Encouraging news: Two separate courts recently struck down New Jersey and New York laws requiring mandatory disclosures of donors to nonprofit organizations, affirming First Amendment rights over purported government interests in donor information. These decisions build on both the Trump Administration’s efforts to curtail Section 501(c)(4) donor disclosure requirements and Americans for Prosperity’s ongoing challenge to California’s donor disclosure law applicable to Section 501(c)(3) public charities.
Can controversial nonprofits expect government protection from mandatory disclosures of their donor participants? New Jersey is the latest state to respond “No,” at least when Section 501(c)(4) social welfare organizations engage in lobbying or other politically related activity. Americans for Prosperity Foundation, a Section 501(c)(4) organization has asserted “Yes,” challenging this so-called “dark money” reporting and donor disclosure law as a First Amendment violation. AFP’s challenge follows on the heels of its valiant (but thus far defeated) effort against California’s more narrow donor disclosure law. Balancing our nation’s constitutional history regarding freedom of speech, association and expression rights, and related privacy interests against New Jersey’s onerous donor disclosure requirements, AFP should win the day with its newly filed injunction action.
Is it campaign finance reform, or yet another threat of harm to First Amendment rights affecting donors and tax-exempt organizations? This spring, the U.S. House of Representatives passed an “omnibus” campaign finance bill called “For the People Act,” (H.R. 1) which addresses a wide range of election and related matters. The Act expressly excludes Section 501(c)(3) public charities from its donor disclosure and reporting requirements, but not Section 501(c)(4) social welfare or other tax-exempt organizations. While the proposed legislation likely will go nowhere in the Senate, it warrants notable mention in the following ways.