U.S. Supreme Court To Hear Donor Disclosure Cases

After winding its way through California courts during the past half-decade or more, a case involving donor disclosure requirements ultimately will be heard by the U.S. Supreme Court this spring.

The nation’s top court consolidated two cases brought against the California Attorney General by the Thomas More Law Center and Americans for Prosperity Foundation. The Supreme Court granted certiorari in Thomas More Law Center v. Becerra (Docket No. 19-255) on Jan. 8.

Louis Castoria, a partner at Kaufman Dolowich & Voluck, LLP in San Francisco who represents the Ann Arbor, Mich.-based law center, believes there will be a spring oral argument date this session, potentially on the calendar by April. John Bursch, senior counsel and vice president of Appellate Advocacy at The Alliance for Freedom, will argue the case before the Supreme Court, with Castoria as co-counsel.

The U.S. Court of Appeals for the Ninth Circuit ruled in September 2018 that the donor reporting requirement does not violate the First Amendment. In response, the Arlington, Va.-based Americans for Prosperity Foundation and the Thomas More Law Center filed petitions for writs of certiorari in August 2019, requesting that the Supreme Court review that decision.

The case challenges the rules that nonprofits disclose major donors under a regulation enforced by the California Attorney General’s Office under Kamala Harris, who has since gone on to become U.S. Senator from California and now vice president to Joe Biden. A former congressman, Becerra was appointed to succeed Harris as California’s attorney general in 2017 and now is the Secretary of Health and Human Services Designate for the Biden administration.

“California’s donor reporting rules simply require charities to provide the state, on a confidential basis, the same information about major donors that they already provide to the federal government,” Becerra said in a press release after SCOTUS granted writs of certiorari. He filed a brief in opposition to the petitions in November 2019, arguing that the court of appeals had correctly rejected the constitutional challenges. “This information helps the state protect consumers from fraud and the misuse of their charitable contributions,” he said.

The issue arose in the early 2010s when the Attorney General’s Office notified charities that were not including Schedule B with their Form 990 filing.  The office threatened to revoke their charity registration and personally sue and fine directors, officers and tax preparers, Castoria said.

Only two other states demand donor lists (New York and New Jersey), according to Castoria, and the other 47 get along fine without Schedule B. Witnesses for the California registry testified that they couldn’t even say that they do a better job of regulating charities than other states because they receive Schedule B, Castoria said. “On a qualitative basis, it’s hard to say it’s done any good to have Schedule B in the first place.”

Schedule B of the tax Form 990 lists donors who have contributed more than $5,000 to an organization. The tax form is collected by the Internal Revenue Service (IRS) but details on Schedule B, such as names and addresses, are redacted on public copies. In 2018, the Department of Treasury eliminated the Schedule B filing requirement for 501(c)(6) associations and 501(c)(4) social welfare organizations.

The More Law Center, which “defends and promotes religious freedom, moral and family values,” argues that the California policy threatens privacy by requiring nonprofits to give the names and private information of donors to the AG’s office.

In 2009, the AG’s office mislabeled nearly 1,800 confidential Schedule B filings as “public,” according to the More Law Center, and confidential documents in the Registry of Charitable Trusts were available online, accessible to anyone who altered a single digit at the end of the document’s URL.

Americans for Prosperity Foundation won a permanent injunction in 2016 but that was appealed and in March 2019, the U.S. Court of Appeals for the Ninth Circuit ruled against the center, leading the organization to ask the Supreme Court to hear the case in a filing in August 2019. More than 60 organizations have filed amicus briefs on behalf of the center, including the NAACP Legal Defense and Education Fund. The NAACP fund won a 1958 case against Alabama when the state wanted to secure a list of donors to the NAACP.

“This is an old issue that has come back,” Castoria said in a telephone interview on Monday morning. “People should be free to support the causes they care about without harassment,” he said. The issue goes back to the 1950s when the Alabama attorney general sought member lists of the NAACP. “In a sense, our case is a carbon copy of that, except it’s donors this time,” Castoria said.

“There is a big precedent for it but it’s an important case because the circuits have not uniformly applied it. It’s morphed, or wandered, over time for less strict levels of scrutiny and for state government intrusions into charitable donations,” he said. “Our belief is the NAACP precedent really needs to be reaffirmed,” Castoria said.

Although the NAACP case was a long time ago, it was a different kind of threat than what’s going on now, Castoria said. “Doxxing [a digital, cybersecurity threat] is becoming a way that people try to quell free speech,” he said. “If donor identities are made public, inadvertently or maliciously, people who disagree with the cause that donors care deeply about can start using doxxing to essentially silence them,” Castoria said, releasing detailed information, like names and addresses, into the public sphere. “It’s a high-tech lynching essentially — not as violent perhaps, but every bit as damaging to the right to free speech.”