Donor-Disclosure Requirement Upheld By Court

March 13, 2018       The NonProfit Times      

An appeals court has upheld the dismissal of a legal challenge to New York’s requirement that charities disclose their major donors as part of registration requirements to solicit contributions in the state.

The U.S. Court of Appeals for the 2nd Circuit handed down its decision on Thursday in Citizens United and Citizens United Foundation v. Attorney General Eric Schneiderman.

Michael Boos, vice president and general counsel for Citizens United, said in a statement that the organization is evaluating options, including a possible petition for rehearing before the full appeals court or an appeal to the U.S. Supreme Court.

Citizens United and its foundation appealed a July 2015 decision by a the U.S. District Court for the Southern District of New York to deny a request for a preliminary injunction that would prohibit the attorney general’s office from requiring nonprofits to provide information on major donors.

Citizens United and Citizens United Foundation registered with the AG’s office in 1995 and submitted disclosures every year but only the first page of Schedule B on its Internal Revenue Service (IRS) Form 990, omitting the identification of major donors. The New York Attorney General’s Office began serving deficiency notices in 2013 that they had failed to comply with annual disclosure requirements.

“State law demands that organizations like Citizens United disclose their biggest donors to regulators so they can police fraud and abuse in the nonprofit sector,” Schneiderman said in a statement after the decision was handed down. “We are pleased the court agreed with our position and rejected Citizens United’s incorrect First Amendment and due process claims,” he said.

In a 37-page ruling, a three-judge panel rejected arguments about free speech, prior restraint and due process. “While we think it plausible that some donors will find it intolerable for law enforcement officials to know where they have made donations, we see no reason to believe that this risk of speech chilling is more than that which comes with any disclosure regulation,” the judges wrote in their decision. “Appellants offer nothing to suggest that their donors should more reasonably fear having their identities known to New York’s Attorney General than known to the IRS.”