On Thursday, July 1, 2021, the U.S. Supreme Court issued one of the most anticipated decisions of the October 2020 Term, Americans for Prosperity Foundation v. Bonta. The Court held that a California regulation requiring non-profit organizations to disclose the names of their donors violates the First Amendment right to free association.

At issue in this case was a regulation that required non-profits that wished to raise funds in California to register with the attorney general’s office, and to disclose the names and addresses of donors who contributed more than $5,000 in a tax year. California argued that the regulation was necessary because it made investigations of charity misconduct easier if donor information was collected up front. The regulation was in place for many years but was not enforced until 2010. When the petitioners, Americans for Prosperity Foundation and the Thomas More Law Center, refused to disclose their donors, the state threatened to suspend their registrations and fine their directors and officers.

Both organizations filed suit in federal court alleging that the regulation violated their First Amendment rights and the rights of their donors. They argued that the regulation would have a chilling effect on donations and could expose them to retaliation. The Supreme Court agreed.

The Court uses the exacting scrutiny standard to analyze laws compelling disclosure. The exacting scrutiny standard requires “a substantial relation between the disclosure requirement and a sufficiently important government interest.”[1] In other words, the government must demonstrate that its interest in requiring charities to disclose their donors is important enough to justify the chilling effect on the exercise of First Amendment rights.

This standard requires that the burden be narrowly tailored to the government’s asserted interest. The Court agreed that preventing fraud was an important government interest, but there exists a “dramatic mismatch” between the government’s interest and the method of achieving it.  Put another way, other means of investigating fraud that do not burden First Amendment rights are available to the California attorney general’s office.

The Pelican Institute was honored to join with The Buckeye Institute and 33 other free market think tanks, all non-profits, in an amicus brief in support of the Petitioners. In fact, Chief Justice Roberts noted in the opinion that hundreds of organizations from across the political, ideological, and religious spectrum filed briefs in support of the Petitioners. Our brief emphasizes that the consequences of disclosing personal information about donors are not hypothetical. Unfortunately, there are real-world examples of retaliation against individuals and organizations who take a stand against their government. This decision protects the First Amendment rights of those who chose to associate with non-profits.

 

[1]Doe v. Reed, 561 U.S. 186, 196 (2010).