If supporters succeed, voters would get to decide in the fall whether to make significant changes to how District politicians raise money.
“I’m not saying this is the magic bullet and is going to make everything open and transparent, but when you have a group giving contributions, they are going to have to give it through their own name,” said Bryan Weaver, a Ward 1 activist who is heading the referendum effort.
Critics counter that a ban on corporation donations — similar to laws in 21 states and in federal elections — will make the funding of D.C. elections less transparent.
“Anytime you try to limit donations, it just pushes campaign contributions more and more toward super PACs,” said council member Jack Evans (D-Ward 2), referring to largely unregulated political action committees. “We don’t have those in the District right now, but if you end corporate donations . . . you end up with more independent expenditures and they turn into a disaster at the national level.”
In weighing the legality of the proposed referendum, Nathan reviewed recent federal court decisions on whether campaign money is protected as free speech.
In response to a question from the Board of Elections and Ethics, Nathan said the Fair Elections to Restore Public Trust initiative would not conflict with the 2010 Citizens United v. Federal Election Commission Supreme Court ruling that personal political contributions are largely free speech.
Nathan said the ballot initiative meets constitutional muster because federal appellate courts have maintained that corporate contributions can continue to be restricted. Nathan cited the 2003 Federal Election Commission v. Beaumont case.
“The court held that contribution limits, up to and including complete bans on direct corporate contributions, are constitutional if they are ‘closely drawn’ to match a ‘sufficiently important interest,’ ” Nathan wrote to Kenneth McGhie, general counsel for the elections board.
“Following Citizens United,” Nathan added, “at least two federal appellate courts have evaluated and rejected the argument that Citizens United implicitly overruled Beaumont and sustained bans on corporations and other business entities contributing to candidates.”
Frustrated by corporations’ ability to funnel multiple donations to candidates through limited liability corporations, Weaver and Ward 7 Advisory Neighborhood Commission member Sylvia Brown proposed the initiative last month.
They formed the Committee to Restore Public Trust, which has the support of D.C. Council member Tommy Wells (D-Ward 6). Mayor Vincent C. Gray (D) recently said he was undecided on the referendum.
The District allows business entities to donate directly to political accounts — including campaigns, transitions, constituent services and legal-defense funds — subject to the same contribution limits that apply to individuals.
The referendum seeks a ban on direct political donations from corporations, companies and limited liability partnerships. But companies would still be allowed to make contributions through trade associations and PACs.
In their filings with the elections board, which has final say on whether a referendum can be held, supporters said a ban on corporate giving would align the District with federal law while guarding against “pay to play.”
Before supporters can pick up petitions, the elections board will hold a hearing on the matter Monday. If it approves having a referendum, supporters would have 180 days to collect valid signatures from 5 percent of registered voters, including 5 percent from at least five wards.
So far, there appears to be limited formal opposition to the proposal, although a spokesman for the D.C. Chamber of Commerce signaled that the organization could have more to say if supporters get the required signatures.
Opponents could argue that the measure is unfair because it does not seek to ban contributions from labor unions.
Evans noted that the council has overturned previous voter-imposed referendums because of unintended consequences.
In 1992, voters set a $100 individual contribution limit for candidates for mayor, council chairman and council at-large seats and $50 for ward council candidates. But the council raised the limits in 1996, citing difficulty in raising money and free-speech concerns.