pressure to get involved in these measures, they should recognize that the regulations governing ballot measures differ meaningfully from those that apply to candidate races. While these differences can provide unique opportunities to influence the outcome of the ballot campaign, they also come with complex compliance obligations.
Covington’s bipartisan, Chambers Band 1-ranked Election and Political Law practice, backed by litigation teams across the firm and nationwide, is uniquely situated to advise ballot committees and their donors on all aspects of a ballot campaign, from introduction to qualification to election day, recounts, and other post-election disputes. In addition to helping ballot measure committees and donors navigate complicated campaign finance law issues, our team also assists with the corporate, tax, litigation, and communications issues that present themselves over the course of the campaign.
The term “ballot measure” is a shorthand for any of the ways in which specific issues or laws are put directly to voters in a state or locality. Initiatives, propositions, referenda, and “issues” provide voters the opportunity to directly pass or repeal specific pieces of legislation. The term as used here also includes constitutional amendments, as many states require votes of citizens to amend the state constitution. Ballot measures can also include direct votes on certain types of taxes such as specific-purpose levies, and on bond measures that seek approval to issue debt for purposes such as school construction.
These measures may focus on controversial political issues, such as abortion or marijuana, or on issues relevant to particular industries, such as gaming or insurance. A few recent, high-profile ballot measure efforts include:
- California Proposition 50, which passed in November 2025, authorized the state to engage in mid-Census congressional redistricting, following Texas’s decision to do so.
- Florida Amendment 3, which failed in 2024, would have legalized marijuana in the state.
- Ohio Issue 1, which passed in 2023, amended the state constitution to establish a right to abortion, contraception, fertility treatment, miscarriage care, and continuing pregnancy.
Other recent measures have proposed increases to the state minimum wage, mandated employee leave policies, and altered voting methods and mechanisms.
Qualifying a measure for the ballot is a logistically and legally fraught process. While each jurisdiction has its own specific procedures, the first steps generally involve getting the title, language, summary, supporter statements, and other information approved by the applicable government regulator, such as the Secretary of State. Supporters or opponents of measures may have an opportunity to weigh in at this stage, and unfavorable decisions may be subject to challenge in court.
Once this first set of regulatory and litigation hurdles are cleared, ballot measure proponents must follow detailed and complex rules as they collect petition signatures to qualify the measure for the ballot. Many thousands, even hundreds of thousands, of signatures may be required, a massive legal and logistical undertaking. States and localities impose strict requirements about who can collect signatures, who can sign, where those signatories must live, how relevant forms are completed, and how signatures are validated. Because flaws in this process can prevent the measure from going to voters, the petition process should be carefully watched by proponents and opponents alike.
Engaging experienced legal counsel from the start is key to protecting against, or identifying and exploiting, any weaknesses in the process.
From the outset, both proponents and opponents of measures need financial support. The rules governing the raising and spending of money by ballot measure committees and their opponents differ significantly from the campaign finance and tax rules that apply to candidate elections. As a result, counsel with both tax-exempt organization and campaign finance law expertise is needed to avoid mistakes.
From a campaign finance perspective, committees that support or oppose measures are subject to state laws that require the committees to register and file reports disclosing their incoming contributions and outgoing expenditures. In some jurisdictions, these registration and disclosure requirements kick in at the moment the qualification process starts. In others, funding remains undisclosed until the measure is set for the ballot.
One point is true nationwide—due to longstanding court decisions on the First Amendment protections provided to the ballot measure process, there generally are no contribution limits on how much money a person can give to support or oppose a measure, and it is broadly permissible for corporations, associations, and other entities to make such donations. As a result, the pool of money available in a statewide ballot measure election is generally much larger than the funds available to candidates in their races.
At some point in the process, funders on either side will be publicly disclosed and tagged as supporters or opponents of the issue. Elected officials supporting or opposing measures can put pressure on potential funders, resulting in a choice between upsetting a key champion in government or funding an issue that may not be one with which the funder wants to be associated. Further, in some jurisdictions, a contribution or expenditure on a measure may require the spender itself to register and disclose its own financial information, something many nonprofits in particular may resist.
On tax issues, too, the laws governing ballot measures differ from those governing candidate elections. Federal tax law considers spending on ballot measures to be a form of legislative lobbying, and not campaign activity, because voters are effectively acting as legislators to change laws, rather than electing individuals to office. This means that committees advocating ballot measures are often set up as social welfare organizations under Section 501(c)(4) of the Internal Revenue Code rather than Section 527 political organizations. Further, Section 501(c)(4) organizations and 501(c)(6) trade associations may spend unlimited sums on ballot measures without endangering their tax status. And while 501(c)(3) public charities cannot donate in candidate elections, they may engage in a limited amount of support for ballot measures, commensurate with their limits on engaging in lobbying. Private foundations still may not participate.
While ballot measure committees generally can raise funds from a broader universe of sources than campaign committees, ballot elections are far from the wild west. State and local laws still impose meaningful limits on participation, and it is important to consult with counsel before donating to, or otherwise supporting, a measure. Some potential restrictions are noted below.
- Foreign nationals. Federal law prohibits foreign organizations, and individuals who are not citizens or lawful permanent residents (“green card” holders), from participating in many aspects of federal, state, and local elections. How that ban applies to ballot measure contributions has long been ambiguous; a relatively recent Federal Election Commission (“FEC”) enforcement action determined that the foreign national ban generally does not apply to a donation to a ballot measure that is not linked to a candidate for office. But no court has ruled on the question and the FEC has called for legislation to extend the ban clearly to measures. Regardless, an increasing number of states have their own laws prohibiting foreign individuals, corporations, and other organizations from contributing to or otherwise spending money on ballot campaigns. In some states such as Ohio, these laws prohibit participation by even green card holders, though that law has been challenged in the courts.
- Bond issuances. Whether a local government will issue debt in the form of bonds is often subject to citizen vote in ballot measures. Special rules apply to participation in bond campaigns by individuals and companies involved in the municipal finance industry and must be carefully observed.
- Regulated industries. Many states have adopted laws prohibiting certain types of businesses, such as insurance companies and banks, from making contributions and expenditures. Whether and how these laws apply to ballot measure contributions is another risk area for such regulated persons.
- Pay-to-play rules. Federal regulations and many states place limits, prohibitions, or disclosure requirements on election spending by persons doing business with state and local governments or handling state and local government investments. These laws can restrict even ballot campaigns contributions, especially where candidates and elected officials may be involved in sponsoring the measures or soliciting funds, or appearing in the ballot committee’s advertisements. Do not assume that because the funds are not being spent in a candidate election, these laws do not apply.
Whether you are a proponent of a measure, an opponent of a measure, or just caught in the middle, Covington can help navigate these processes. Our cross-disciplinary political law, litigation, tax, and regulatory team can provide guidance through the process, and has advised numerous donors and ballot measure committees on these issues. From the inception of the idea to drafting the language and supporting materials, from bringing or defending against litigation challenging the qualification process to advising on the petitioning and ballot access phase, from advising on the rules and consequences of making contributions to defending or contesting a disputed election, our firm’s experienced regulatory lawyers and litigators can help.
If you have any questions concerning the material discussed in this client alert, please contact the following members of our Election and Political Law practice.
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