This post was originally published on Forbes Aug 4, 2015
Citizens United won a game-changing case in the Supreme Cout in 2010 allowing corporations to make independent political expenditures. Now it is in court trying to make extra sure that nobody, other than the IRS, knows where the money is coming from. Both Citizens United and Citizens United Foundation are suing the Attorney General of New York over donor disclosure requirements.
Plaintiffs Citizens United and Citizens United Foundation seek to preliminarily enjoin the New York Attorney General from enforcing his policy of requiring registered charities to disclose the names, addresses, and total contributions of their major donors in order to solicit funds in the state. Plaintiffs contend principally that the policy impermissibly trenches upon their First Amendment rights of freedom of speech and association. They also allege that the policy was adopted in violation of the State Administrative Procedure Act; that it is preempted by federal law; and that the Attorney General's enforcement of the policy violates their due process rights.
First, plaintiffs contend that the policy violates their First Amendment rights of freedom of speech and association. They identify two distinct grounds for their First Amendment challenge: (1) that the Attorney General's interests in enforcing the Schedule B policy do not justify the burdens it places on charities' rights of speech and association (the “unconstitutional burden” argument), and (2) that Article 7-A of the Executive Law is an unlawful prior restraint on speech because it confers unbridled discretion on the Attorney General to impose unlimited conditions on charities' ability to speak (the “prior restraint” argument).
The Attorney General has explained that requiring registered charities to file Schedule B furthers the government's interests in overseeing charitable organizations and enforcing solicitation laws because information on charities' sources of funding enables him to identify organizations that may be operating fraudulently or without a proper charitable purpose. For example, a charity's multi-year filings of Schedule B may disclose that a single donor has consistently served as its primary source of funding, causing the Attorney General to question whether the charity is in reality a tool to evade taxes or launder money. At oral argument, counsel described a specific instance in which an examination of Schedule B enabled the Charities Bureau to determine that close relatives of a major donor were the recipients of jobs with, and expenditures by, a charity, leading the Bureau to investigate whether the entity was truly pursuing charitable purposes.
Citizens United has not demonstrated that the balance of equities tips in its favor or that a preliminary injunction serves the public interest. On this record, the only actual, non-speculative burden that the Schedule B policy imposes on plaintiffs' speech and association rights stems from its interference with their donors' subjective desire to remain completely anonymous. As the Court has already found, that burden is negligible. On the other end of the scale, prohibiting the Attorney General from obtaining Schedules B from organizations such as plaintiffs would materially impede his oversight of charities by precluding his access to information that exposes potential violations of the law. Moreover, the public has a strong interest in the enforcement of laws that protect it from unscrupulous charities, at least when such enforcement is not likely to lead to a First Amendment violation.
Donald McGahn, a partner at Jones Day representing Citizens United, said the group plans to pursue the rest of its lawsuit against Schneiderman, and show that the attorney general is "acting unconstitutionally and beyond his authority."
Schneiderman, in a statement, said "today's victory over Citizens United reaffirms some of our most basic responsibilities in overseeing the nonprofit sector," including to ensure that charitable funds are properly used.
This is just the first step in a lengthy process to protect the privacy of our members and supporters, and we are confident that in the end we will prevail