This piece originally appeared on p.16-17 of The NonProfit Times October 2021 digital edition.
The Supreme Court of the United States ruled in July that California could not require charities and other nonprofit organizations to submit an annual list of donors to state officials as a pre-condition for soliciting contributions in the state. The case, known as Americans for Prosperity Foundation v. Bonta (AFPF), should have a substantial, positive impact on charities and the Americans who support them.
California implemented the requirement roughly a decade ago and faced immediate legal challenges. Americans for Prosperity Foundation (AFPF) and the Thomas More Law Center, charitable organizations operating under Section 501(c)(3) of the Internal Revenue Code, were two such plaintiffs. The organizations filed separate suits, arguing that the state’s demand violated their First Amendment rights of speech and association. Both groups won at trial court but lost on appeal at the Ninth Circuit. They appealed to the U.S. Supreme Court, where their cases were consolidated and heard in April 2021.
In a 6-3 decision, the Supreme Court held that the California rule violated the First Amendment right to freedom of association, which includes a right to keep one’s memberships, affiliations, and financial support private.
The seminal case on associational privacy is NAACP v. Alabama. In 1956, as part of an investigation into the NAACP (and really, as part of the state’s efforts to hamper the civil rights movement), Alabama’s attorney general demanded the names and addresses of the group’s supporters. The NAACP refused and was held in contempt by state courts. The U.S. Supreme Court reversed, writing:
It is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute [an] effective  restraint on freedom of association…. Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs….
Several later cases affirmed NAACP v. Alabama, but in the 1970s, the Court began to develop a separate line of cases dealing with disclosure of political campaign contributions. In these cases, most notably Buckley v. Valeo (1976) and Citizens United v. Federal Election Commission (2010), the Court upheld compulsory disclosure laws pertaining to political campaigns. AFPF v. Bonta clarifies how courts should handle freedom of association claims when the state seeks to compel disclosure of memberships and financial support.
Specifically, the Supreme Court has required that such cases be reviewed under a legal standard known as “exacting scrutiny.” The key part of the Court’s decision in AFPF was its determination that “exacting scrutiny” requires that laws be “narrowly tailored” to address a “substantial” government interest.
“Narrow tailoring” means that a statute or policy must not infringe on First Amendment rights where doing so does not serve the “important” government interest at stake. Additionally, AFPF instructs lower courts to be skeptical of broad government claims of “substantial” or “important” interests, and discusses the type of evidence that will be relevant to a First Amendment claim.
California argued that it needed donor information to police charitable and other nonprofit fraud, but the state rarely used the information it collected. At trial, the court discovered that there was not “a single, concrete instance” in which pre-investigation collection of donor information proved useful. Thus, collecting annual donor information in bulk from some 60,000 nonprofits was clearly not narrowly tailored to any law enforcement interest of the state.
California responded that, even if the information was rarely used, having it on file was more “efficient” and “effective” if it was needed. But the Supreme Court held that “mere administrative convenience” was not a sufficiently important government interest given the infringement on First Amendment rights. Thus, the policy failed exacting scrutiny. The Court further held that the policy was unconstitutional “on its face,” meaning it was unconstitutional to demand this information in this manner from any entity, not only the two plaintiffs.
The ruling strikes down the policy in California and three other states – Hawaii, New Jersey, and New York. Equally important, however, is that outside of political campaigns, any law or policy broadly requiring the publication of donors, either to the public or to the government, is now highly suspect.
Importantly, plaintiffs in these cases are not required to show a record of threats, harassment, or boycotts of their donors. The Court made clear that if a policy is not narrowly tailored to an important government interest, “such a demanding showing [of threats or harassment] is not required.” But if narrow tailoring is satisfied, a showing of threats and harassment may still justify relief for particular organizations.
The Court also specifically held that “disclosure requirements can chill association ‘[e]ven if there [is] no disclosure to the general public.’” For many donors, the government is precisely the entity from which they hope to keep their support private.
