The Disclosure Digest: April 15, 2019
Explore the laws governing nonprofit donor disclosure with Ballotpedia. Each weekly edition of The Disclosure Digest will highlight noteworthy legislation, pending litigation, and major activities by advocacy groups.
Nonprofit organizations do not distribute surplus revenues as profits or dividends to shareholders. Instead, nonprofits use revenues for self-preservation or expansion. Tax-exempt nonprofits are regulated under Section 501 of the Internal Revenue Code. States may subject nonprofits to additional regulations beyond those imposed by the federal government. Under federal law, nonprofits are generally not required to disclose to the public information about their donors. State laws, however, may require such disclosure. Some say expanded donor disclosure provisions minimize the potential for fraud and establish public accountability. Meanwhile, others say that disclosing information about donors violates privacy rights and can inhibit charitable activity.
This week, we shine a spotlight on California, where a federal appeals court recently declined to review an earlier judgment upholding a state donor disclosure law.
State spotlight: Federal appeals court declines review of judgment upholding California donor disclosure policy
On March 29, 2019, the United States Court of Appeals for the Ninth Circuit declined a request for en banc review of an earlier judgment upholding a California donor disclosure law. In an en banc review, the entire bench takes up the case, as opposed to the customary three-judge panel that typically hears appeals.
- Who are the parties to the suit? The plaintiff is Americans for Prosperity Foundation, a 501(c)(3) nonprofit. The defendant is Xavier Becerra in his capacity as state attorney general. The case name and number are Americans for Prosperity Foundation v. Becerra, 2:14-cv-09448-R-FFM.
- What is at issue?
- California law requires nonprofit organizations to file copies of their IRS 990 forms with the state. Schedule B of this form includes the names and addresses of all individuals who donated more than $5,000 to the organization in a given tax year. The California law requires that nonprofits furnish the state with Schedule B forms. Although the law does not provide for the public release of Schedule B information, court documents indicate inadvertent disclosures have occurred.
- How have courts ruled up to this point?
- In 2016, Judge Manuel Real, of United States District Court for the Central District of California, found in favor of the plaintiff and enjoined the state from collecting Schedule B information from Americans for Prosperity Foundation. Real was appointed to the court by Pres. Lyndon Johnson (D).
- A three-judge panel of the Ninth Circuit unanimously overturned Real's ruling in 2018. That panel comprised Judges Raymond Fisher, Richard Paez, and Jacqueline Nguyen. Fisher and Paez were appointed to the court by Pres. Bill Clinton (D); Nguyen was appointed by Pres. Barack Obama (D).
- Americans for Prosperity Foundation petitioned the Ninth Circuit for en banc review. That petition was rejected March 29, with five judges dissenting.
- Judge Sandra Ikuta, appointed to the court by Pres. George W. Bush (R), wrote the following in the dissent: “Under the panel’s analysis, the government can put the First Amendment associational rights of members and contributors at risk for a list of names it does not need, so long as it promises to do better in the future to avoid public disclosure of the names. Given the inability of governments to keep data secure, this standard puts anyone with controversial views at risk. We should have reheard this case en banc to reaffirm the vitality of NAACP v. Alabama’s protective doctrine, and to clarify that Buckley’s watered-down standard has no place outside of the electoral context." Judges Consuelo Maria Callahan, Carlos Bea, Mark J. Bennett, and Ryan D. Nelson joined the dissent. Callahan and Bea were appointed to the court by Bush; Bennett and Nelson were appointed by Pres. Donald Trump (R).
- Judges Fisher, Paez, and Nguyen wrote in response to the dissent, "Requiring the nonpublic disclosure of Schedule B information comports with the freedom of association protected by the First Amendment because it allows state and federal regulators to protect the public from fraud without exposing contributors to the threats, harassment or reprisals that might follow public disclosure." (italics original)
- What comes next? Dave Abrams, a spokesman for Americans for Prosperity Foundation, said, "We’re assessing the order and reviewing options. We appreciate the dissent’s recognition of why this case is so important. We’re committed to championing First Amendment liberties for all Americans and speaking out against measures that risk chilling diverse public discourse."
What we're reading
- Arizona Republic, "1 win for cities, or is it? Arizona Attorney General finds Tempe's disclosure law does not violate state law," April 11, 2019
- NBC Montana, "Judge to hear Montana governor's dark-money case against IRS," April 11, 2019
- National Review, "States Need to Ensure Donor Privacy – It's Crucial to Freedom of Speech," April 9, 2019
The big picture
Number of relevant bills by state: We're currently tracking 72 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we're tracking.
Number of relevant bills by current legislative status
Number of relevant bills by partisan status of sponsor(s)
Recent legislative actions
Below is a complete list of legislative actions taken on relevant bills in the past week. Bills are listed in alphabetical order, first by state then by bill number. Know of any legislation we're missing? Please email us so we can include it on our tracking list.
- Connecticut HB07329: This bill would expand disclosure requirements for entities making independent expenditures.
- Referred to Office of Legislative Research and Office of Fiscal Analysis April 12.
- Connecticut SB00269: This bill would narrow the definition of a contribution as it applies to state legislative candidates.
- Referred to Office of Legislative Research and Office of Fiscal Analysis April 12.
- Georgia SB213: This bill would adjust contribution thresholds triggering disclosure requirements.
- Sent to governor April 9.
- Montana SB134: This bill would revise the definitions of contributions, expenditures, and independent expenditures as they apply to electioneering communications.
- Senate conference hearing April 16.
- New Hampshire SB105: This bill would establish disclosure requirements for certain contributions made to inaugural committees.
- House Election Law Committee hearing scheduled April 23.
- New Hampshire SB156: This bill would require that political contributions made by limited liability companies be allocated to individual members in order to determine whether individuals have exceeded contribution limits.
- House Election Law Committee hearing scheduled April 16.
- Washington HB1379: This bill would amend a state law requiring that entities producing political advertisements publicly disclose their top five donors.
- Placed on second reading by Senate Rules Committee April 13.
See also
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