SCOTUS Strikes Down Disclosure Law

Another 6-3 decision along ideological lines.

Adam Liptak, NYT (“Supreme Court Backs Donor Privacy for California Charities“):

The Supreme Court ruled on Thursday that California may not require charities soliciting contributions in the state to report the identities of their major donors.

The vote was 6 to 3, with the court’s three liberal members in dissent.

The requirement was challenged by Americans for Prosperity Foundation, a group affiliated with the Koch family, and the Thomas More Law Center, a conservative Christian public-interest law firm. They said it violated the First Amendment’s protection of the freedom of association by subjecting donors to possible harassment.

The disputed measure requires charities to file with the state a copy of an Internal Revenue Service form that identifies major donors. Under federal law, the I.R.S. must keep the form confidential. California also promised to keep the forms secret, but it has not always done so.

According to court papers, the challengers discovered in 2015 that the state had displayed about 1,800 forms on its website. State officials said that the disclosures were inadvertent and promptly corrected and that the state had imposed new security measures.

In the context of elections, the Supreme Court has supported laws requiring public disclosure. In the Citizens United campaign finance decision in 2010, the court upheld the disclosure requirements before it by an 8-to-1 vote. In a second 8-to-1 decision that year, Doe v. Reed, the court ruled that people who sign petitions to put referendums on state ballots do not have a general right under the First Amendment to keep their names secret.

The challengers in the case, Americans for Prosperity v. Bonta, No. 19-251, said the electoral context was different and that charities needed protection given the nation’s volatile political climate. They received support from hundreds of groups across the ideological spectrum, including the Chamber of Commerce, the Cato Institute, the Electronic Frontier Foundation, the American Civil Liberties Union, and the NAACP Legal Defense and Educational Fund.

Nina Totenberg, NPR (“The Supreme Court Throws Out A State Law Requiring Nonprofits To Name Rich Donors“) adds:

The U.S. Supreme Court on Thursday sided with rich donors and their desire to remain anonymous against a state law aimed at policing the finances of charities and other nonprofits.

By a 6 to 3 vote along ideological lines, the court struck down California’s law requiring nonprofits to file a list of their large donors with the state. The court said that the law subjected donors to potential harassment, chilling their speech in violation of the First Amendment

[…]

In his opinion for the court’s conservative majority, Chief Justice John Roberts said the court was applying exacting scrutiny, not strict scrutiny in analyzing the California measure.

“While exacting scrutiny does not require that disclosure regimes be the least restrictive means of achieving their ends, it does require that they be narrowly tailored to the government’s asserted interest,” he wrote.

[…]

In her dissent, Justice Sotomayor wrote: “Today’s analysis marks reporting and disclosure requirements with a bull’s-eye. Regulated entities who wish to avoid their obligations can do so by vaguely waving toward First Amendment ‘privacy concerns.’ … 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. That is all irrelevant to the Court’s determination that California’s Schedule B requirement is facially unconstitutional. Neither precedent nor common sense supports such a result.”

Even more important could be the effect on federal and state laws that require public disclosure of the names of campaign contributors. In the political context, the Supreme Court has long ruled that such disclosure is constitutional because it serves the important public interest of accountability by disclosing who has skin in the game of influencing government policy. Indeed, public disclosure is perhaps the only remaining check on political contributions, and some political contributors would like to see it eliminated, too. In fact, so too would some members of the Supreme Court’s conservative wing.

Josh Gerstein and Zach Montellaro, POLITICO (“Supreme Court nixes California disclosure law in blow to dark-money opponents“) add:

The Supreme Court dealt a blow Thursday to efforts to rein in so-called dark money political groups, issuing a ruling striking down California’s policy of demanding donor lists from nonprofit organizations.

[…]

Chief Justice John Roberts, who wrote the majority opinion for the court, ruled that California’s “blanket demand” for that information “is facially unconstitutional.”

