Supreme Court Throws Out California Disclosure Rule For Charities

(Mandel Ngan/AFP via Getty Images)

Varun Hukeri General Assignment & Analysis Reporter
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The Supreme Court struck down a California rule Thursday that required charities and nonprofit groups soliciting financial contributions to disclose information about their donors to state authorities.

In a 6-3 ruling authored by Chief Justice John Roberts, the Court ruled that California’s disclosure rule violated the First Amendment’s freedom of association protections by subjecting donors to the threat of public harassment and intimidation. The decision reversed a Ninth Circuit Court of Appeals ruling in Sept. 2018 that sided with California’s attorney general.

Two conservative groups — Americans for Prosperity and the Michigan-based Thomas More Law Center — had challenged the disclosure rule in lawsuits filed against then-California Attorney General Kamala Harris and her successor Xavier Becerra.

The rule required charities and nonprofit groups to file a copy of an Internal Revenue Service (IRS) form known as Schedule B with state authorities, which include the personal information of all donors who contributed more than $5,000 in a given year, according to CNBC.

California argued it needed the information to investigate potential fraud by charities and nonprofit groups. Under federal law, the IRS must keep the disclosure form confidential. California also pledged to keep that information private, but the legal challenge argued the state has routinely failed to do so.

In court filings, the plaintiffs said they discovered that California had displayed around 1,800 disclosure forms on a state website in 2015, according to The New York Times. But California officials argued the disclosures had been promptly removed from the website and the state had implemented new security measures. (RELATED: California Gov. Signs A Bill Requiring Presidential Candidates To Submit Tax Returns)

Roberts wrote in the majority opinion that California “has an important interest in preventing wrongdoing” but added “there is a dramatic mismatch” between that interest and “the disclosure regime” state authorities implemented “in service of that end.”

Justice Sonia Sotomayor wrote in a dissenting opinion that the Court’s decision means entities “who wish to avoid their obligations” such as public disclosure can simply do so by “waving toward First Amendment ‘privacy concerns.'” She further argued “neither precedent nor common sense supports such a result.”

Some campaign finance advocates expressed concerns that the Court’s decision could erode public disclosure rules in the future, making it more difficult for the public to know who’s funding political causes, according to Axios.