Can a North Carolina corporation legally spend money to take a public position for or against a question on the ballot, like a bond referendum or a school referendum, when the state's election statutes broadly prohibit corporate expenditures 'for any political purpose whatsoever'?

Plain-English summary

Representative Ben Tison of Charlotte asked the AG whether a corporation could legally spend money to support or oppose a question on a North Carolina ballot. The question was triggered by an apparent conflict between (a) the broad statutory prohibitions on corporate political expenditures in G.S. 163-269, G.S. 163-270, and G.S. 163-278.19 (each of which barred contributions or expenditures "in aid of or on behalf of any candidate, campaign committee, political committee or for any political purpose whatsoever") and (b) the First Amendment as recently construed by the U.S. Supreme Court.

The 1978 AG concluded that the corporation could spend, and superseded a contrary prior opinion.

The opinion is built around the U.S. Supreme Court's decision in First National Bank of Boston v. Bellotti, decided April 26, 1978. The AG describes the case this way: the Court struck down a portion of a Massachusetts statute that had prohibited specified business corporations from making contributions or expenditures "for the purpose . . . of influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any of the property, business or assets of the corporation." The Court held that expression of views on an issue of public importance lies at the heart of the First Amendment, and that a corporation's interest in speaking on referendum questions is protected by that Amendment.

North Carolina's statute is not identical in language to the Massachusetts statute, but it contains comparably broad words: "or for any political purpose whatsoever." The AG had previously read those words (in a July 20, 1977 opinion to the State Board of Elections) to bar corporate spending on referendum questions. After Bellotti, the AG reversed that reading. The 1978 opinion states the new reading: the words "or for any political purpose whatsoever" in G.S. 163-269, 270, and 278.19 should not be construed to prohibit corporate expenditures on referendum issues.

The constitutional rationale, quoted in the opinion, comes from Thornhill v. Alabama, 310 U.S. 88, 101-102 (1944): "The freedom of speech and of the press guaranteed by the Constitution embraces at the least the liberty to discuss publicly and truthfully all matters of public concern without previous restraint or fear of subsequent punishment. . . . Freedom of discussion, if it would fulfill its historic function in this nation, must embrace all issues about which information is needed or appropriate to enable the members of society to cope with the exigencies of their period." Although the AG attributes this language to the U.S. Supreme Court, the Thornhill citation places it in the same authoritative line.

The opinion explicitly supersedes the prior July 20, 1977 opinion to the State Board of Elections "as to that portion thereof dealing with corporate contributions or expenditures on referendum issues." The new reading governs going forward.

Currency note

This opinion was issued in 1978. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. North Carolina's campaign finance statutes have been substantially restructured since 1978 and are now codified largely in Chapter 163, Article 22A. The U.S. Supreme Court's Citizens United v. FEC decision in 2010 further broadened corporate political speech protections beyond Bellotti and now extends to candidate elections as well as referendum questions. Anyone evaluating a current corporate political spending question should consult current Article 22A, current State Board of Elections rules, and post-Citizens United doctrine.

Historical context: what the AG concluded

The opinion sits at a doctrinal hinge point in 1978. Bellotti had been decided only weeks before, and state AGs and state election authorities across the country were re-reading their corporate-spending prohibitions against the new First Amendment ruling. North Carolina's 1977 opinion to the State Board of Elections had read the state statute one way; Bellotti made the relevant constitutional landscape clear in the opposite direction.

The AG's reasoning has three parts.

First, the AG concedes that the bare statutory text ("or for any political purpose whatsoever") could be read to encompass referendum expenditures. The 1977 prior opinion had so read it. The text is broad.

Second, the AG identifies the Bellotti holding as constitutionally controlling. The Supreme Court in Bellotti held that the corporation's interest in expressing views on a referendum question is protected First Amendment activity, regardless of the corporation's profile or relationship to the question. A state statute that broadly prohibits such expression abridges the First Amendment.

Third, the AG performs constitutional avoidance. Rather than holding that the North Carolina statute is unconstitutional, the AG construes the "or for any political purpose whatsoever" language not to reach referendum expenditures. Construing the statute narrowly avoids the constitutional problem and preserves the rest of the statute's force (its application to candidate races and political committees).

The opinion does not foreclose all regulation of corporate referendum spending. It speaks to expenditures expressing the corporation's own views. Coordinated contributions to political committees that themselves campaign on referendum issues, and the disclosure or reporting requirements that attach to such spending, are not addressed in this short opinion. The AG's holding is narrow: the prohibition does not bar a corporation from speaking directly on a referendum.

For corporate counsel and election authorities in 1978, the practical change was significant. A corporation could now publicly campaign for or against a bond issue, a referendum on a statewide constitutional amendment, a local school facilities question, or any other ballot proposition, by spending corporate funds on advertising or other speech, without violating G.S. 163-269, 270, or 278.19. The supersession was express; counsel could rely on the new reading.

Common questions

Can a North Carolina corporation legally take out a newspaper ad endorsing or opposing a referendum question?

Yes, under the 1978 AG reading. The First Amendment, as explained in Bellotti, protects the corporation's expression of views on referendum questions, and the North Carolina prohibition on corporate "political purpose" expenditures does not reach those expenditures.

Does the rule also let corporations contribute to candidates?

No. The 1978 opinion is limited to expenditures on referendum issues. The corporate prohibition on contributions to or expenditures for candidates, campaign committees, and political committees remains in force under G.S. 163-269, 270, and 278.19 as the AG read them in 1978. (Later developments, including Citizens United in 2010, have shifted the federal constitutional ground further, but those are not part of this 1978 opinion.)