“When it comes to the freedom of association, the protections of the First Amendment are triggered not only by actual restrictions on an individual’s ability to join with others to further shared goals. The risk of a chilling effect on association is enough,” Roberts wrote for the court.

Robert Barnes, WaPo (“Supreme Court strikes down California law requiring charities to disclose top donors to attorney general“) adds:

A district court ruled for the groups, noting that the state has failed in some cases to keep the information private. But a panel of the U.S. Court of Appeals for the 9th Circuit upheld California’s practice.

The Biden administration took a middle-of-the-road approach to the question. It said the requirement should not be found unconstitutional in all applications but that the groups should have another opportunity to prove that the rights of their donors had been violated.

The Supreme Court ruled in 1958 that the NAACP did not have to comply with Alabama’s demand that it list its donors because of the danger that could befall donors if their names were disclosed. But the court has also said that anonymity is not guaranteed in political speech, such as when people sign petitions to put a referendum on the ballot.

Jess Bravin, WSJ (“Supreme Court Strikes Down Nonprofit Donor Disclosure Rule“) highlights this passage:

“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,” Chief Justice John Roberts wrote for the court, joined by Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett.

In contrast to campaign-finance disclosure laws, which are intended to inform the public, the charitable-donor disclosures remain confidential and were intended to be seen only by auditors. But in an era where data breaches are commonplace, “assurances of confidentiality may reduce the burden of disclosure to the State, they do not eliminate it,” the court said.

The dissenters accused the majority of hijacking precedents written to protect civil-rights activists under threat in order to hobble supervision of nonprofit activity that bears no comparable risk.

I honestly have no opinion on whether the Majority got it right as a matter of law and precedent. While I have studied quite a bit of the First Amendment and Civil Rights caselaw over the last four decades, this set of facts is outside the scope of my lay knowledge. As a matter of public policy, though, I think they got it right.

To the extent that participating in civic organizations is a matter of Constitutionally protected free association, it seems reasonable that one ought to be able to do so without being required to disclose that fact to the government and to the public record.

My relatively longstanding view was that those who donate to political candidates and parties ought to have to disclose that fact and I continue to believe that there’s a strong public interest in knowing who is funding their political leaders. That interest is much, much less in the case of other organizations. Regardless, in recent years, I’ve reconsidered even the former in that, in today’s climate, it’s certainly plausible that such disclosure would subject people to harassment, even physical harm.

FILED UNDER: First Amendment, Law and the Courts, Supreme Court, U.S. Constitution
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Stormy Dragon says:

    My relatively longstanding view was that those who donate to political candidates and parties ought to have to disclose that fact and I continue to believe that there’s a strong public interest in knowing who is funding their political leaders. That interest is much, much less in the case of other organizations.

    This is completely backwards from actual precedent, where political speech gets STRONGER first amendment protections than non-political speech, not weaker.

    Let’s be clear: this ruling also overturned all laws requiring disclosure of donors to political organizations, and anyone pretending otherwise is just whistling past the graveyard.

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  2. wr says:

    Say what you will about the “conservatives” on the Supreme Court — they know which side of their bread is buttered.

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  3. James Joyner says:

    @Stormy Dragon: That’s absolutely fair but I do think the state’s interest in the disclosure is more compelling, at least in the case of large donors.

    @wr: Considering that the ACLU and NAACP were among the many litigants against the law, I don’t think that’s what was going on. Indeed, I would think the various BLM organizations, not to mention LGBTQ groups, in particular are grateful for the ruling.

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  4. Stormy Dragon says:

    @James Joyner:

    If the same case came up, but involving campaign donations, which two of the six justices do you think would switch sides?

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  5. HarvardLaw92 says:

    @James Joyner:

    California has a clear impetus for seeking the information, IMO – effective enforcement of its tax laws. That said, the way this opinion is tailored leaves the door open for California. The state can simply rewrite the policy in a more restrictive way and we’re back to square one.