States remain free to develop “narrowly tailored” policies and statutes mandating disclosure in some instances. For example, the Supreme Court majority seemed to concede that, if California needed donor information as a truly relevant part of a fraud investigation, it could demand the information through an audit letter or subpoena. And it is unclear how the ruling will affect filing requirements with the IRS. The majority noted that, “revenue collection efforts and conferral of tax-exempt status may raise issues not presented by California’s disclosure requirement.”
The case is unlikely to upend the core of federal campaign finance disclosure laws. In Buckley v. Valeo, the Court recognized “important” state interests supporting these laws that were not present in AFPF, such as providing information to voters about candidates, preventing quid pro quo corruption, and aiding the enforcement of campaign contribution limits.
Political campaign disclosure laws are also evaluated under the “exacting scrutiny” standard. By putting more teeth into that standard of review, AFPF may make some laws suspect. For example, many states require reporting of campaign contributions as little as $10 or $25. That could be challenged as not “narrowly tailored” to any important state interests in preventing corruption or informing the public.
That said, disclosure of large contributions to candidates and other political committees is likely to remain.
Efforts to expand the scope of campaign finance disclosure laws are more suspect. Per Buckley, except when dealing with organizations whose “major purpose” is the election or defeat of candidates, the Court has only upheld compulsory disclosure laws that are closely and directly tied to candidate campaigns.
These have included “independent expenditures” (ads made independently from a candidate or political party that “expressly advocate” the election or defeat of a candidate, using phrases such as “vote against,” “elect,” and “Smith for Congress”) and “electioneering communications,” defined in the relevant case as broadcast ads involving a substantial sum ($10,000 or more) aired in a candidate’s district within 30 days of a primary or 60 days of a general election. Laws that would extend campaign finance disclosure to other speech, including nonprofit “grassroots” lobbying, are highly suspect after AFPF v. Bonta and will be subject to the “narrow tailoring” requirement.
Some specific types of compulsory disclosure laws and proposals that may be more vulnerable to constitutional challenge after AFPF include:
- Requiring that groups without the “major purpose” of promoting the election or defeat of candidates be subject to broad disclosure and reporting standards;
- Defining key terms in campaign finance law, such as “contributions,” “expenditures,” or “independent expenditures,” to include speech that is not clearly campaign-related, and using that definition to trigger mandatory donor disclosure;
- Expanding the definition of “electioneering communication” outside the bounds described above;
- Requiring an organization making relatively minimal “independent expenditures” or “electioneering communications” to disclose all donors, as opposed to only those who earmarked contributions for the expenditures;
- Requiring that “independent expenditures” or “electioneering communications” be made only from a separate fund established for that purpose, with donors to the fund disclosed;
- Requiring disclosure of donors to groups engaged in “grassroots lobbying” on issues and pending legislation; and
- Requiring that ads include the names of the organization’s largest donors on the face of the ad, unless those donors earmarked funds for that purpose.
Americans for Prosperity Foundation v. Bonta is the Court’s most important decision on the First Amendment right of association in over 60 years. Nonprofits can now rest comfortably knowing that they can solicit potential donors in every state without disclosing their donors, and that laws or policies requiring bulk disclosure of donors are either unconstitutional or at least suspect under the First Amendment.
The ruling does not throw all campaign finance disclosure laws into doubt and does not question the compelled disclosure of large contributions to PACs, political parties, and candidate campaigns. It does, however, cast further doubt on already constitutionally dubious efforts to expand compulsory disclosure governing political contributions to new realms of speech.
The full impact of AFPF v. Bonta will be shaped by lower court decisions applying it to particular statutes and policies. But there is no doubt that AFPF shifts the First Amendment landscape in favor of charities, privacy, and the right to association.
Bradley A. Smith is chairman of the Institute for Free Speech and the Blackmore/Nault Professor of Law at Capital University. He is also a former chairman of the Federal Election Commission.