By James Piereson The Weekly Standard · March 20, 2017
Photo credit: Prager University / YouTube
On February 27 the Supreme Court turned down an appeal in a case from Colorado that would have decided whether nonprofit organizations that run issue advertisements during election campaigns can be compelled to disclose the names and addresses of their donors. This was one of several cases making their way through state and federal courts that address the issue of donor privacy and the degree to which federal and state governments can use disclosure requirements to regulate political speech. This is the free speech and privacy issue of the hour, one that the Supreme Court has allowed to continue simmering.
In the Colorado case, the Independence Institute, a 501(c)(3) charitable organization, proposed to run a series of “issue advertisements” during the 2014 Senate campaign urging the state’s two senators to support a federal bill to reform guidelines for criminal sentences. The proposed ads addressed only this narrow issue and did not endorse or oppose any candidate for election. Nevertheless, under the McCain-Feingold Campaign Finance Act of 2002, the organization would have been required to make public its list of donors because the ads, though they were focused narrowly on issues, mentioned the name of a senator on the ballot within 60 days of the election. A federal district court ruled against the Independence Institute and upheld the donor-disclosure provisions of McCain-Feingold as they apply to nonprofit groups. The Supreme Court affirmed that decision last week, thereby creating an environment in which donors, concerned with retaliation, may be reluctant to support issue-oriented campaigns.
A parallel case is also working its way through the courts, testing whether California can require not-for-profit organizations to disclose their donor lists as a condition for raising funds in the state. In 2014, Kamala Harris, California’s attorney general, declared that nonprofits soliciting contributions in the state would have to submit the names and addresses of their donors. Since charities are required to register in California to raise funds there, her order effectively means that nonprofit organizations must release personal information about their donors (or withdraw from the state).
The Americans for Prosperity Foundation challenged Harris’s order in federal district court, which ruled in its favor, arguing that a handover of its donor lists would violate the foundation’s First Amendment rights. However, the court limited relief to the donor list of that single foundation. The APF has since appealed to the Ninth Circuit Court seeking a broader decision that would apply to all nonprofits operating in California. Since Harris won election in 2016 to the U.S. Senate, the new attorney general of the state, Xavier Becerra, is now the named defendant in the lawsuit. As a member of Congress, Becerra was an outspoken advocate for the kind of aggressive disclosure represented by his predecessor’s order.
The decision in Americans for Prosperity Foundation v. Becerra (Harris) may affect a similar regulation imposed by the state of New York as well as legislation being considered in more than 20 states that would restrict donor privacy. Under the guise of transparency, legislators across the country are debating bills that would force disclosure of nonprofit donors. In New Mexico, for instance, the legislature has considered four bills that would have mandated the disclosure of donors to nonprofit organizations that speak solely about issues. Alabama legislators are trying to amend their state constitution to require nonprofits to disclose information about their donors. In Missouri, the legislature has considered bills that would reclassify a variety of nonprofit groups as “political committees,” subject to donor disclosure and government reporting requirements.
Several states, including Minnesota, Montana, and West Virginia, are considering or have adopted so-called DISCLOSE Acts (Democracy Is Strengthened by Casting Light On Spending in Elections), which require nonprofit organizations that sponsor issue campaigns to reveal their donors. These laws are drawn broadly to require organizations as varied as Planned Parenthood and the National Rifle Association to disclose the names of all donors large and small, including the vast majority of contributors who endorse the general principles of these organizations but do not earmark their gifts to the issue campaigns in question. These laws and regulations go well beyond the requirements of McCain-Feingold because they propose to cover all issue ads, not just those that happen to mention the names of candidates in the run-up to an election.
Such laws and regulations are being implemented in order to combat what former Federal Election Commission chairman Ann Ravel called “the nationwide scourge of dark money nonprofit networks hiding the identities of their contributors.” It has become an article of faith among progressives that conservative billionaires are concealing political contributions by funneling them through issue oriented not-for-profit organizations and networks not subject to public disclosure—as if these practices have not been adopted as well by numerous liberal and progressive operations.
But claims that “dark money” is corrupting our elections are much exaggerated. The law already requires full public disclosure of contributions to candidates, parties, PACs, and super-PACs. The Federal Communications Commission requires broadcast and cable networks to disclose the sponsors of political advertisements. According to the Center for Competitive Politics, more than 95 percent of all funds spent on election campaigns are subject to donor disclosure. The Federal Election Commission reports that a total of $7 billion was spent on campaigns during the 2012 election cycle, of which $257 million—less than 4 percent of the total—was raised and spent by issue-oriented nonprofit organizations that are not required to disclose the names of donors. That figure fell substantially during the 2016 cycle to $148 million out of an estimated $7 billion spent all told. Moreover, academic researchers have found that mandatory disclosure of donors (beyond what the law already requires) does little to provide useful information for voters. Advocates for donor disclosure are thus deploying scorched earth tactics to address at worst a minor problem, heedless of the consequences of doing so.