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  6. James Joyner says:

    @Stormy Dragon: As noted in the OP, I don’t have strong opinions on the legal reasoning here and, indeed, have not read the opinion beyond the cited press reports. I’m just expressing a view on my policy preferences and how public interest and privacy should be balanced.

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  7. James Joyner says:

    @HarvardLaw92: I presume that, in order to deduct a charitable contribution, you have to claim it. That’s certainly a reasonable intrusion into personal privacy.

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  8. HarvardLaw92 says:

    @James Joyner:

    In an ideal world, the taxing agency is able to match records to validate that the claimed contribution actually took place, which is what that policy is aimed at facilitating. There are some self-dealing issues you’d want to look for as well. They stretched a bit here I think. I don’t think it’s intrusive at all. I see it as more a case of you have to willingly cede some 1A protections in order to avail yourself of the deduction (or the charity tax status, as the case may be).

    I expect the state will shortly redraw the policy though. It’s too much of a legitimate interest for California to just walk away and accept defeat.

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  9. James Joyner says:

    @HarvardLaw92: It’s well outside my expertise but I’d think it would be easy to defend the requirement to keep track of large donors. Normal folks who write off $200-$500 on their taxes in charitable contributions presumably aren’t the target and what makes the law too sweeping. But, again, I’m just spitballing based on some press reports.

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  10. HarvardLaw92 says:

    @James Joyner:

    You’d think it would be. The Feds do it every day, and as far as I could see CA was basically just demanding the unredacted 990’s they have to file with the IRS, so I’m a loss as to what special problem they found with CA policy beyond the state might accidentally leak it (which is a weak sauce argument for John Roberts).

    I’d advise CA to rewrite the policy to allow them to redact names but have to send in the rest. Lob the ball back and call it a day.

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  11. James Joyner says:

    @HarvardLaw92: It’s a really weird case. The law only applies to big donors ($5000 or more than 2% of total organizational funding). But Roberts mostly argues that the Attorney General could get the info when needed for investigation through subpoena and that the AG’s office had repeatedly posted the materials to the internet.

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  12. Mu Yixiao says:

    @HarvardLaw92:

    I see it as more a case of you have to willingly cede some 1A protections in order to avail yourself of the deduction (or the charity tax status, as the case may be).

    Do they only have to give up anonymity if they want to claim the deduction? Can they forgo the deduction and stay anonymous?

    My recollection is that those accepting donations must turn over a list of all donor names and amounts.

    The former seems like a fair trade. The latter seems overly intrusive (and ripe for political retaliation).

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  13. HarvardLaw92 says:

    @James Joyner:

    That’s the thing. Unredacted 990’s are available all day long. Several firms base their entire business model on providing that information, so the entire line of reasoning is basically a farce. I can’t see anything substantive here beyond they just don’t like California. I expected a lot more than this mess from John.

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  14. Michael Cain says:

    @HarvardLaw92:

    so I’m a loss as to what special problem they found with CA policy beyond the state might accidentally leak it (which is a weak sauce argument for John Roberts).

    The Court continues in the direction that it started years ago: the First Amendment guarantees anonymous political speech. Especially for entities that can speak really loudly (ie, have lots of money to spend). Only the minimum information — eg, that necessary to support a tax deduction — need to be disclosed, and the government is not allowed to use that for purposes other than taxes.

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  15. HarvardLaw92 says:

    @Mu Yixiao:

    Certainly you can forego including the information on a return by choosing not to claim the deduction, but neither the charity nor the taxing authority is aware of the choice. From a tax policy standpoint you can’t ask the charity to redact information that it has no way of knowing needs to be redacted. Moreover, there are probably legitimate public policy concerns surrounding charitable funding versus charitable use.

    The kicker is what I said above though – this is already public information. I can’t see a defensive rationale grounded in privacy that someone has already ceded their right to. It’s a mess.

