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Supreme Court rules in favor of nonprofits, protecting donors from ‘cancel culture’

Justices ruled 6-3 that the state of California’s approach to rooting out charitable fraud violated the Constitution

Freedom of association includes the right to confidentially donate money to controversial nonprofits, the Supreme Court said Thursday in a 6-3 ruling against the state of California.

The decision bars the state from requiring annual donor disclosures, noting that any benefit California received from its policy paled in comparison to the “chilling effect” the process had on potential donors.

“When it comes to the freedom of association, the protections of the First Amendment are triggered not only by actual restrictions on an individual’s ability to join with others to further shared goals. The risk of a chilling effect on association is enough,” wrote Chief Justice John Roberts in the majority opinion, which was joined, at least in part, by the court’s five other conservative justices.

Justice Sonia Sotomayor wrote a dissenting opinion, which was joined by her two liberal colleagues, rejecting the notion that a minimal threat of exposure truly violates donors’ constitutional rights.

“Although this court is protective of First Amendment rights, it typically requires that plaintiffs demonstrate an actual First Amendment burden before demanding that a law be narrowly tailored to the government’s interests, never mind striking the law down in its entirety. Not so today,” Sotomayor wrote.

Roberts addressed this concern in his opinion, noting that a wide range of nonprofits had filed briefs stating that California’s mandatory disclosure rules interfered with their work.

“The gravity of the privacy concerns in this context is further underscored by the filings of hundreds of organizations,” he said. “Far from representing uniquely sensitive causes, these organizations span the ideological spectrum, and indeed the full range of human endeavors: from the American Civil Liberties Union to the Proposition 8 Legal Defense Fund; from the Council on American-Islamic Relations to the Zionist Organization of America; from Feeding America — Eastern Wisconsin to PBS Reno.”

Roberts added, “The deterrent effect feared by these organizations is real and pervasive, even if their concerns are not shared by every single charity operating or raising funds in California.”

Case background

In the case, justices were asked to balance the government’s interest in rooting out charitable fraud with nonprofits’ interest in guarding donor privacy.

The lawsuit was filed by two organizations — Thomas More Law Center and Americans for Prosperity Foundation — that refused to comply with California’s disclosure rules due to fear of data leaks.

The nonprofits, which do advocacy work related to contentious issues like religious rights, immigration and abortion, said their donors would face harassment or even physical violence if their identities were made public.

“Clients and staff members have been threatened, harassed and there were even two assassination attempts on one,” said John Bursch, an attorney for one of the nonprofits, to the Deseret News in April.

The organizations believed state officials could combat fraud without demanding access to annual donor lists.

“California failed to identify a single instance where up-front collection of (donor information) proved more effective or efficient than a targeted letter or subpoena,” argued Americans for Prosperity Foundation in one of its briefs to the Supreme Court.

California rejected this claim, arguing that regular data collection helped spur targeted investigations. State officials also said the nonprofits’ concerns about leaks were unfounded.

In 2018, the 9th Circuit Court of Appeals ruled in favor of California, comparing the case to previous battles over donations to election campaigns.

The Supreme Court on Thursday overturned that decision, ruling that California’s interest in identifying fraud could not justify its current disclosure rules.

“California casts a dragnet for sensitive donor information from tens of thousands of charities each year, even though that information will become relevant in only a small number of cases involving filed complaints,” the majority opinion said. “California’s interest is less in investigating fraud and more in ease of administration.”

Impact of the ruling

Bursch, who serves as senior counsel and vice president of appellate advocacy for the Alliance Defending Freedom, which represented Thomas More Law Center in the case, said the court’s decision will ensure Americans remain free to support the causes they care about.

“The Supreme Court has confirmed that every American is free to peacefully support causes they believe in without fear of harassment or intimidation,” he said in a statement. “Public advocacy is for everyone, not just those able to weather abuse.”

This week’s ruling will ensure charitable donors are protected from “cancel culture,” said Kelly Shackelford, president, CEO and chief counsel for First Liberty Institute, a law firm that specializes in religious liberty cases, in a statement.

“The Supreme Court recognized that the disclosure of names and address of citizens simply for belonging to a cause is chilling to the freedom of association,” he said. “Cancel culture is bad enough without the government forcing organizations to reveal the names of their donors so they can be attacked.”

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