Supreme Court Declines To Hear Fundraising Appeal

November 10, 2015       Mark Hrywna      

Justices of the Supreme Court of the United States decided against hearing a case challenging a California regulation requiring disclosure of donor information to the state attorney general’s office.

“We are very disappointed that the Supreme Court decided not to review the 9th Circuit’s decision. The case is not over and we will study our legal options before making our next move,” said Center for Competitive Politics (CCP) President David Keating. “It is possible, for example, that the court did not want to review the denial of a preliminary injunction and will decided to hear the case after the lower courts have ruled on the merits of the case,” he said.

Schedule B of the federal Form 990 filed by nonprofits typically is redacted when it’s filed with the Internal Revenue Service (IRS). Regulators in California and New York recently began enforcing a requirement that the entire form be filed with the state if a nonprofit is registered as a fundraiser. State officials claim that donor lists are reviewed only by state employees and are not released publicly. CCP had filed suit against California Attorney General Kamala Harris last year.

The Center for Competitive Politics v. Attorney General Kamala Harris isn’t the only such case brewing that involves donor information. The Citizens United Foundation filed suit against New York Attorney General Eric Schneiderman and the Americans For Prosperity Foundation has taken on Harris in the 9th Circuit Court of Appeals. It’s possible the Supreme Court could take up a case if other major courts come out in opposite ways, which often can be a premise for the Supreme Court to hear an appeal.

Depositions in the Americans For Prosperity Foundation case were cited by Keating, who said the AG’s head auditor testified that an investigation has never been initiated as a result of reviewing Schedule B but also that some 1,400 confidential forms recently appeared on the state’s website.

“The office doesn’t need this information and has demonstrated its inability to keep these forms confidential,” Keating said. “It’s time to end this anti-association policy permanently,” he said in a statement.

The Form 990, already filed with the IRS, “includes information about an organization’s major donors and state policy shields that information from public disclosure,” said Kristin Ford, a spokeswoman for the AG’s office. “This law has long been on the books and helps protect the public against fraud,” she said.

To solicit charitable contributions in California, a nonprofit must be registered with the state’s Registry of Charitable Trusts in the Attorney General’s Office, and an annual report filed. The report includes Schedule B of the Form 990, which identifies contributors of more than $5,000 in a single year.

State officials have argued that having information on significant donors allows the office to identify suspicious behavior, increase investigative efficiency, and avoid the need for expensive or burdensome audits. Critics counter that state regulators can file subpoenas for any information or documents if they suspect illegal activity.