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Supreme Court Says California Cannot Require Filing of Schedule B

Supreme Court Says California Cannot Require Filing of Schedule B

Court says requirement violates First Amendment right to freedom of association of donors

After nearly a decade of litigation over whether states may require charities seeking to register to solicit charitable contributions to file a complete copy of their Form 990 tax information return, including an unredacted Schedule B containing the names of significant donors, the 6-3 conservative majority of the U.S. Supreme Court has held that the requirement violates the donors’ First Amendment right of association, a question that is “not even close” according to two of the Justices. 

In so holding, according to the three dissenting justices, the Court has “discard[ed] its decades-long requirement” that the plaintiffs must plead and prove that disclosure will likely expose them to objective harms.

The case is part of an on-going battle over disclosure of names of donors to nonprofits.  The Trump Administration eliminated the requirement for Schedule B for all Form 990 filers except for public charities.  (See Nonprofit Issues®, Vol. XVIII, No. 3.)

The specific case arose when California began to require that charities registering to solicit contributions in the state file an unredacted Schedule B with the Form 990 in 2010.  (New York and New Jersey are the only two other statues that were enforcing a similar requirement prior to this decision.)  The names on Schedule B are not available to the public and California had implemented new security measures after some names had become available to the public in prior years. 

The Americans for Prosperity Foundation and the Thomas More Law Center sued to enjoin the requirement. The Foundation provides education and training “about the principles of a free and open society, including free markets, civil liberties, immigration reform and constitutionally limited government.”  The Law Center’s mission is “to protect religious freedom, free speech, family values, and the sanctity of human life.”

The cases went up to the Ninth Circuit twice after the District Court found for the plaintiffs.  The Ninth Circuit most recently found for the state in 2018.  (See Nonprofit Issues®, Vol. XVIII, No. 4.)

Writing for the Court’s majority, Chief Justice John Roberts said the Court had long held that “compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as other forms of governmental action,” citing the NAACP case before the Supreme Court in 1958. 

He said that the Court had settled on a standard referred to as “exacting scrutiny” to review disclosure cases.  “There must be a substantial relation between the disclosure requirement and a sufficiently important governmental interest,” he said, and “the strength of the governmental interest must reflect the seriousness of the actual burden on First Amendment rights.”  Exacting scrutiny, he said, requires that restrictions “be narrowly tailored to the government’s asserted interest.”

(The Law Center argued the standard should be a more stringent “strict scrutiny.”  In a concurring opinion, Justice Clarence Thomas agreed.  In a separate concurring opinion, Justices Samuel Alito and Neil Gorsuch said they didn’t have to decide that question because the rule was unconstitutional under either standard.)

Chief Justice Roberts went on to refute the claims of the dissenting opinion, saying that there is “a dramatic mismatch” between the interest of the Attorney General in collecting information and the burden placed on charities and donors from the disclosed information, especially when the District Court found that there is not “a single concrete instance in which pre-investigation collection of a Schedule B did anything to advance the Attorney General’s investigative, regulatory or enforcement efforts.” The Court concluded that the requirement was “facially unconstitutional.”

Justice Sonia Sotomayor, in the dissenting opinion, argued that the cases cited by the Court primarily involved situations in which disclosure of information had been shown to have harsh consequences to those whose information had been made available.  She also argued that in order to determine whether a rule was closely tailored to meet a need, the court must first determine how much the disclosure requirement actually burdens the freedom to associate.  She argued that there was more than enough evidence that the information advanced the Attorney General’s interest in preventing charity fraud.   (Americans for Prosperity Foundation v. Bona, Supreme Court, U.S., No. 19-251, 7/1/21.)


This is another data point in the continuing fight over disclosure of information and “dark money” in politics and government.  It will be interesting to see how long it will be before some charity challenges the right of the Internal Revenue System to require the donor information on Schedule B.  The IRS obviously has a more direct role in reviewing charity activity and has more reasons to want the information, but the breadth of the holding in this case, plus the lack of a requirement of any actual harm suffered by those whose information is disclosed, make it likely that there will be a challenge to the IRS requirement in the not-so-distant future.

U.S. Supreme Court

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