Supreme Court Strikes Down Controversial California Donor Disclosure Law

The Supreme Court on Thursday said California violated the First Amendment by requiring charities that raise money in the state to disclose their top donors to the attorney general.

A bipartisan coalition of advocacy groups that included the NAACP, the American Civil Liberties Union, and the conservative St. Thomas More Law Center said the rule scared off prospective donors and threatened their freedom of association. Chief Justice John Roberts delivered the majority opinion of six justices striking California’s disclosure regulation in full, over the dissent of Justice Sonia Sotomayor for the liberal trio.

Though charities representing the full range of political views came together to challenge California’s law, some Democrats fear Thursday’s case is the first step of a long-term attack on federal donor disclosure practices. In an exchange with Derek Shaffer, a lawyer representing Americans for Prosperity Foundation, Justice Stephen Breyer worried that "this case is really a stalking horse for campaign finance disclosure laws."

A federal trial judge barred the California attorney general from collecting donor information on charities, which appears on a form called the schedule B. But the U.S. Court of Appeals for the Ninth Circuit sided with the state, prompting an appeal to the Supreme Court.

Appearing before the justices in April, Shaffer emphasized that California’s rule could fall without endangering the IRS disclosure regime. He said the agency has a mandate from Congress to collect donor information, while the California attorney general decided to collect this information without direction from the legislature. What’s more, the IRS needs to have that information on hand for individual filers claiming exemptions for charitable giving, and its internal data is closely held.

He also highlighted that confidential donor information leaked from the attorney general’s office to the public sphere in hundreds of cases. Americans for Prosperity Foundation identified 2,000 instances in which tax documents from the attorney general’s unit wound up online. A federal trial judge who enjoined California’s law wrote that the amount of "careless mistakes made by the attorney general’s registry is shocking."