In 2010, then-California Attorney General Kamala Harris began demanding that non-profit organizations provide her office with a list of their donors in order to be able to solicit contributions in that state.[1] Several non-profits filed suit in opposition to the order, saying their donors have a First Amendment freedom of association right to give privately, and that the state should have to demonstrate a compelling interest to demand disclosure of the information.
On January 8, the U.S. Supreme Court announced that it would hear two cases arising out of the dispute, Americans for Prosperity Foundation v. Becerra (No. 19-251) and Thomas More Law Center v. Becerra (No. 19-255). Our NTUF Taxpayer Defense Center will be filing a brief in the case in support of the non-profit organizations. Just one reason why we are doing so is historical: some citizens have expressed concern to us over retaliation from government agencies or other entities if their names as donors were publicized. Others describe themselves as whistleblowers, who have often legitimately feared retaliation for their stance.
A key case that the organizations rely on is NAACP v. Alabama (1958), in which the Alabama Attorney General demanded that the NAACP turn over its member list to him before being allowed to do business in the state, and after they refused, sought a court order to bar the organization from the state. In a unanimous decision, the Supreme Court found for the NAACP, holding that the Constitution protected “the right of petitioner's members to pursue their lawful private interests privately and to associate freely with others” free “from state scrutiny of petitioner’s membership lists.” Alabama had not met a standard of showing “a substantial relation between the disclosure requirement and a sufficiently important governmental interest.”
California reads the NAACP case narrowly, and the Ninth Circuit Court of Appeals agreed. They rely heavily on an acknowledged but mostly unstated fact in the case: the purpose of Alabama’s order was to cripple NAACP’s ability to operate by subjecting donors and members to retribution (“economic reprisal, loss of employment, and threat of physical coercion”) and thus to deter future donors and members. The Ninth Circuit conceded that plaintiffs had shown that “some individuals who have or would support the plaintiffs may be deterred from contribution” (emphasis original), but that “[t]he mere possibility that some contributors may choose to withhold their support does not establish a substantial burden on First Amendment rights.”
An interesting – and alarming – argument was made in the United States government’s brief asking the Court to take the cases. While the government argued that the Ninth Circuit was wrong in not requiring California to narrowly tailor its requests to prevent “a reasonable probability of harassment, reprisals, and similar harms,” on page 12 the government favorably cites the Regan v. Taxation with Representation case of 1983. That case involved a 501(c)(3) organization that sought to lobby the government while retaining its tax-exempt status, where federal law generally requires organizations to pick one or the other. The organization said that choice was a First Amendment violation. The Supreme Court disagreed, and used sweeping language that tax-exempt status is a “subsidy” and that “Congress is not required by the First Amendment to subsidize lobbying.” Subsequent cases and numerous law review articles have been uncomfortable with the sweeping language of the Regan case, embracing Justice Blackmun’s concurrence that a government restriction is only permissible if the organization’s members have some other outlet for their expression. For example, many 501(c)(3) organizations have (c)(4) affiliates who can engage in political communication. Unfortunately, many lower court cases have taken the language of Regan at face value to uphold intrusive governmental regulations on charities, and indeed the government here uses Regan to justify the federal Form 990 donor disclosure requirement.
NTUF’s brief will push back against any use of Regan as standing for the proposition that any organization accepting tax-exempt status must accept any conditions the government wishes to place on the organization’s freedom of speech or association. While the Supreme Court agreeing to hear the AFPF and TMLC cases is a good sign, that the United States government favorably referenced the Regan argument – even in passing – is a bad sign.
[1] Donor information is provided to the federal government on the Form 990 Schedule B annually filed by most 501(c)(3) organizations, which includes the names and addresses of donors who contribute $5,000 or more, or alternatively who give more than 2% of the organization’s total revenue. The information in those pages is redacted in public versions of the 990 form and in the versions provided to state officials. The IRS uses the information to cross-reference charitable deductions taken by taxpayers, and federal law and technological safeguards guard against unauthorized disclosure of the information. California cites a general interest in preventing “fraud, self-dealing, diversion or misuse of charitable assets, and other violations of state law” and has acknowledged “confidentiality lapses . . . both as a result of technological vulnerabilities and human error,” but says the state has addressed those problems.