Two ideological nonprofit groups challenged California’s requirement that 501(c)(3) tax-exempt organizations file their IRS Form 990 Schedule B with state regulators. Schedule B lists the names of large contributors to an organization (generally those who give $5000 or more in a year). Both the IRS and California regulators keep organizations’ Schedule B confidential so that the identities of donors are not publicly disclosed, although California has in the past inadvertently disclosed some Schedule Bs to the public. The organizations challenging the State filing requirement claim that it violates the First Amendment-protected right to freedom of association, both on its face and as applied to them. The as-applied claim is based on the assertion that their supporters will face threats and retaliation if their identities are disclosed to the public.
The Ninth Circuit held that California’s requirement is not facially unconstitutional because the requirement of nonpublic disclosure places little burden on associational freedom and is justified by regulators’ need for that information to help monitor possible self-dealing and other financial improprieties by nonprofit organizations. The court also rejected the as-applied challenge on the ground that the organizations had not shown that a reasonable probability that their information would ever become public, and the claimed harm to their supporters would only occur if there was such public disclosure.
After the U.S. Supreme Court granted the challengers’ petition for certiorari, Public Citizen filed an amicus brief supporting the state. The brief argues that financial disclosure and reporting requirements that implicate associational rights are subject to an intermediate level of constitutional scrutiny under which a governmental interest that is substantial in relation to the actual burden on associational freedom created by a requirement is sufficient to justify it. Here, the burden of nonpublic reporting of large contributors is minimal for most organizations, and the challengers have failed to show that they will suffer harms that might make application of the requirement to them unconstitutional.