Previous research has shown that institutional factors, particularly ‘direct democracy’, along with racial context, shape policy outcomes in the fifty American states. But less is understood about the impact of such factors on attitudes towards government of racial and ethnic minorities. The passage of ballot initiatives targeting minority interests might be expected to have a negative effect on these groups. This study considers the impact of institutional and social context on attitudes about government responsiveness (external efficacy), drawing on pooled NES survey data from 1988–98 merged with state level data. Consistent with previous research, which was based on a single year, there is strong evidence that citizens in states with frequent exposure to direct democracy are more likely to perceive that government is responsive to their needs. At the same time, direct democracy did not have the hypothesized detrimental impact on racial and ethnic group attitudes towards government in general. State racial context also did not have a measurable impact on individual-level attitudes. Regardless of state environmental contexts, however, racial and ethnic minorities (with the exception of Latinos) reported less confidence in government than whites. The findings have broader implications, particularly given the growing racial and ethnic diversity and the ongoing politics of democratic inclusion in America.