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July 1, 2021 — In its final decision of the term, the Supreme Court determined in a 6-3 vote that nonprofits are not required to submit their Form 990-Schedule B list of donor names and addresses to the State of California.  Chief Justice Roberts wrote the majority opinion.  The full text of the decision is available here.

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Where are we post-Bonta?

• All states formerly requiring charitable organizations to divulge their major donors on Schedule B have discontinued the compelled disclosure of donor information in light of the Supreme Court’s ruling in Bonta. These states include, but are not limited to, New York and New Jersey.

• The Bonta decision has been cited approximately 90 times. Two recent decisions relied on Bonta to affirm and advance protections afforded charitable solicitation in the lower courts.
  
  • Kissel – In Kissel v. Seagull, 552 F. Supp. 3d 277 (D. Conn. 2021), Adam Kissel, a professional fundraiser, sued Commissioner Michelle Seagull of Connecticut’s Department of Consumer Protection (in her official capacity), challenging portions of the state’s law governing professional fundraisers’ charitable solicitations as facially unconstitutional. The United States District Court for the District of Connecticut preliminarily enjoined the State of Connecticut from enforcing portions of its Connecticut Solicitation of Charitable Funds Act (the “Act”) applicable to paid solicitors. The court concluded that Kissell was likely to succeed on his claim that the statute’s notice, financial disclosure, and donor record-keeping and inspection requirements were unconstitutional because those requirements were predicated on a content-based evaluation of the subject matter of plaintiff’s speech and could not likely pass strict scrutiny. Critically important, the district court found that strict scrutiny applied to the Act, and the challenged provisions were not likely to survive that demanding standard.The Commissioner sought to distinguish Bonta as inapplicable in Kissel, arguing California’s demand for donor information in Bonta is different from Connecticut’s requirement that the paid solicitor merely retain records in the event the state exercises its right to request or inspect records. The district court rejected that argument, explaining Connecticut cannot meaningfully distinguish Bonta. To the contrary, the court explained, “Kissel’s First Amendment claim is stronger than the First Amendment claim in Americans for Prosperity Foundation because it rests not only on the First Amendment right to association but also on the First Amendment right to free speech that is burdened by a content-based law that applies to him as a paid solicitor and that independently triggers strict scrutiny apart from any associational rights.” Id. at 296 (emphasis added).

• • Reagan – In City of Austin v. Reagan Nat’l Advert. of Austin, LLC, 142 S. Ct. 1464, 1479-80 (2022), the United States Supreme Court considered a local advertising ordinance restricting off-premise signs. The Supreme Court cited to Bonta for the important rule that a less demanding test for facial overbreadth applies when a law affects freedom of speech. As affirmed in Bonta, it is well settled under First Amendment “overbreadth” doctrine that a law restricting speech is facially unconstitutional “if a substantial number of its applications are unconstitutional, judged in relation to the statute’s plainly legitimate sweep.” (citing United States v. Stevens, 559 U.S. 460, 473 (2010). On point, TNPA and its co-signers covered this important issue of facial overbreadth in their amici brief in Bonta.

Why TNPAF Knew it was Critical to Weigh in on Behalf of the Nonprofit Sector

• Charities are fundamental to American civic life and are stronger in America than in most nations.

• Giving by individuals was an estimated $309.66 billion in 2019 and amounted to approximately 70% of total giving (Giving USA 2020). Preliminary measures suggest a significant increase in numbers of donors and dollars contributed for 2020. Donor privacy is essential for the fundraising success of these charities.

• These funds support an enormous range of voluntary activities from providing health care, shelter, and food to providing public and private education at all levels (this selection of activities is a placeholder only).

• Charities, organizations that rate charities for best practices, and fundraising professionals have developed best practices and rules over decades providing for donor privacy and its protection.

• If donor privacy is violated, this would cause irreparable harm to fundraising and to the nation’s charitable sector.

• California demonstrably failed to protect the confidential Schedule B information in its custody. Since California adopted this practice, two other states have followed. Doubtless more will follow suit. More states gathering such data dramatically increases the risks of a loss of privacy. With hacks of even national security and high-level corporate data becoming increasingly common, how can we expect regulators’ data and websites to remain secure?

• Many individual donors are not comfortable with their personal information being provided by charities to state officials. Regardless of whether they live in the state, they do not trust state officials to keep the information secure or to refrain from misusing it.

• The threat of misuse looms larger when one considers the states have no routine need for information on individual donors in order to enforce their solicitation laws. In preliminary filings in the present case, twelve states with solicitation laws agreed there is no routine need. Should a state find need in the case of an individual organization, the state can seek a subpoena for the donor information (giving both organization and donor an opportunity to resist). A reasonable person might ask, “If they don’t need the information to enforce solicitation laws, why do they want it?”

The Timeline | Donor Privacy & Schedule B Reporting

2016-2020
A number of affected nonprofits individually sued the state of California over its compelled disclosure of otherwise private donor information. The state was requiring nonprofits to share the information from Schedule B of their Federal Tax Return Form 990 with the state Attorney General.

Note: Prior to this Supreme Court decision, three states – CA, NJ, NY – had mandated filing the Schedule B as a solicitation law registration requirement. 

In two instances, affected nonprofits challenged California in federal district court and were rewarded with injunctions barring the collection of the donor information.  A federal appeals court overturned the lower court rulings leading the nonprofits to petition the U.S. Supreme Court for review. 

January 2021
The Court granted certiorari — meaning it agreed to hear the cases — addressing the issue of mandatory disclosure of donor information to state officials. Those cases were consolidated for briefing and oral argument.

February 2021
The Nonprofit Alliance Foundation (TNPAF), the 501(c)3 supporting organization of TNPA), submitted an amicus brief to the Court supporting the need to maintain donors’ privacy, and opposing the mandatory disclosure of donor information to state officials. The goal of this amicus brief was to present the fundraising perspective of the nonprofit community to the U.S. Supreme Court.

TNPAF reached out to colleague and member organizations to educate them about what was at stake, the history of donor harassment of those supporting particular causes, and the First Amendment.

March 1, 2021
The amicus brief was officially filed with the U.S. Supreme Court with 126 nonprofit organizations signing on.

April 26, 2021
Oral arguments were presented to the U.S. Supreme Court.  Proceedings were livestreamed and recorded and can be viewed here.

• During oral argument, TNPA’s brief and one of our signers, PETA, were mentioned as early as 4 minutes and 53 seconds into the 1 hour and 44-minute oral argument.Later, at 1:39 minutes, Justice Barrett noted that more than 250 nonprofit organizations weighed in to support the charity appellants in this case, asking how many nonprofits must raise their voice for the facial overbreadth of the state action to be consider substantial?
  
  • “Let me shift and ask you something else. So we’re at 250 organizations who filed briefs in support of the Petitioners here arguing that the disclosure mandate would harm their rights.

  • Is that enough for a facial challenge? I — I gather your position is no. So I’m wondering how many would it take?”

July 1, 2021
In its final decision of the term, the Supreme Court determined in a 6-3 vote that nonprofits are not required to submit their unredacted Schedule B list of donor names and addresses to the State of California.  Chief Justice Roberts wrote the majority opinion. The full text of the decision is available here.

• The SCOTUS decision named several of our amici in the opinion. See page 18, recognizing the Zionist Organization of America, Feeding America—Eastern Wisconsin, and PBS Reno, as well as other organizations spanning the ideological spectrum who share a fundamental, protected interest in donor privacy.