This week the U.S. Supreme Court heard oral argument in the case Americans for Prosperity Foundation v. Bonta (formerly AFPF v. Becerra). The Roundtable has closely followed this case since AFPF’s complaint against California’s then-state Attorney General Kamala Harris for demanding that nonprofit organizations file their confidential IRS Schedule B forms, including the names of major donors, with the state.
Previously, the Philanthropy Roundtable had submitted two amicus briefs, the most recent of which was cited by AFPF in its February 22, 2021, brief. The value of all the amici’s briefs, including the Roundtable’s, was clear yesterday as several justices referred to the broad range and large number of groups who filed amicus briefs as evidence that the regulation will have significant impact on the philanthropic and nonprofit sectors.
AFPF’s arguments appeared to resonate with the justices. Below are five key takeaways:
- Americans’ Freedom of Association includes the right to anonymous association.
The issue of anonymity as a key part of the freedom of association came up repeatedly. Justice Amy Coney Barrett stressed this line of questioning, as did Justice Clarence Thomas and Justice Brett Kavanaugh, who said the critical corollary of the freedom to associate is the right to keep that association private.
Justice Thomas asked several questions related to the recent trend of publicly accusing organizations of being racist, homophobic or otherwise controversial. He asked whether the petitioners’ analysis would change if an organization were simply providing free dog beds. This opened up a discussion of how we live in very divisive times; a cause that may appear non-controversial may in fact be controversial to some now—or may become contentious in the future. He also brought up the history of census data being used to round up Japanese Americans for internment camps and similar historical threats. AFPF’s attorney added that there are many other reasons that a donor may wish to remain anonymous outside of fear of retaliation, including religious reasons, modesty, or a desire to avoid unwanted solicitations, as the Roundtable’s amicus brief argues.
- Fear of disclosure may chill charitable giving and association.
Justice Samuel Alito asked the defendant’s attorney whether they doubt that donors who give to controversial causes have reason to worry, citing ample evidence of harassment in the brief jointly submitted by the American Civil Liberties Union, the NAACP Legal Defense Fund, and the Human Rights Campaign. The defense responded that there may be a chilling effect in individual cases, but there is no evidence this applies to a typical individual donating to a typical charity.
Justice Alito was also concerned with the leaks California has had in the past and questioned whether there would be any confidence in California’s ability to keep the information confidential in the future, or whether donations will be chilled. Justice Sonia Sotomayor raised similar concerns that the information could be hacked—or that the “reasonable fear” created by past breaches will chill giving.
- California does not need to prophylactically demand Schedule Bs.
The major question in the case is whether California’s interest in collecting Schedule Bs outweighs the constitutional concerns with mandating their collection. This leads to a discussion of why it may be constitutional for the IRS to require Schedule Bs, but not a state. To this end, Justice Kavanaugh asked the petitioners’ attorney to distinguish between IRS’s collection of Schedule Bs and California’s collection of Schedule Bs. He responded that, unlike California, the IRS has 1) statutory authority; 2) tax compliance purposes; 3) nationwide jurisdiction; and 4) significant protections against public disclosure. Justice Kavanaugh also brought up the fact that if 46 other states do not require Schedule Bs, it is difficult to see why California asserts that this is necessary for their oversight. (Particularly because, as Justice Alito highlighted in his questioning, the state only used these documents in a handful of cases over 10 years.)
Justice Neil Gorsuch had a compelling hypothetical about whether the government could argue it needed other information for purposes of efficiency—such as an organization’s Christmas card list to ensure mail delivery was happening properly.
- Americans should not have to wait until they are threatened to have their rights protected.
There was a frequent discussion on the issue of an as-applied challenge, which would argue that California’s rule is unconstitutional as applied in specific instances, not as a whole. This would essentially require every affected donor and charity to individually prove that they have faced a negative impact due to the requirement. The petitioners’ attorney effectively pointed out they have spent seven years challenging this and surely every nonprofit in the state cannot be expected to go through the same onerous process. Procedural hurdles aside, Chief Justice John Roberts, among others, questioned how a concerned charity would go about showing they are at risk and what the threshold or criteria would be to prove such a risk.
The defendant’s attorney also noted that a charity could go before California’s Attorney General’s office for an administrative exemption. The justices seemed concerned with California’s argument that if a nonprofit or a donor is facing threats or harassment, they could apply for an exemption. Chief Justice Roberts wondered how they could prove the risk and asked how many examples would be needed. Justice Gorsuch referred to this as “putting the cart before the horse,” as this would presumably require the threat or harassment to occur before a donor’s liberties are protected. Justice Alito questioned whether, if California asserts the information will not be public, if any group could ever succeed at such a challenge.
- There is a need to clarify distinction between political and non-political speech.
Justice Breyer brought up the issue of whether it is possible to distinguish between this case and campaign finance laws, where the desire for privacy may be even more intense. His question suggested that California’s regulation may deter “bad behavior.” This theme is a familiar one to any following the attacks on so-called “dark money.” It points to the need for more education on the important role that appropriate campaign finance laws play in ensuring transparency in government and the political process—and how that is wholly separate from the private speech and association of individuals not engaged in election activities.
The court is expected to issue a ruling on this case by the end of this term in June 2021.