Supreme Court strikes down California donor disclosure requirement

Washington — The Supreme Court on Thursday invalidated a requirement by the state of California that charities fundraising in the state must disclose the identities of their most generous donors.

The high court ruled 6-3 along ideological lines in favor of a pair of nonprofits that challenged the state's policy. The Supreme Court found the measure, which requires charities that fundraise in the state to turn over information about their top contributors, is unconstitutional.

"We are left to conclude that the attorney general's disclosure requirement imposes a widespread burden on donors' associational rights. And this burden cannot be justified on the ground that the regime is narrowly tailored to investigating charitable wrongdoing, or that the state's interest in administrative convenience is sufficiently important," Chief Justice John Roberts wrote in an opinion, joined in full by Justices Brett Kavanaugh and Amy Coney Barrett. "We therefore hold that the up-front collection of Schedule Bs is facially unconstitutional."

But in a dissenting opinion joined by Justices Stephen Breyer and Elena Kagan, Justice Sonia Sotomayor said the decision by the high court "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. "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."

The case involved a requirement by the state that charities and nonprofits fundraising there submit a copy of an IRS form, known as Schedule B, that includes the names and addresses of their largest donors to the California attorney general's office. 

California argued the information is needed for regulatory oversight purposes and to investigate fraud, self-dealing and abuse of an organization's tax-exempt status. But two organizations that solicit donations in California, Americans for Prosperity Foundation (AFPF) and the Thomas More Law Center, challenged the donor disclosure policy in 2014, arguing it burdens their First Amendment right to free association.

A federal district court in 2016 sided with the two groups in the dispute and blocked the California attorney general from requiring AFPF and Thomas More to disclose their largest donors. But a three-judge panel on the 9th U.S. Circuit Court of Appeals reversed the lower court's decision that the disclosure requirement violated the constitutional freedom of association, and the full appeals court declined to rehear the case.

In filings with the Supreme Court, AFPF argued its most substantial donors face potential harassment and threats if their identities are publicly disclosed and said California has violated a pledge to keep the IRS forms confidential. While federal law forbids the IRS from disclosing the information on the form, AFPF told the Supreme Court in filings that it discovered the attorney general's office had publicly posted nearly 1,800 forms online.

The groups also warned California's practice chills activities protected under the First Amendment.

The Justice Department told the Supreme Court the disclosure requirement furthers "important governmental interest" in policing fraud and abuse, and argued other means of obtaining the same information would not be as effective and efficient. But it urged the justices to send the dispute back to the lower court to allow it to consider the harm to donors if their identities became known and to reassess the burden the disclosure requirement places on contributors' associational rights.

In a statement posted to Twitter, AFPF applauded the Supreme Court's decision.

"When a state makes a blanket demand for a list of an organization's supporters, it creates an unacceptable risk to those people's right to join together with one another and violates the privacy necessary to protect that right," the organization said.

The Americans for Prosperity Foundation is the sister organization of Americans for Prosperity, a conservative group backed by Charles and David Koch.

In April, three Democrats in Congress sent a letter to Justice Amy Coney Barrett calling on her to recuse herself from the case because Americans for Prosperity was behind a campaign in support of her confirmation. Barrett, however, participated in oral arguments that month.

The two nonprofits that challenged California's demand for donor information had backing from a wide array of organizations ranging from the American Civil Liberties Union and NAACP Legal Defense and Educational Fund, to the U.S. Chamber of Commerce and the Electronic Frontier Foundation.

The groups, which themselves rely on donations, warned that upholding the policy could have adverse consequences for their donors, including subjecting them to possible threats and harassment.