SCOTUS protects donor privacy over “efficiency.” Some worry that this enables more “dark money” in politics.
The Supreme Court today upheld donor privacy.
NPR reports that the 6-3 decision came down along partisan lines. Unsurprisingly, the reporting on the decision has also been along partisan lines, with the New York Times and NPR expressing their concern, as National Review and The Philanthropy Roundtable celebrate the decision. Sheldon Whitehouse bloviates and Vox echoes.
“It’s a great day for dark money,” writes Ian Millhiser at Vox. The Supreme Court “sided with rich donors,” writes Nina Totenberg at NPR.
Millhiser here continues the tradition of pretending that “dark money” is a phenomenon exclusive to the political right. Totenberg’s formulation poisons the well, presenting this as a decision exclusively in the interest of the “rich donor,” and failing to ask if it’s in the interest of the nonprofit.
The most popular criticism of the decision is that it paves the way for increased secrecy and decreased donor disclosure in political giving. This, however, is overwrought at best, fearmongering at worst.
WHAT DOES THE CASE ACTUALLY SAY?
Much reporting gives the impression that the decision is unusual, setting California as some exception to the norm. Reality is much to the contrary. The norm—both in California and nationally—aligns with the Court’s decision today.
The case specifically concerned California’s requirement to disclose Schedule B of a nonprofit’s 990. This is the section disclosing the names and addresses of an organization’s major donors. The full 990—Schedule B and all—is submitted to the IRS, but only three states (now two) require nonprofits to submit the Schedule B to the state. The other 47 states and the District of Columbia either require registration without the Schedule B or require no registration.
Overturning this California law aligns California with the vast majority of other states. It is not unusual, but rather very usual.
What’s also important is that this decision returns California to its own norm. The catalyst for this case was the fact that for many years the Americans for Prosperity Foundation and Thomas More Law Center registered and operated in California without submitting their Schedule Bs. No questions were raised. It was only in 2010 that California’s attorney general began enforcing this requirement.
That enforcement was contested and—after the case was kicked between the District Court and Ninth Circuit—the petition made its way to the present case. The point, though, is that today’s decision aligns California law not only with the majority of other states, but also with California’s own standard practices.
Finally, while everyone agrees—as Chief Justice Roberts writes—that the state policing and preventing charitable fraud is important, it turns out that Schedule Bs are not important forms for this policing. And so the donor privacy protection here is both ordinary (compared to other states) and not obstructive to the state’s goals to prevent charitable fraud. It is argued to be more “efficient” for California’s AG to hold the Schedule B on file, but “the prime objective of the First Amendment is not efficiency,” as the opinion quotes an earlier decision (McCullen v. Coakley).
Also unsurprising: the Roberts opinion regularly cites NAACP v. Alabama—the 1958 Supreme Court case that upheld member privacy in support of the NAACP and the right of their members to freely (and privately) associate. This landmark case for private association comes not from “dark money conservatives” but from the NAACP protecting its members from damage and violence in a profoundly unfriendly social environment.
Today, the organizations opting for donor privacy are not a monolith. Roberts cites the diversity of those filing amici briefs:
The gravity of the privacy concerns in this context is further underscored by the filings of hundreds of organizations as amici curiae in support of the petitioners … these organizations span the ideological spectrum, and indeed the full range of human endeavors: from the American Civil Liberties Union to the Proposition 8 Legal Defense Fund; from the Council on American-Islamic Relations to the Zionist Organization of America; from Feeding America—Eastern Wisconsin to PBS Reno.
This is not a fringe, right-wing decision made in the exclusive interest of dark money Koch shills. The donor privacy protected here is a good recognized by many and diverse charitable organizations.
Why? Because free speech is not chilled in a vacuum, but in a social context. The exposure that chills association in Alabama in 1958 is different than the exposure that chills association in California in 2021. Nevertheless, wise and forward-looking nonprofits know that, even if their major donors may not mind being outed today, they may mind being outed tomorrow. Best to be cautious then.
A BIG NON SEQUITUR
NPR tells us that that the most important part of this case is, not the victory for donor privacy, but the effect it may have on campaign disclosure laws. They quote UC-Irvine law professor Rick Hasen in blog post: “it will be much harder to sustain campaign finance disclosure laws going forward.”
Millhiser in Vox takes the same angle: “The decision is, simply put, a disaster for anyone hoping to know how wealthy donors influence American politics.”
Professor Hasen makes a sharp case for this in a guest essay for the New York Times. Millhiser worries about Roberts’ “narrowly tailored” standard and Hasen laments that Roberts “rejiggered” the “exacting scrutiny” standard. (These are two tests the Court applies to determine the Constitutionality of a law.)
Their concern is that the rejiggering or reapplying of these standards will quickly lead to cases about campaign finance disclosure. Hasen writes that the Court “has laid the groundwork for lower courts to strike down campaign finance disclosure laws.” While this concern could bear itself out, the rhetoric is overwrought.
First, as I noted above, the rhetoric postures as if this is unusual, that the norm is for charities to disclose their Schedule Bs. That is very much not the norm, and this case does not introduce something unusual or unprecedented.
Second, the concern depends upon a sloppy conflating of charitable giving and campaign contributions. Will lawsuits arise arguing that disclosing campaign finance contributions is unconstitutional for its failure to be narrowly tailored to an important government interest? Perhaps. But it is obvious that any court hearing this case—left- or right-leaning—will take Americans for Prosperity as a guiding precedent? Not at all—at least not yet.
For most people in the nonprofit world, the distinction between “charitable” giving and “political” giving is stark. It is an obvious and present distinction—and a meaningful one. The protection of donor privacy for charitable donors does not signal the introduction of donor privacy for political donors. This stands to reason again, for campaign finance disclosure is the norm, just as donor privacy is the norm in most states.
Millhiser and Hasen are fearmongering about “putting our democracy at risk” and suggesting that “there is now a presumption that all such [disclosure] laws are unconstitutional.”
CONSEQUENTIALISM IN THE COURT
There is, finally, a philosophical error committed. It was Justice Sotomayor’s dissenting opinion that led the charge in worrying about the future of donor disclosure laws: “today’s analysis marks reporting and disclosure requirements with a bull’s-eye,” she writes.
That may be so. I am less worried about the novelty of the decision and thus the significance of the bullseye. But even if this decision puts campaign finance disclosure at risk, that risk does not necessarily speak to the integrity and value of this decision. It is a consequentialist ethic that would coerce exposure in one case (charitable giving) simply because of its implications for another case (campaign finance).
If indeed the good of association outweighs the state’s efficient gathering of the Schedule Bs, then that good should be promoted. If promoting that good puts another good at risk, then we must address that risk separately. But Millhiser and Hasen barely address the merits or demerits of the majority opinion itself, worrying mostly about what’s next.
What matters here, though, is that this decision is a win—for some rich donors, yes, as Totenberg says—but also for thousands of nonprofits who would like to offer their donors as much privacy as possible.