Supreme Court Strikes Down Aggressive Donor-Disclosure Rule in California

By Matthew Vadum
Matthew Vadum
Matthew Vadum
contributor
Matthew Vadum is an award-winning investigative journalist and a recognized expert in left-wing activism.
July 5, 2021 Updated: July 6, 2021

The Supreme Court struck down a California regulation forcing charitable organizations to give the state attorney general’s office the identities of their major donors, finding 6–3 that the rule unconstitutionally burdens the First Amendment right to free association.

The court opinion split cleanly along ideological and partisan lines, with the six conservative justices nominated by Republican presidents voting to strike down the rule and the three liberal justices nominated by Democratic presidents voting to uphold it.

The ruling was a major victory for the two conservative nonprofits that brought suit and the former Trump administration, which had argued that the state’s regulation violated the Constitution. In addition, a broad cross-section of the nonprofit world filed briefs in support of the nonprofits’ position, including the ACLU, NAACP Legal Defense Fund, Human Rights Campaign, and People for the Ethical Treatment of Animals.

Chief Justice John Roberts wrote the majority opinion in the consolidated case, Americans for Prosperity Foundation (AFPF) v. Bonta, court file 19-251, and Thomas More Law Center v. Bonta, court file 19-255, which came down July 1. Rob Bonta, a Democrat, was sworn in on April 23 as California’s attorney general. Telephonic oral arguments took place April 26 after the Supreme Court decided on Jan. 8 to hear the case.

AFPF and its sister organization, Americans for Prosperity, are influential libertarian nonprofits funded by businessman Charles Koch. The Thomas More Law Center is a conservative Christian public interest law firm based in Ann Arbor, Michigan.

The decision “protects Americans from being forced to choose between staying safe or speaking up,” AFPF CEO Emily Seidel said in a statement.

“The ability to maintain one’s privacy makes it possible for people to join together in causes and movements. Especially given how polarized our country has become, the work of addressing injustice and advocating for change is hard enough without people facing fear of harassment and retaliation from the government and from potentially violent opposition.”

A California regulation requires charities to file a copy of their IRS Form 990, a federal informational return for nonprofit organizations, annually with the state, along with a Schedule B to the form, which contains names and addresses of top donors. At the federal level, Schedule B is kept confidential under pain of federal civil and criminal penalties. When a Schedule B is released to the public, donor-identifying information is redacted.

But California has a spotty track record of maintaining confidentiality. The state’s policy is to keep the information confidential, but there are no state legal penalties for breaching confidentiality, and nonprofit information has been made public.

The regulation went unenforced for years until 2010 when then-Attorney General Jerry Brown, a Democrat, sent thousands of deficiency letters to charities that hadn’t complied with the Schedule B requirement. The two nonprofits in this case received deficiency letters in 2012 and 2013, when Kamala Harris, now vice president, also a Democrat, was the state’s attorney general.

The charities concerned refused to file their unredacted Schedule Bs with the liberal, Democratic Party-dominated California government because they didn’t trust its officials to keep the information secret. They say that their donors have in the past been harassed and been the victims of reprisals when their names became public, and this made them more reluctant to donate.

The charities stated they have reason to be concerned. AFPF presented evidence that a technology contractor working at its headquarters had posted online that he was “inside the belly of the beast” and “could easily walk into [the CEO’s] office and slit his throat.” The Law Center produced evidence that it had received “threats, harassing calls, intimidating and obscene emails, and even pornographic letters.”

The charities “introduced evidence that they and their supporters have been subjected to bomb threats, protests, stalking, and physical violence. Such risks are heightened in the 21st century and seem to grow with each passing year, as anyone with access to a computer can compile a wealth of information about anyone else, including such sensitive details as a person’s home address or the school attended by his children,” Roberts wrote in the court’s opinion.

The charities sued and won in the U.S. district court, then lost in the U.S. Court of Appeals for the 9th Circuit.

The case found its way back to the district court, which again ruled in the charities’ favor. That court found that California couldn’t safeguard the confidentiality of donors’ information, the Supreme Court opinion noted.

AFPF “identified nearly 2,000 confidential Schedule Bs that had been inadvertently posted to the Attorney General’s website. … One of the Foundation’s expert witnesses also discovered that he was able to access hundreds of thousands of confidential documents on the website simply by changing a digit in the URL. The court found after trial that ‘the amount of careless mistakes made by the Attorney General’s Registry is shocking.’”

The case returned to the 9th Circuit, which again ruled in favor of California, leading the two charities to take their case to the Supreme Court.

Throughout the litigation, California argued that having the nonprofits’ donor information on hand makes it easier to police misconduct by charities.

But the convenience of state investigators doesn’t justify the intrusive donor disclosure requirement, Roberts wrote for the court.

“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,” the chief justice wrote.

“California’s interest is less in investigating fraud and more in ease of administration … [which] cannot justify the disclosure requirement. The Attorney General may well prefer to have every charity’s information close at hand … but ‘the prime objective of the First Amendment is not efficiency,” he wrote, citing McCullen v. Coakley (2014).

“Mere administrative convenience does not remotely ‘reflect the seriousness of the actual burden’ that the demand for Schedule Bs imposes on donors’ association rights,” Roberts added, referencing Doe v. Reed (2010).

In her dissenting opinion, Justice Sonia Sotomayor worried that the new ruling would leave charitable disclosure rules throughout the country open to attack.

“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,’” she wrote.

Matthew Vadum
Matthew Vadum
contributor
Matthew Vadum is an award-winning investigative journalist and a recognized expert in left-wing activism.