9th Circuit Supports Disclosure to AG of 501(c)(3)'s Donors

Earlier this month the U.S. Court of Appeals for the Ninth Circuit upheld a lower court's denial of a preliminary injunction against the California Attorney General.  The injunction would have prevented the AG from requiring the section 501(c)(3) Center for Competitive Politics (CCP) to provide an unredacted copy of its Schedule B to IRS Form 990, which schedule identifies significant donors to the group.  The AG had required the filing of the schedule as a condition of the group maintaining its registration with the state as a charity eligible to solicit contributions in California.

The court, applying exacting scrutiny, rejected what it characterized as CCP's facial challenge to the disclosure requirement, concluding that CCP had failed to either allege or produce evidence that the disclosure of their identities to the AG would cause these significant donors to "experience threats, harassment, or other potentially chilling conduct."  Slip. Op. at 16.  While the court noted that the AG planned to keep the donors' identities confidential and so not release them to the public, it also concluded that CCP had failed to provide evidence that even public disclosure would chill the First Amendment activities of its donors, so the potential for the AG to change her policy in this regard did not salvage CCP's claim.  Slip Op. at 18 n.9.  Finally, the court concluded that the Internal Revenue Code section 6104, to the extent it governs the ability of the Treasury Department to make information regarding tax-exempt organizations available to state officials, did not preempt the AG's disclosure requirement.

The decision has ramifications for both the pending lawsuit by the Americans for Prosperity Foundation (APF) challenging the same requirement and for the authority of AGs more generally to demand unredacted copies of Schedule B and other donor information.  APF was initially more successful than CCP in its lawsuit, obtaining a preliminary injunction blocking the application of the requirement to it, but that victory may now be in doubt given this decision relating to CCP.  As for other states, the court noted in a footnote the several states that already have similar requirements, and more states may seek to gather this information if this appellate court decision stands.

Additional Coverage: LA Times.

Lloyd Mayer