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Welcome to Disclosure Digest
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June 15, 2021
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Join us today as we explore the legislation, litigation, and advocacy surrounding nonprofit donor disclosure.
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 to the public information about donors violates privacy rights and can inhibit charitable activity. |
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BALLOTPEDIA |
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First Circuit hears arguments in lawsuit over Rhode Island donor disclosure law
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On June 9, a three-judge panel of the U.S. Court of Appeals for the First Circuit heard oral argument in Gaspee Project v. Mederos, in which plaintiffs allege a Rhode Island law requiring issue advocacy groups to disclose personal information about their donors violates donors' free-speech and privacy rights.
The parties to the suit
The plaintiffs are two nonprofit groups: the Gaspee Project and the Illinois Opportunity Project, both 501(c)(4) organizations subject to the challenged law. The Liberty Justice Center is representing the plaintiffs. The defendants are Diane Mederos, Stephen Erickson, Jennifer Johnson, Richard Pierce, Isadore Ramos, David Sholes, and William West, all members of the Rhode Island Board of Elections.
What's at issue
The law in question (H7859, enacted in 2012) requires issue advocacy groups to disclose to the public personal information about donors who contribute more than $1,000. Groups must report the donor's name, job title, employer, home address, and donation amount. This information is then posted to a government website. The law also requires that, in the weeks leading up to an election, groups publish the names of their top five contributors on any advertising or messages.
Daniel R. Suhr, an attorney for the Liberty Justice Center, said:
This case is about freedom of speech and association. We think the marketplace of ideas operates best when we have the most robust conversation and people can say controversial things without fear of retaliation. From the beginning of our nation, our country has had a proud tradition of anonymous speech in the public square. And that stems from a commitment to focusing on ideas, rather than who is paying for the message.
Austin Graham, legal counsel for the Campaign Legal Center, which supports the Rhode Island law, said:
It's about providing voters with more information to fully evaluate political advertising and messaging, which in turn allows them to fully participate in the democratic process. It's the marketplace of ideas. Informed decisions in the political marketplace, like the economic marketplace, depend on the free flow of information about sources of political messages supporting or opposing candidates.
Case history
The plaintiffs filed suit on Nov. 21, 2019, in the U.S. District Court for the District of Rhode Island. On Aug. 28, 2020, Judge Mary McElroy, a Donald Trump (R) appointee, dismissed the lawsuit:
The Act's disclosure and disclaimer requirements are justified by the sufficiently important state interest of an informed electorate and any burdens on political speech that they may cause are substantially related to that state interest. The plaintiffs, therefore, cannot state a plausible claim that the Act is facially violative of First and Fourteenth Amendment rights.
The plaintiffs appealed the dismissal to the First Circuit. The judges deciding the case are David Barron (a Barack Obama (D) appointee), Bruce Selya (a Ronald Reagan (R) appointee), and Pedro Delgado Hernández (an Obama appointee).
Other noteworthy litigation
On April 26, the U.S. Supreme Court heard oral arguments in Americans for Prosperity Foundation v. Bonta, a case involving a California law that requires nonprofits to file copies of their IRS 990 forms with the state. This includes Schedule B, which contains the names and addresses of all individuals who donated more than $5,000 to the nonprofit in a given tax year. Although the law does not allow the public access to Schedule B information, court documents show that inadvertent disclosures have occurred.
In 2014, Americans for Prosperity challenged the law in U.S. district court, triggering a series of legal developments spanning several years. The U.S. Supreme Court is expected to make its ruling in the case sometime this month. |
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The big picture
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Number of relevant bills by state: We're currently tracking 38 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):
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Recent legislative actions
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For complete information on all of the bills we are tracking, click here.
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California SB686: This bill would require a limited liability company that qualifies as a committee or a sponsor of a committee under the state's campaign finance laws to file a statement of members with the secretary of state. The statement of members must include a list of all persons who have a membership interest in the limited liability company of at least 10% or who made a cumulative capital contribution of at least $1,000 to the company after it qualified as a committee or sponsor of a committee, or within the 2 calendar years before it qualified.
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Democratic sponsorship.
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The bill was referred to the Assembly Elections Committee on June 10.
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