Montana had a ban on corporate contributions to ballot issue campaigns until 1976, when it was thrown out by the courts. In 1996, however, Montana voters approved Initiative I-125, reinstating the ban, with 52% of the vote.
Corporations are routinely banned from contributing directly to campaigns for state office (For instance, Alaska, Arizona, Colorado and 15 other states, as well as the federal government, ban direct corporate contributions), but I-125 was the only law to ban corporate contributions to ballot initiatives.
In1998, however, the ban was struck down as unconstitutional by a federal court. Appeals to the 9th Circuit and then the Supreme Court failed to win reinstatement of the law.
The courts concluded that the law violated corporations’ "right" to free speech. They cited a 1978 Supreme Court case, First National Bank of Boston v. Bellotti, which overturned a Massachusetts law outlawing all corporate contributions to ballot initiatives.
The authors of Montana’s I-125 had hoped to distinguish their law from the Massachusetts law by allowing corporate political action committees(PACs) to make contributions to ballot campaigns. PACs collect voluntary donations from corporate officers, employees, shareholders, and members, all of whom presumably share the PAC’s political views. What Montana outlawed was direct spending from a corporation’s general funds.
But the courts did not concur that this was a legitimate distinction and overturned Initiative 125.
Montana Statutes that were overturned
13-35-227. Prohibited contributions from corporations.
(1)(a) Except as provided in subsection (4), a corporation may not make a contribution or an expenditure in connection with a candidate, a ballot issue, or a political committee that supports or opposes a candidate, a ballot issue, or a political party. (b) For purposes of this section,"corporation" refers to for-profit and nonprofit corporations.
(2) A person, candidate, or political committee may not accept or receive a corporate contribution described in subsection (1).
(3)This section does not prohibit the establishment or administration of a separate, segregated fund to be used for making political contributions or expenditures if the fund consists only of voluntary contributions solicited from an individual who is a shareholder, employee, or member of the corporation.
(4) The provisions of subsection (1) prohibiting corporate contributions to or expenditures in connection with a ballot issue do not apply to a nonprofit corporation formed for the purpose, among others, of promoting political ideas and that:
(a) does not engage in business activities;
(b) has no shareholders or other affiliated persons who have a private claim on the corporation’s assets or earnings;
(c) does not accept foreign or domestic for-profit corporations as members; and
(d) does not accept in the aggregate more than 5% annually of its total revenue from foreign or domestic for-profit corporations.
(5) A person who violates this section is subject to the civil penalty provisions of 13-37-128.