Supreme Court to Decide Case Challenging Non-Profit Donor Disclosure State Law

In Americans for Prosperity v. Becerra and Thomas More Law Center v. Becerra the petitioners claim that a California law requiring them to submit to the California Attorney General their IRS Form 990 Schedule B, which lists their largest donors, violates the First Amendment. California law requires the Attorney General to keep Schedule B information confidential, with limited exceptions.

The Ninth Circuit upheld the law. While the entire Ninth Circuit refused to rehear the case a number of judges wrote a lengthy dissent. They argue the Ninth Circuit applied the wrong legal standard in this case and ignored facts found by the district court.

The Ninth Circuit concluded the disclosure requirement complies with “exacting scrutiny” which “requires a substantial relation between the disclosure requirement and a sufficiently important governmental interest.”

Regarding the governmental interest, according to the Ninth Circuit, “[i]t is clear that the disclosure requirement serves an important governmental interest” because “such information is necessary to determine whether a charity is actually engaged in a charitable purpose, or is instead violating California law by engaging in self-dealing, improper loans, or other unfair business practices.”

To overly burden the First Amendment rights of Americans for Prosperity and Thomas More Law Center, according to the Ninth Circuit, the disclosure requirement must create a “substantial threat of harassment.” Petitioners could demonstrate such a threat exists by presenting evidence donors would be deterred or that there was a reasonable probability the disclosure would lead to “threats, harassment, or reprisals” toward donors.

The Ninth Circuit found the disclosure requirement wasn’t likely to deter donors: “Considered as a whole, the [petitioners]' evidence shows that some individuals who have or would support the [petitioners] may be deterred from contributing if the [petitioners] are required to submit their Schedule Bs to the Attorney General. The evidence, however, shows at most a modest impact on contributions. Ultimately, neither [petitioner] has identified a single individual whose willingness to contribute hinges on whether Schedule B information will be disclosed to the California Attorney General.”

The Ninth Circuit also concluded that while it was at least possible petitioners Schedule B donors would face threats, harassment or reprisals if their information were to become public, the risk of public disclosure is “slight” due to the law preventing it. 

The judges who dissented from the Ninth Circuit’s decision to rehear the case opined that the legal test the Ninth Circuit applied in this case was wrong—“a lower form of scrutiny adopted by the Supreme Court for the unique electoral context.”

The dissenting judges also criticized the Ninth Circuit opinion for “ignoring the district court’s factfinding.” “[T]he state’s promise of confidentiality was illusory; the state’s database was vulnerable to hacking and scores of donor names were repeatedly released to the public, even up to the week before trial. Moreover, as the district court found, supporters whose affiliation had previously been disclosed experienced harassment and abuse. Their names and addresses, and even the addresses of their children’s schools, were posted online along with threats of violence.”

In 2018 the Second Circuit upheld a similar New York law over a First Amendment challenge.