Attorney General Phil Weiser has joined 16 other top prosecutors in asking the U.S. Supreme Court to reject a challenge by conservative groups to state laws that require reporting of nonprofits' major donors.
The Americans for Prosperity Foundation, an organization that trains people to become “advocates for freedom,” filed a lawsuit against the California Attorney General’s Office over the state’s policy of mandating nonprofits to report information about high-dollar donors. The foundation and the Thomas More Law Center, a conservative Christian law firm involved in a similar dispute, alleged the filing requirement infringes upon the First Amendment.
In both instances, California's law required the disclosure of, at most, 10 donors for each group. Although the state keeps donor names confidential, the petitioners argued the database is susceptible to hacking, or that any Internet user could access the confidential documents "merely by changing a single digit at the end of the website’s URL.” Donors, therefore, have a legitimate fear of "violence, harassment, and targeting" if their identities become public.
The inevitable result, they concluded, is the chilling of First Amendment rights to free speech and association.
Weiser and the attorneys general of 15 states and the District of Columbia told the Court that donor disclosure to states imposes little additional burden on nonprofits, given the federal government used to require reporting of donations in excess of $5,000.
Donor disclosure, they argued, has allowed state regulators “to check the accuracy of charities’ financial reporting, ensure compliance with basic regulatory responsibilities, and identify and remedy fraud and abuse.”
The attorneys general — all Democrats — traced the regulation of charities in the United States to the 1780s, with laws governing how much money citizens could give to organizations. In the late 1800s, Pennsylvania required tax-exempt organizations to demonstrate they actually had a charitable purpose.
Forty-three states, including Colorado, require annual reports from charities that solicit donations. The Colorado Secretary of State's Office said there is no requirement to disclose donor identities, only total yearly contributions.
Among the benefits of disclosure to states, donor reporting laws promote “the accuracy of organizations’ financial reports and to ensure that organizations are properly complying with their basic regulatory responsibilities,” explained the brief filed on March 31 with the Court.
New York Attorney General Letitia James, whose office led the brief, provided the National Children’s Leukemia Foundation as an example, where an accountant noticed several irregularities in the organization’s reporting. One board member allegedly donated a helicopter to the charity — which turned out to be false. The leukemia foundation had also allegedly used false and misleading practices to solicit money, while providing less than 1% of revenue toward children with leukemia.
The state attorney general’s office ultimately settled the matter for $1 million and the foundation was dissolved.
Dozens of organizations across the country have also weighed in on the issue to the Court, including several Republican attorneys general. In arguing against disclosure, they noted that “the overwhelming majority of States serve their common interest far better by declining to collect donor information from organizations that have not given them a reason to suspect misconduct.”
In the California case, a federal lower court judge originally ruled for the conservative organizations, finding the requirement to submit to California the same major donor information the group provided to the Internal Revenue Service violated the First Amendment. A panel of judges on the U.S. Court of Appeals for the Ninth Circuit reversed that decision. The panel reasoned the state had a legitimate interest in policing charity fraud, and the risk that donors’ information would become public was “slight.”
The Supreme Court has scheduled oral argument for April 26. The case is Americans for Prosperity Foundation v. Rodriguez.