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SCOTUS May Strike Down California Donor Disclosure Law

The law requires charities provide a copy of their Form 990 tax return listing major donors

The Supreme Court of the United States (SCOTUS) appears primed to strike down California’s requirement that tax-exempt charities disclose to the state the names and addresses of their top donors.

The court heard oral arguments Monday in a case brought by Americans for Prosperity Foundation and Thomas More Law Center, who have argued that the state’s policy violates the First Amendment and discourages giving. California requires that charities provide a copy of their Form 990 tax return that lists donors who contribute large amounts. The state is not allowed to disclose donor information publicly but state officials say they need the names to prevent fraud and ensure charities are operating in accordance with their exempt purpose.

On Monday, conservative justices pointed out that only three states besides California require such disclosure.

“Doesn’t it show that it’s really not all that essential to a state’s interests if 46 other states have seen fit to regulate without infringing on the right to assemble or the right to associate in this same way?," asked Justice Brett Kavanaugh of California’s Deputy Solicitor General Aimee Feinberg.

Feinberg argued that “collection [of donor information] is substantially related to oversight and law enforcement interest.”

Liberal justices are concerned that a court ruling in the case could have broader implications for campaign finance laws. Justice Stephen Breyer said several outside organizations believe the case is a “stalking horse for campaign finance disclosure laws.”

While the Supreme Court considers the California donor disclosure law, over three dozen Democratic senators this week urged the Internal Revenue Service (IRS) to reverse a Trump administration decision to eliminate disclosure requirements for many exempt organizations. The IRS last year rolled back donor disclosure requirements for certain tax-exempt organizations, including 501(c)(6) trade associations, but charities and other 501(c)(3) organizations, as well as 527 political groups, still need to also disclose donors to the IRS under the new rules.

This article was provided to OSAE by ASAE's Power of A and Inroads.

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