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  16. James Joyner says:

    @HarvardLaw92: I remember looking at the Atlantic Council’s 990s back in the day and they managed to shield what they were paying just about everyone because they listed the unpaid Board members. But, at least at that point, it wasn’t reporting much in the way of donor information.

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  17. Jay L Gischer says:

    it’s certainly plausible that such disclosure would subject people to harassment, even physical harm.

    This is an accurate statement. The problem I have with it is that some of us are subject to harassment just for breathing. My daughter, the trans woman, for example. But apparently if you have money, the government will protect you.

    I don’t condone violence. And I think if someone wants to boycott your business because of your political donations, they have that right. They have the right to tell people about it, too. Take the heat, the rest of us do.

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  18. James Joyner says:

    @Jay L Gischer: The ostensible purpose of the law if to make it easier for the AG to investigate tax fraud and self-dealing, not provide the public information so that businesses can be targeted for boycotts. The latter purpose would certainly infringe the 1st Amendment. Roberts contends, plausibly, that there are narrower ways to achieve the former objective.

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  19. Raoul says:

    I can see Russia spending millions through non-profits next election.

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  20. DrDaveT says:

    I honestly have no opinion on whether the Majority got it right as a matter of law and precedent. While I have studied quite a bit of the First Amendment and Civil Rights caselaw over the last four decades, this set of facts is outside the scope of my lay knowledge. As a matter of public policy, though, I think they got it right.

    I’m very confused here. I thought the First Amendment restricted the government’s ability to pass a law restricting freedom of speech.

    What law in this case restricts freedom of speech? Even if you accept the absurd solecism that giving people money is speech, no restriction or barrier is created by a requirement that donations be disclosed. This is especially true if you are talking about donations to 501(c)3 organizations, where a public subsidy is in play. There’s no constitutional right to get your welfare anonymously.

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  21. James Joyner says:

    @DrDaveT:

    What law in this case restricts freedom of speech? **** There’s no constitutional right to get your welfare anonymously.

    The right being protected here isn’t of the organization to keep their donor list private but of their donors to be able to express their preferences without risk of harassment.

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  22. Modulo Myself says:

    What does harassment even mean in this context? I’m legally protected against actual harassment. A giant corporation is protected against having people through bricks through their windows. But I’m not legally protected against a campaign denouncing me for my political views and the corporation doesn’t have the right not to be boycotted. The campaign might make my life dangerous. The boycotts and protests might lead to property being destroyed. But so what? I don’t understand how anyone can possibly think the KKK has the right to march (they do) but the Kochs have the right not to be protested for their political views.

    One of the reasons that CRT or whatever you want to call it has come in vogue is because of situations like these. Conservatives have invented a right out of speech, which is basically that if you have power and money you have the right not to face consequences for your speech.

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  23. raoul says:

    @Modulo Myself: Good point. Here are a couple thoughts: If you put yourself in the middle of the public square, your privacy rights are much diminished. IOW, I think there is a misunderstanding on what privacy means. The current decision is tantamount to saying that the very wealthy can harass others without getting harassed (e.g., supporting an organization that sponsors picketing abortion clinics like some religious organizations). It is ironic based on the holding, but guess whose freedom of speech is being curtailed.

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  24. Modulo Myself says:

    @raoul:

    Exactly–I can give money to a group that wants to ban ‘trans ideology’ from schools, but my rights include not being called a bigot for my views. Basically, from my totally safe space I can rant about 17 year old trans kids and how they’re being coddled from the reality that they might be disgusting freaks.

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  25. James Joyner says:

    @Modulo Myself:

    I don’t understand how anyone can possibly think the KKK has the right to march (they do) but the Kochs have the right not to be protested for their political views.

    I don’t think that’s what this decision is about. It’s simply a right not to have to have your contributions to charitable organizations be made public on a blanket basis to serve a rather nebulous state interest.

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