LWV of California and Partners Urge the Supreme Court to Reject Challenge to California’s Charitable Reporting Law

WASHINGTON—Wednesday, the League of Women Voters of California, Campaign Legal Center (CLC), Citizens for Responsibility and Ethics in Washington (CREW), and Common Cause submitted an amicus brief to the U.S. Supreme Court (SCOTUS) in Americans for Prosperity Foundation v. Becerra. The case challenges a California law requiring nonprofit organizations to disclose their large donors. In its challenge to donation transparency requirements, the case could have implications for campaign finance laws. 

“The League joined this case to stand against the spreading influence of dark money in politics,” said Stephanie Doute, executive director of the League of Women Voters of California. “Financial disclosure rules are essential to ensure accountability for political influence, and this case has dangerous implications for campaign finance. The wealthiest political donors should not be able to influence our politics in secret. This case is just another example of wealthy special interests trying to chip away at transparency in politics.”

The brief urges the Court to uphold California’s law that requires charitable groups active in the state to file nonpublic tax reports—Schedule Bs—with the state Attorney General (AG) listing their largest donors. The state has asserted that the law requiring nonpublic reports is necessary to effectively enforce its tax and nonprofit laws and prevent charitable fraud. In California, the Schedule B form is kept confidential and used only for governmental oversight purposes.

“California’s nonprofit donation disclosure requirement is essential to detect fraud and other abuses,” said Virginia Kase, CEO of the League of Women Voters of the United States. “Allowing sweeping exceptions to the financial disclosure rules for political nonprofits would set a dangerous precedent that would severely damage campaign finance transparency.” 

The petitioners Americans for Prosperity Foundation (AFPF) and the Thomas More Law Center refused to submit their Schedule B donor reports to the AG’s office and brought this lawsuit against the California AG, claiming that the confidential submission of the Schedule B will violate their First Amendment rights by exposing the handful of major donors that appear on each group’s Schedule B form—many of whom contribute above a million dollars annually—to harassment and threats.

To support their claims, AFPF and the Law Center likened themselves and the potential harassment faced by their major donors to that of NAACP members during the civil rights movement in Alabama. The petitioners are making this bold claim to urge the Court to either strike down California’s law as unconstitutional on its face or grant both groups an exemption from the reporting requirement—even though the state requirement is functionally identical to their nonpublic reporting obligations under federal tax laws, which the petitioners are not challenging.

In positioning their case at the Supreme Court, the petitioners explicitly disavow any intent to challenge public and electoral transparency laws. Instead, they are asking the Court to ratchet up the standard of review applied in disclosure cases only when they involve nonpublic financial disclosures to government regulators—but a broad ruling accepting that theory could make it harder to defend all disclosure laws in court.

Petitioners are also claiming the unique exemption from disclosure laws that the Supreme Court created in Buckley v. Valeo to protect historically marginalized groups facing severe persecution and harassment. Unlike the disclosure law in Buckley, however, California’s law requires confidential reporting, so there is no reasonable chance that the petitioners’ major donors will be exposed to any public hostility; by conflating their circumstances with those of marginalized groups, the petitioners threaten to expand the disclosure exemption, potentially putting other transparency measures at risk in the future, including disclosure of money spent on elections.

“This case has nothing to do with elections or any claimed interests in public transparency,” stated Paul Smith, vice president at CLC. “A case about the constitutionality of California’s confidential tax reporting law should not be permitted to dilute the Court’s well-established precedents endorsing voters’ right to know who is spending money to influence our elections and our government. This case should not be used as a vehicle to expand exemptions from transparency in election spending to any deep-pocketed, politically active group that attracts public criticism for messages to evade disclosure.”

“Shielding the rich donors who give enormous sums to organizations like Americans for Prosperity Foundation and Thomas Moore Law Center removes any semblance of accountability,” Stuart McPhail, senior litigation counsel at CREW. “When it comes to understanding how organizations like these operate, especially those groups with tremendous public influence, it's imperative their financial records are accessible and transparent. The First Amendment not only permits such transparency but is advanced when transparency leads to speech used to hold the powerful to account.” 

“This suit is truly a solution in search of a problem that does not in fact exist,” said Beth A. Rotman, money in politics & ethics program director at Common Cause. “The disclosure requirement being challenged is disclosure solely to the state of California, and their filings are exempted from FOIA requests, so the public will never see their lists of donors.”

Read the amicus brief.

###

PRESS CONTACT: Kayla Vix | 202-809-9668 | [email protected]