Overview
On July 1, in Americans for Prosperity Foundation v. Bonta, the Supreme Court struck down a California regulation requiring charities to include unredacted copies of Schedule B to IRS Form 990, which includes the names and addresses of major donors, when they renew their charitable solicitation registration. On a 6-3 vote, the Supreme Court concluded that California's disclosure requirement is facially invalid because it burdens donors' First Amendment associational rights and is not sufficiently tailored to the government's interest in preventing charitable fraud and self-dealing. It does not change any requirements for organizations to file the Schedule B of the Form 990 with the IRS.
Since 2001, the petitioners had declined to file unredacted Schedule Bs in order to preserve donor anonymity. When California increased its enforcement efforts and threatened suspensions and fines, the petitioners filed suit, alleging that the compelled disclosure requirement violated their First Amendment rights and the rights of their donors.
The six Justices in the majority did not agree on the correct standard of review to apply to California’s disclosure requirement. Because a disclosure requirement burdens the freedom of association rights of the donors under the First Amendment, Justices Roberts, Kavanaugh and Barrett applied an "exacting scrutiny" standard to the disclosure requirement, which "requires that a government-mandated disclosure regime be narrowly tailored to the government’s asserted interest, even if it is not the least restrictive means of achieving that end." Justices Thomas instead applied a per se rule that the more stringent "strict scrutiny" standard—which requires the government to employ the least restrictive means to achieve a compelling state interest—applies to all laws that compel disclosure of protected First Amendment association. Justices Alito and Gorsuch declined to address whether exacting scrutiny or strict scrutiny applies because it was unnecessary to decide the case.
Although the majority did not agree on the appropriate standard of review, they concluded that California’s requirement was facially invalid. The Court recognized California’s interest in preventing charitable fraud and self-dealing as an important government interest, but it held that a blanket demand that all charities disclose Schedule Bs to the Attorney General was not sufficiently tailored to this interest. Instead, the Court held that the Attorney General had other means of obtaining this information, including subpoenas or audit letters, and did not need to collect this sensitive information from all charities that solicit donations in California.
Justices Sotomayor, Kagan, and Breyer, in dissent, would have rejected a facial challenge to the California rules and the majority’s more categorical approach to donor disclosure requirements. Instead, the dissenters would have required individual litigants to show “a reasonable probability that the compelled disclosure of . . . contributors' names will subject them to threats, harassment, or reprisals from either Government officials or private parties." In addition, the dissenters would have adopted a balancing test that weighs the strength of the relevant government interest against the "seriousness of the actual burden on First Amendment Rights."
This Supreme Court decision represents the most recent step in a long-running saga regarding the disclosure of donor information on Schedule B.
Prior coverage of Schedule B disclosure can be found here, here, here, and here.