This chapter discussed referendums and citizens’ initiatives as instruments of direct democracy. We first introduce some classifications, and point out the large variation between direct democratic instruments and their roles in political systems. After this, special attention is paid to three major areas of criticism of direct democracy. First, we discuss the problems of voter competence, as well as the problem of the lack of deliberation in referendum campaigns. Second, we discuss the problems related to government-initiated referendums, especially their manipulative usages and their negative impact on parliamentary deliberation. The third issue pertains to the role of money and organised interests in citizens’ initiatives. Finally, we discuss two practices that provide new solutions to some of these perennial problems. The Citizens’ Initiative Review in Oregon is a system designed to improve voter competence, while the Finnish Citizens’ Initiative couples with online citizens’ initiatives with parliamentary procedures.