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State policy experiments restricting out-of-state giving to candidates and causes have taken different forms throughout recent history. Some have limited the amount or percentage of contributions that candidates and committees may accept from out-of-state donors. Others have forbidden out-of-state contributions to ballot measure committees entirely. The common thread? All are unconstitutional. Any policy imposing direct limits on – or outright banning – out-of-state contributions will ultimately prohibit some Americans from engaging in First Amendment-protected activity. For individuals barred from giving any amount to a candidate or cause, the outcome is the same whether due to a percentage-based restriction or a total ban on out-of-state donors.

Critically, the negative impacts of such restrictions are not limited to would-be donors living outside a state. Many state-based organizations will lose access to critical fundraising networks, and many national organizations will be prohibited or hindered from engaging in a state. The end result is less speech and less information for voters.

Legislation that discriminates against out-of-state voices and impedes in-state speech harms citizens’ ability to meaningfully participate in policy debates and elections. While the short-term political goals often motivating out-of-state fundraising restrictions are dubious, successful litigation challenging such restrictions is certain.

3 KEY CONSEQUENCES OF RESTRICTING OUT-OF-STATE GIVING

Harms Nonprofit Civic Engagement and Associational Freedom. Many state-based nonprofits active in policy debates are affiliated with and/or funded in part by national organizations that receive donations from members and supporters across the country. In an environment with out-of-state funding limits, both the national organization and the state chapter are likely to be prohibited from engaging in regulated communications about policy issues central to their missions. For example, an in-state organization may be unable to inform like-minded citizens in the state of candidates’ relevant voting records or may be prevented from speaking to voters about the impacts of ballot measures simply because the group received “too much” funding from its national affiliate.

Denies the Right to Hear From and Speak to Americans in Other States. Many state issues have regional or national implications, and voters may wish to hear from non-state residents or businesses affected by a state’s policy choices. Voters may also wish to hear from national organizations with expertise in specific policy areas. Before seeking to silence out-of-state voices, lawmakers should consider their constituents’ right to hear those viewpoints. Likewise, those out-of-state residents and businesses may have a vested interest in the outcome of state political debates. Land use and taxation, energy policy and environmental regulations, and criminal justice and immigration are all examples of policies that have tangible impacts beyond a single state’s borders.

Unconstitutionally Bans Political Expression. The First Amendment to the U.S. Constitution generally forbids laws that prohibit a particular class of citizens from engaging in political expression. State-level proposals to ban or restrict political contributions by Americans living outside the state are no exception. Though non-discriminatory and sufficiently high contribution limits have survived constitutional scrutiny, any limit on Americans’ political contributions must be for the purpose of preventing quid pro quo corruption or its appearance. As courts have emphasized repeatedly, limits applied exclusively to out-of-state donations have no relation to anti-corruption interests. Additionally, while restrictions on foreign nationals engaging in political activity in connection with U.S. elections (whether federal, state, or local) have been upheld as constitutional, the same is NOT true for limits on out-of-state persons. The chart that follows highlights five state and local laws aiming to restrict out-of-state political and cause-based giving that were emphatically ruled unconstitutional.

STATE/LOCAL LAWS RESTRICTING OUT-OF-STATE GIVING RULED UNCONSTITUTIONAL