A second charity dealing with controversial issues has won a permanent injunction against enforcement of California’s demand that an unredacted Schedule B has to be filed with the state in order to register for charitable solicitation in the state.  The Thomas More Law Center has won the injunction against Secretary of State Kamala Harris on the ground that enforcement of the demand for the list of major contributors would violate the center’s Constitutional rights.

The case is the second one decided by the same judge in the federal Central District of California.  After the Ninth Circuit Court of Appeals held in 2015 that the requirement was not unconstitutional on its face, the case was remanded for trial.  (See Nonprofit Issues, 4/15.)  At the trial, the District Court held that it was unconstitutional “as applied” to the Americans for Prosperity Foundation.  (See Nonprofit Issues, 5/16.) 

In the Thomas More case, the Court again ruled that obtaining the unredacted Schedule B to the annual Form 990 tax information return was “not substantially related” to the government’s interest in regulating charitable organizations and that the Attorney General’s interest could be more narrowly achieved.  It noted that the Attorney General’s office had completed investigations even where it knew that the Schedule B was missing from the registration packet.

The Court also found that disclosing Schedule B would “create a burden on its First Amendment rights.”  The organization testified that it received threatening, harassing and intimidating mail because of the positions it took on controversial issues and one anonymous donor claimed that he wanted to remain anonymous because he feared that he would be harassed as a result of his affiliation.  The Court said that compelling the disclosure of donors’ identities would only compound such fears of other donors and create difficulties for the center.

The Attorney General had taken steps to assure the confidentiality of the information on Schedule B since the trial in the Americans for Prosperity Foundation case, which the Court found “commendable.”  But it is an “obvious fact” that the Attorney General cannot assure that documents will not be inadvertently disclosed no matter what steps are taken, the Court said.  “Taken in the context of a proven and substantial history of inadvertent disclosures, this inability to assure confidentiality increases the ‘reasonable probability’ that compelled disclosure” would chill the donors’ First Amendment rights, it said.  (Thomas More Law Center v. Harris, C.D. CA, No. CV 15-3048, 11/16/16.)

YOU NEED TO KNOW

California still demands Schedule B from applicants for charitable solicitation registration, taking the position that only these two charities have won injunctions against enforcement of the requirement as applied to them.  As a practical matter, therefore, unless an organization wants to go to court to try to win its own injunction, these cases are irrelevant to their ability to register without supplying Schedule B.