The campaign to ensnare charitable organizations in the disclosure regime is bound to hurt the charitable sector in general. According to Giving USA, charitable contributions in 2015 in the United States amounted to $373 billion, or roughly 2 percent of gross domestic product. These funds support a litany of causes that contribute to the vitality of civil society in America. Many of those donors give with an expectation of privacy or anonymity, even if they are donating to museums, orchestras, or food pantries rather than to organizations promoting controversial points of view. The threat of public disclosure will deter some of these donors, or at least give them pause. For this reason, the Philanthropy Roundtable, an organization representing donors, filed an amicus brief urging the Supreme Court to clarify the issues raised by the Colorado case.
Existing laws and regulations already place strict limits on the extent to which tax-exempt charities and private foundations may spend money on elections and lobbying efforts. Public charities are required by the IRS to submit donor lists with their tax returns, though these lists are not (as yet) made public. Private foundations—those funded by a single donor—must submit lists of their donations with their annual tax returns, which the IRS makes available for public distribution. Those laws and regulations permit charitable organizations—liberal, conservative, and everything in between—to take public positions or to provide information to the public on controversial issues, so long as they are not involved in electioneering or propaganda. The rules currently strike an appropriate balance between independence and accountability in the charitable sector. There is little to be gained by extending campaign disclosure requirements to these kinds of institutions, as the district court in Colorado, the attorney general of California, and various other states propose to do.
Some have suggested that the real purpose behind this campaign is to deter donors from making contributions to issue-oriented campaigns or advocacy organizations for fear of exposure, harassment, and retaliation. As Kimberley Strassel demonstrates in her book The Intimidation Game, progressive groups swung into action in 2010 following the Supreme Court’s decision in Citizens United v. Federal Election Commission, aggressively pursuing a strategy of exposure and harassment against conservative donors to campaigns and ballot initiatives.
The press has reported many examples of donors who were harassed after their donations on behalf of controversial causes were made public. Indeed, Tom Matzzie, a progressive activist associated with MoveOn.org, indicated to the New York Times several years ago that the aim of the disclosure campaign is “to confront donors to conservative groups . . . to create a chilling effect that will dry up contributions.” Such aims contradict the fundamental principle that all Americans have the right to support causes they believe in without fear of harassment or intimidation.
Donors are very much aware of this potential danger. In a recent study of voters in six states, Dick M. Carpenter II found that while they tend to support disclosure in the abstract, they change their minds when the issue is personalized. As he wrote, “When participants are asked about their likelihood of contributing to a campaign in the face of disclosure, almost 60 percent would think twice about contributing if their personal information is to be disclosed.” His careful study proved what we already had reason to believe—namely, that aggressive disclosure regulations have a chilling effect on political speech and contributions, particularly where divisive or controversial issues are concerned.
The emphasis on disclosure arose directly from the Citizens United decision, which struck down contribution limits for issue-oriented campaigns but left intact the limited disclosure requirements in McCain-Feingold. With contribution limits gone, progressive groups seized on disclosure as the strongest weapon still available to harass conservative donors seeking to support issue-oriented campaigns.
The Supreme Court has long held that the ability to support unpopular causes without fear of reprisal from neighbors or employers is vital for the functioning of American democracy. In 1958, the Court ruled unanimously in NAACP v. Alabama that “freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the ‘liberty’ assured by the Due Process Clause of the Fourteenth Amendment.” That case addressed an attempt by the state to subpoena the NAACP’s membership list as a means of disrupting its operations. The court ruled in favor of the NAACP, pointing out that turning over its membership list would expose supporters “to economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility” and thereby compromise “their right to freedom of association.”
In the NAACP case, the state of Alabama was seeking membership lists rather than lists of donors. But in a subsequent landmark case, Buckley v. Valeo (1976), the Court extended that precedent to cover donor lists. Applying its reasoning from NAACP, the Court ruled that “past decisions have not drawn fine lines between contributors and members, but have treated them interchangeably.” In that case, the Court drew a line between organizations like political parties or political action committees that exist for the primary purpose of electing candidates for public office and those that primarily seek to inform or persuade the public on issues and controversies. In the first case, donor disclosure is appropriate; in the second, it is not.
The bright line drawn by the Supreme Court in these landmark cases is now being blurred by the incremental extensions of McCain-Feingold, the decisions of the Federal Election Commission and the federal courts, and the flurry of laws and regulations about donor disclosure being adopted by the states. The Supreme Court missed an opportunity last week to uphold that boundary and to strike a blow for donor privacy and robust political debate. But the issues will not go away. The Court will have another opportunity to review the controversy—and to rectify this mistake. ¨
James Piereson is a senior fellow at the Manhattan Institute.