U.S. Supreme Court issues decision in donor disclosure case. What comes next?

On July 1, the U.S. Supreme Court issued its decision in Americans for Prosperity Foundation v. Bonta, striking down a California policy that required nonprofits to disclose their donors’ identities to the state’s attorney general.

What comes next in the wake of this decision? First, we’ll discuss the case background and the Supreme Court’s ruling, then we’ll turn our attention to the implications of that ruling.

What’s at issue, and how lower courts have ruled

The California policy in question required nonprofits to file copies of their IRS 990 forms with the state. Form 990 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 did not allow the public access to Schedule B information, court documents show that inadvertent disclosures had occurred.

In 2014, Americans for Prosperity challenged the law in U.S. district court, triggering a series of legal developments spanning several years:

2014: Americans for Prosperity Foundation (AFPF), a 501(c)(3) nonprofit, filed suit in U.S. district court, alleging that the California law violated its First Amendment rights.
2015: The Thomas More Law Center (TMLC), also a 501(c)(3) nonprofit, filed a similar suit in the same U.S. district court.
2016: Judge Manuel Real of the U.S. District Court for the Central District of California found in favor of AFPF and barred the state from collecting the group’s Schedule B information. In a separate 2016 ruling, Real also found in favor of TMLC and prevented the state from collecting the group’s Schedule B information. Real was appointed to the court by Lyndon Johnson (D).
2018: The two suits were combined on appeal. A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit unanimously overturned Real’s rulings in 2018. Judges Raymond Fisher, Richard Paez, and Jacqueline Nguyen issued the ruling. Fisher and Paez are Bill Clinton (D) appointees. Barack Obama (D) appointed Nguyen.
2019: The plaintiffs petitioned the Ninth Circuit for en banc review. That petition was rejected March 29, 2019. On Aug. 26, 2019, the plaintiffs appealed to the Supreme Court.
2021: On Jan. 8, the U.S. Supreme Court agreed to take up the consolidated appeal. Oral argument took place on April 26.

How the Supreme Court ruled

The Supreme Court ruled 6-3 in favor of the plaintiffs, striking down the California law. Chief Justice John Roberts, a George W. Bush (R) appointee, wrote the majority opinion. Roberts said, “California has an important interest in preventing wrongdoing by charitable organizations.” But, he went on to say that there was “a dramatic mismatch” between that interest and California’s donor disclosure requirements. He wrote: “The upshot is that California casts a dragnet for sensitive donor information from tens of thousands of charities each year, even though the information will become relevant in only a small number of cases involving filed complaints.” Roberts added, “In reality, then, California’s interest is less in investigating fraud and more in ease of administration.” He said that interest did not “reflect the seriousness of the actual burden that the demand for Schedule Bs imposes on donors’ association rights.”

Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett – all of whom were appointed by Republican presidents – concurred in the judgment.

Alito, Gorsuch, and Thomas declined to join some parts of the majority opinion, disagreeing about whether an exacting scrutiny or strict scrutiny standard should be applied in cases like this. Under the exacting scrutiny standard, a law that infringes on a constitutional right will be upheld only if it is narrowly tailored to advance a compelling government interest. The strict scrutiny standard, which is more stringent, requires that a challenged law be narrowly tailored using the least restrictive means available to serve a compelling government interest.

In the majority opinion, Roberts said the exacting scrutiny standard should be applied to all cases of this type. Alito said he was “not prepared at this time to hold that a single standard applies to all disclosure requirements.” Gorsuch joined Alito in this opinion. In his concurrence, Thomas said the court should have invoked the strict scrutiny standard because “our precedents require application of strict scrutiny to laws that compel disclosure of protected First Amendment association.”

Justice Sonia Sotomayor wrote a dissent, joined by Justices Stephen Breyer and Elena Kagan – all Democratic appointees. Sotomayor said the majority opinion “discards [the Supreme Court’s] decades-long requirement that, to establish a cognizable burden on their associational rights, plaintiffs must plead and prove that disclosure will likely expose them to objective harms, such as threats, harassment, or reprisals.” Sotomayor added, “The evidence shows that California’s confidential reporting requirement imposes trivial burdens on petitioners’ associational rights and plays a meaningful role in [state] attorneys’ ability to identify and prosecute charities engaged in malfeasance,” which she said is “more than enough to satisfy the First Amendment.”

What are the reactions, and what comes next

Bartlett Cleland, counsel and chief strategy and innovation officer for the American Legislative Exchange Council, and Lee E. Goodman, a former chairman of the Federal Election Commission, wrote the following in an op-ed praising the Supreme Court’s ruling in Americans for Prosperity Foundation v. Bonta:

Fortunately, six Justices reaffirmed in definitive terms the First Amendment’s powerful protection for speech, assembly, and privacy. In striking the California donor disclosure rule, they demonstrate that they understand the history of government abuses and the need for people to be secure in their associations and the importance of conscience to freedom.

It is unclear how this ruling will affect donor disclosure and privacy laws in other states. David Strauss, a law professor at the University of Chicago, said:

The Court has tried to draw a line between disclosures that are really going to hurt people … and disclosures that are unlikely to be harmful. The question is whether, after this decision, the Court is still going to try to draw that line, or is instead going to say: disclosure laws of all kinds risk chilling speech.

Rick Hasen, a law professor at the University of California, Irvine, said that the Supreme Court’s ruling could affect campaign finance laws more broadly:

The court’s ruling calls into question a number of campaign finance disclosure laws. Perhaps even more significant, it also threatens the constitutionality of campaign contribution laws, which are judged under the “exacting scrutiny” standard, too. Lower courts can now find that such laws are not narrowly tailored to prevent corruption or its appearance or do not provide voters with valuable information — two interests the court recognized in the past to justify campaign laws.

The big picture

Number of relevant bills by state: We’re currently tracking 39 pieces of legislation dealing with donor disclosure and privacy. 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

No legislative actions have been taken on relevant bills since our last issue.

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