What case is the opinion built on?

First National Bank of Boston v. Bellotti, decided by the U.S. Supreme Court on April 26, 1978. Bellotti struck down a Massachusetts statute that had prohibited specified business corporations from making expenditures to influence votes on referendum questions other than questions materially affecting the corporation's property, business, or assets.

Did the AG say the North Carolina statute is unconstitutional?

No. The AG construed the statute narrowly to avoid the constitutional problem, rather than holding it unconstitutional. Under the AG's reading, the words "or for any political purpose whatsoever" do not apply to corporate expenditures on referendum issues.

Does this affect the AG's earlier opinion on corporate political spending?

Yes. The AG expressly superseded the prior opinion to the State Board of Elections dated July 20, 1977, "as to that portion thereof dealing with corporate contributions or expenditures on referendum issues." The 1977 reading remains for any other parts of the opinion not affected.

Background and statutory framework

The opinion engages a state statutory cluster and a federal constitutional decision.

The state statutes. G.S. 163-269, G.S. 163-270, and G.S. 163-278.19 each contained prohibitions on corporate (and similar entity) contributions or expenditures "in aid of or on behalf of any candidate, campaign committee, political committee or for any political purpose whatsoever." The final phrase, "or for any political purpose whatsoever," is the operative language at issue: read broadly, it could be understood to bar all corporate political spending, including referendum spending; read narrowly (consistent with Bellotti), it can be cabined to candidate and political-committee activity.

The federal precedent. First National Bank of Boston v. Bellotti held that a Massachusetts statute prohibiting specified business corporations from making contributions or expenditures to influence votes on referendum questions (other than questions materially affecting the corporation's business) violated the First Amendment. The opinion was decided April 26, 1978; the AG's North Carolina opinion came less than three weeks later, on May 11, 1978.

The doctrinal anchor. Thornhill v. Alabama, 310 U.S. 88 (1944), supplied the broad First Amendment language ("liberty to discuss publicly and truthfully all matters of public concern") the AG quoted for the rationale.

The prior opinion. The AG's July 20, 1977 opinion to the State Board of Elections had taken the broader reading of G.S. 163-269, 270, and 278.19, treating "for any political purpose whatsoever" as covering referendum expenditures. That reading was expressly superseded as to referendum expenditures by the 1978 opinion.

Citations

• G.S. 163-269
• G.S. 163-270
• G.S. 163-278.19
• First National Bank of Boston v. Bellotti (decided April 26, 1978)
• Thornhill v. Alabama, 310 U.S. 88, 101-102 (1944)
• Prior AG opinion to State Board of Elections dated July 20, 1977 (superseded as to corporate referendum expenditures)

Source

• Landing page: https://ncdoj.gov/opinions/elections-expenditures-in-support-of-or-in-opposition-to-referendum-issue-by-corporations/

Original opinion text

Requested By: Rep. Ben Tison Post Office Box 120 Charlotte, N.C. 28201

Question: May a corporation make expenditures to express its voices in support of or in opposition to referendum issues?

Conclusion: Yes. The First Amendment of the U.S. Constitution protects the right of a corporation to express its views on public issues submitted by referendum to the voters.

G.S. 163-269, G.S. 163-270 and G.S. 163-278.19 prohibit corporations, insurance companies and other business entities from making contributions or expenditures in aid of or on behalf of any candidate, campaign committee, political committee or for any political purpose whatsoever. (Emphasis added.)

In a prior opinion of this Office, the view was expressed that a corporation could not expend funds in support or opposition of issues submitted to a referendum in light of the above statutes and opinions of courts in other jurisdictions which construed statutes containing the words "or for any political purpose whatsoever."

The Supreme Court of the United States, in the case of First National Bank of Boston et al v. Bellatti, decided April 26, 1978, held that the expression of views on an issue of public importance is at the heart of the First Amendment and struck down that portion of a Massachusetts statute which prohibited specified business corporations from making contributions or expenditures "for the purpose . . . of influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any of the property, business or assets of the corporation."

Although North Carolina does not have a statute similar in language to the Massachusetts statute, it is the view of this Office that the words "or for any political purpose whatsoever" appearing in G.S. 163-269, 270 and 278.19 should not be construed as prohibiting a corporation from making contributions or expenditures for the purpose of influencing or affecting the vote on issues submitted to the voters by expression of corporate views.

The Supreme Court states: "The freedom of speech and of the press guaranteed by the Constitution embraces at the least the liberty to discuss publicly and truthfully all matters of public concern without previous restraint or fear of subsequent punishment. . . . Freedom of discussion, if it would fulfill its historic function in this nation, must embrace all issues about which information is needed or appropriate to enable the members of society to cope with the exigencies of their period." Thornhill v. Alabama, 310 US 88, 101-102 (1944).

The Court further stated that the question before it was whether the statute abridges expression that the First Amendment was meant to protect and held that it did. Thus, the fact that the corporation wanted to expend funds to express its views on a public issue submitted to the voters, did not remove such expression from the protection of the First Amendment.

We conclude that a corporation may expend its funds to express its views on referendum issues which are submitted to the voters and that such right of expression is protected by the First Amendment to the United States Constitution.

The prior opinion of this Office to the State Board of Elections, dated July 20, 1977 giving a different interpretation to the North Carolina statutes referred to herein, is superseded as to that portion thereof dealing with corporate contributions or expenditures on referendum issues.

Rufus L. Edmisten
Attorney General

James F. Bullock
Senior Deputy Attorney General