The Ninth Circuit should reconsider its decision in Center for Competitive Politics v. Harris. The recent Americans for Prosperity v. Harris case now pending appeal before the Ninth Circuit raises the same constitutional question, to wit: Is California’s compelled disclosure of charitable organizations’ major donors facially unconstitutional?
Since NAACP v. Alabama, states know well that compelled disclosure of member or donor names stifles their ability to “pursue their collective effort to foster beliefs, which they admittedly have the right to advocate” and “may induce members to withdraw from the Association and dissuade others from joining it because of fear of exposure of their beliefs shown through their associations and of the consequences of this exposure.”
There are many reasons we choose to give anonymously: privacy, religious beliefs, modesty, fear of reprisal personally or professionally, or other manifestations of public hostility. This is even more critical today in the wake of increased cybersecurity concerns and botched enforcement scandals that target certain groups because of political affiliation or ideology.
In the first of three recent cases on this issue, the Center for Competitive Politics sought to enjoin the California Attorney General from requiring disclosure of the names and contributions of the Center’s major donors on IRS Form 990 Schedule B. While the IRS requires charitable organizations to file Schedule B with their annual return, Schedule B is exempt from public disclosure under IRC § 6104. Notwithstanding this important privacy protection for anonymous speech and association, the Ninth Circuit affirmed the federal district court’s denial of a preliminary injunction.
However, another federal district court in California reached a different outcome in two subsequent cases. After a trial on the merits in both Americans for Prosperity v. Harris and Thomas More Law Center v. Harris, the district court found that California’s Schedule B disclosure requirement is not substantially related to a compelling government interest and is not narrowly tailored. In light of the much denser record from a full trial on the merits in both Americans for Prosperity and Thomas More Law Center, the manifest weight of the evidence requires the finding that the disclosure requirement is facially unconstitutional. Limited by the Ninth Circuit’s earlier ruling in Center for Competitive Politics, however, the district court granted the injunction on the as-applied challenge rather than the facial challenge, notwithstanding its clear finding that the requirement is facially unconstitutional.
Unlike the Ninth Circuit in Center for Competitive Politics, the district court in Americans for Prosperity and Thomas More Law Center “had the benefit of holding [two separate] bench trial[s]” addressing the same issue, and as stated in Americans for Prosperity, “was left unconvinced that the attorney general actually needs Schedule B forms to effectively conduct its investigations.” In fact, the court found that “the attorney general was hard pressed to find a single witness who could corroborate the necessity of Schedule B forms in conjunction with their office’s investigations.”
In both cases, testimony indicated that the attorney general’s office seldom used Schedule B in investigations and that in “approximately 540 investigations conducted over the past 10 years … only five instances involved the use of a Schedule B.” Attorneys overseeing such investigations further testified that successful investigations can be completed without Schedule B (even where they know Schedule B is missing) and that the same information can be obtained through less restrictive means. The “testimony of multiple lawyers within the attorney general's office clearly indicate that the attorney general could have achieved its end by more narrowly tailored means.” Finding, therefore, that it is “indeed possible for the attorney general to monitor charitable organizations without Schedule B,” the attorney general is limited in pursuing its interests “by means which do not ‘broadly stifle fundamental personal liberties when the end can be more narrowly achieved.’”
In addition, the district court in Americans for Prosperity spent significant time noting the numerous inadvertent disclosures of confidential donor information by the attorney general in contravention of the privacy protections afforded by the First Amendment and IRC § 6104 as well as assurances from the office that steps were in place to prevent disclosure. “Taken in the context of a proven and substantial history of inadvertent disclosures,” the court in Thomas More Law Center found “this inability to assure confidentiality increases the ‘reasonable probability’ that compelled disclosure of Schedule B would chill Plaintiff's First Amendment rights. Donors and potential donors would be reasonably justified in a fear of disclosure given such a context.” As NAACP v. Alabama made clear, the disclosure of donor names to a political office of attorney general, which increases the risk of abuse of enforcement power, could be just as devastating as that office’s leak of the confidential information to the media or to the public.
Given the voluminous record now before the Ninth Circuit and the lower court’s holdings in Americans for Prosperity and Thomas More Law Center, the Ninth Circuit would be “hard pressed” not to recognize that this disclosure requirement fails strict scrutiny and is therefore facially unconstitutional.
Organizations should not be forced to file a lawsuit and prove the likelihood of threats, harassment, etc., in order to free themselves of California’s unconstitutional burden on their First Amendment rights to speak and associate anonymously, even if on behalf of politically disfavored causes. That defies the very purpose and protection of the right to speak and associate anonymously.
As affirmed in NAACP v. Alabama more than 50 years ago, the First Amendment protects anonymous speech and association, and our democracy depends upon our ability to defend the same.
 In another case, Citizens United v. Schneiderman, the Second Circuit is slated to review a lower court’s ruling on this same issue. New York is the only other state presently withholding charitable fundraising registrations to those who do not provide Schedule B.
Karen Donnelly is a partner in the Kansas City office of Copilevitz & Canter. Her practice focuses on First Amendment law within the context of charitable and political speech. She represents nonprofit and for-profit clients within the nonprofit fundraising community in defense of First Amendment claims as well as other constitutional issues. She also represents clients in the defense of state and federal government investigations and other civil litigation.