State's Requirement for List of Donors from §501(c)(3) Charity Did Not Violate First Amendment or Federal Law

In the case of Center for Competitive Politics v. Harris, 115 AFTR 2d ¶ 2015-703, CA9, No. 14-15978 the Ninth Circuit Court of Appeals affirmed a District Court’s denial of the plaintiff’s request for a preliminary injunction requiring providing to the California Attorney General an unredacted list of donors from Schedule B, Form 990 of a §501(c)(3) organization.

The organization was a §501(c)(3) organization that, was described in the opinion as follows:

CCP is a Virginia non-profit corporation, recognized by the IRS as an educational organization under § 501(c)(3). CCP’s “mission is to promote and defend the First Amendment rights of free political speech, assembly, association, and petition through research, education, and strategic litigation.” CCP supports itself through financial donations from contributors across the United States, including California.

Under federal law the list of donors provided on Schedule B of Form 990 is not subject public disclosure pursuant to IRC §6104(b), although other information provided is subject to disclosure.  However California regulations required an organization soliciting donations in the state of California to provide information to the state, including a complete copy of the Form 990 filed.  While much of the information submitted to California would be subject to public inspection, the regulation provided that the Schedule B would remain confidential.

Originally the organization had provided to the California Attorney General a copy of the Form 990 with a redacted Schedule B that omitted donor information not subject to disclosure by the IRS.  However eventually the Attorney General’s office balked and demanded an unredacted copy of the Schedule B.  At that point the charity filed its lawsuit to block the filing.

The charity argued that it should not be required to provide this information for two reasons:

  • The disclosure of the data would have a chilling effect on free speech, as donors would be intimidated by the disclosure of their names.  This, the organization, meant California’s rule was in violation of the First Amendment
  • As well, the organization argued that Congress’s enactment of §6104 in 2006 was meant to protect donors and pre-empt any contrary state laws.

The Ninth Circuit rejected the first contention, holding that a ruling that disclosure itself was a violation of First Amendment rights could only be justified if the interests of the state government in requiring disclosure was not greater than the actual burden on First Amendment rights. 

The Court’s decision found that cases cited by the organization in support of their position merely held that disclosure could be a First Amendment violation, but not that all such disclosures were violations.  In each case cited that found a violation the Court argued that the plaintiff had produced evidence of actual harm that would occur.  In this case the Court found that the plaintiff had not produced any evidenced that parties had or would refuse to make donations if the documents were filed with the state in addition to the IRS.

The fact the documents were to be held in confidence by California seems to put that disclosure in the same position as the disclosure to the IRS.  The Court found that the plaintiff’s arguments that California’s ability to insure that information would remain confidential and there was a possibility the information may not remain confidential was not strong enough was a purely speculative claim.

The Court noted that this was a motion for a preliminary injunction only, and did hold that if the organization could demonstrate the likelihood of actual harm from disclosure at trial the provision might be, in their case, a violation of the First Amendment in practice.  But that information was presented at this point, and there was no support for finding that such disclosure would always present a First Amendment problem.

The Court also did not find clear evidence that Congress meant to pre-empt states from requiring such disclosure, effectively limiting the disclosure to the federal government alone.  The Court noted that while Congress can enact laws that pre-empt federal rules, prior case law and federalism principles in general require a clear showing of such intent on behalf of Congress, something that did not exist in this case.