Supreme Court rules for conservative charities in challenge to donor disclosure
WASHINGTON – The Supreme Court on Thursday permitted two conservative charities to keep their largest donors anonymous in a splintered opinion that places stricter limits on when governments may require groups to disclose financial information.
The opinion, which was more broad than some experts predicted, raised questions about the court's commitment to similar disclosure requirements in campaign finance.
Chief Justice John Roberts wrote the opinion for a 6-3 majority, with the court's conservative wing mostly lining up against its three liberal members. Associate Justice Sonia Sotomayor wrote a dissent in which she asserted that the majority had placed a "bull’s-eye" on reporting and disclosure requirements.
"The upshot is that California casts a dragnet for sensitive donor information from tens of thousands of charities each year, even though that information will become relevant in only a small number of cases involving filed complaints," Roberts wrote.
California required nonprofits to disclose their largest donors to state regulators in what they said was an effort to head off fraud. Two conservative groups, the Americans for Prosperity Foundation and the Thomas More Law Center, sued and asserted the mandate violates their donors’ First Amendment right "peaceably to assemble.”
The groups told the court that donors, fearing retribution, might be hesitant to give if their identities were revealed.
Sotomayor asserted that the groups never established that the state's regulation actually chilled speech – only speculated that it had.
"Today, the court holds that reporting and disclosure requirements must be narrowly tailored even if a plaintiff demonstrates no burden at all," she wrote. "It does not matter if not a single individual risks experiencing a single reprisal from disclosure, or if the vast majority of those affected would happily comply."
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The charities told the court about a rash of incidents they said demonstrated their donors’ safety would be jeopardized by the disclosure. During a 2012 rally in Michigan, for instance, protesters tore down an Americans for Prosperity event tent, trapping several elderly attendees inside, the group said. Others affiliated with the charities have received death threats, the charities said.
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Several of the groups sought to separate the issue of disclosure by charities from campaign finance laws, which require candidates and many different types of political groups to offer itemized reports of most of their donors.
Paul Seamus Ryan, vice president of policy and litigation for Common Cause, noted that the Supreme Court has repeatedly pointed to the government's interest in disclosure of political donors in past cases. And Ryan noted that Roberts did not embrace the much higher standard governments would have had to meet to impose disclosure requirements that some of the groups had sought.
But the decision appeared likely to inspire new lawsuits over campaign disclosure requirements. And Rick Hasen, a professor specializing in election law at the University of California, Irvine School of Law, wrote on his popular election law blog that "it will be much harder to sustain campaign finance disclosure laws going forward.
Though the foundation is tied to Republican megadonor Charles Koch, the suit drew support from progressive and conservative charities who said people should be able to give to causes without being identified. California countered that the need to investigate groups that receive tax benefits outweighs those privacy concerns.
The case turned in part on a landmark 1958 civil rights decision in which the Supreme Court struck down a request by Alabama that the NAACP reveal its membership – a decision that required the state to show its need for information outweighed the potentially chilling effect on associating with the civil rights group that was protected by the First Amendment.
Opponents of the suit scoffed at comparing the potential backlash against large donors with what African Americans endured in the Jim Crow South in the 1950s.
"The same scrutiny the court applied when NAACP members in the Jim Crow South did not want to disclose their membership for fear of reprisals and violence now applies equally in the case of donors only too happy to publicize their names across the websites and walls of the organizations they support," Sotomayor wrote.
In subsequent Supreme Court cases, the justices ruled that governments must show a "substantial relation" between the information they seek and an "overriding and compelling state interest.” But the charities want the court to embrace a higher standard for disclosure requirements: If a state is going to abridge the freedom of association, they said, then the requirement should be "narrowly tailored" to accomplish the state's goal.
That means the government would have to demonstrate its regulation functions as narrowly as possible to achieve its interest – a more difficult threshold to meet.
Roberts embraced that argument in his opinion.
"We do not doubt that California has an important interest in preventing wrongdoing by charitable organizations," Roberts wrote. "There is a dramatic mismatch, however, between the interest that the Attorney General seeks to promote and the disclosure regime that he has implemented in service of that end."
Most charities – including the groups involved in the case – are already required to disclose their donors to the Internal Revenue Service for federal tax purposes. California says the information it seeks is used for investigations and is not released to the public.
But the groups noted past slip-ups that inadvertently made donors’ names public. And they challenged the state’s need for the information in the first place: If California opens an investigation into their fundraising, they said, it can subpoena the donor list at that time rather than demanding the information preemptively.
A federal district court in California sided with the groups in 2016 but the San Francisco-based U.S. Court of Appeals for the 9th Circuit reversed the lower court’s decision, finding that the charities never demonstrated that a would-be donor decided against giving money because of their potential outing. Without a concrete incident of harm, the appeals court ruled, the case collapses.
During oral arguments in April, Associate Justice Stephen Breyer raised a concern echoed by good government groups who feared the decision would have broader implications for political campaigns. Why, Breyer asked, isn't the California case a "stalking horse" for campaign disclosure laws, which also require donor disclosure?
"Can we distinguish campaign finance laws, where the interest is even stronger in people being able to give anonymously?" Breyer asked in April.
Attorneys for the charities responded that California's interest in having donor lists was less compelling than the public having insight into who is contributing to a campaign. The groups also noted that campaign finance disclosures are required by a federal statute but that the California requirement is an agency-approved regulation.