2021-04-25 by W.M.
How a Supreme Court Case About Nonprofit Donations Could Affect America’s Elections
Upon first glance, the U.S. Supreme Court case Americans for Prosperity Foundation v. Rodriquez might not seem like it could impact elections.
The case, which will be argued before the Supreme Court Monday, examines the constitutionality of a California regulation requiring nonprofits wishing to raise money in the state to disclose their largest donors to the state Attorney General. But the stakes could be much higher for American democracy if the Court rules broadly, so the case has drawn intense interest from leaders and advocacy groups on both sides of the political spectrum, forging unlikely alliances in the fight over when anonymous donations are protected by the Constitution.
“We are engaged in a quiet battle with dark money forces that seek to exert broad and often secret control within government, and this case could dramatically strengthen their power,” Sen. Sheldon Whitehouse, a Democrat from Rhode Island, tells TIME.
The conservative nonprofit Americans for Prosperity Foundation—which has the backing of Republican mega-donor Charles Koch—brought the lawsuit in 2014, arguing that requiring them to disclose their major donors violates their First Amendment right to freedom of association. (Conservative law firm Thomas More Law Center filed a similar suit, which was consolidated with this one.) On the other side, California’s Attorney General argues that the government needs to collect donor names to prevent fraud, but keeps those names confidential.
Regardless of what happens to California’s policy after the Supreme Court rules later this year, the larger effects of the case will hinge in part on what standard of judicial scrutiny the Court uses to make its evaluation. Financial disclosure laws typically are evaluated under “exacting scrutiny,” a roughly mid-level standard. The 9th Circuit sided with California in 2019, ruling that the regulation held up under this standard of review because the state had proven it was substantially related to its interest in preventing fraud. But the plaintiffs argue the policy must be reviewed under a higher standard, and if the justices agree, some advocates worry it could make it easier to strike down other disclosure laws in the future.
As it stands now, Supreme Court precedent allows for unlimited corporate spending in elections, with some restrictions and donor disclosure requirements for groups like Super PACs. The outcome of Americans for Prosperity Foundation could indicate if similar requirements might be in danger in the future with three new justices appointed by former President Donald Trump on the bench.
“Ultimately, what’s at stake is the potential for chipping away at transparency that is required by our campaign finance disclosure laws,” says Carol Moon Goldberg, the president of the League of Women Voters of California.
The roots of the issue go back to protecting the safety of Black civil rights activists in the 1950s.
In 1958, the Supreme Court ruled in NAACP v. Alabama ex rel. Patterson that Alabama could not require the NAACP to share the names of its members because that could expose them to “possibilities of harassment and reprisal.” In subsequent rulings, the Court held that requiring groups to disclose names of donors can have a “chilling effect,” meaning that people might be less likely to donate if they think others could find out they did so. Certain groups can also be granted exemptions if they can prove they’re at risk of harassment if they disclose names.
Now, Americans for Prosperity Foundation argues the California policy could create such a chilling effect, and is asking for an exemption even if the Court doesn’t strike the rule down entirely. The group points to the fact that a portion of confidential records were accidentally made accessible on the state’s website, and one of their expert witnesses was able to hack into it and access even more private information. The state maintains those security holes have since been fixed.
“Stripping citizens of their privacy is a tool wielded by some in political power to silence their opposition and stifle individuals from engaging in educational and charitable efforts,” said Americans for Prosperity Foundation CEO Emily Seidel.
The American Civil Liberties Union (ACLU), the NAACP Legal Defense and Education Fund, The Knight First Amendment Institute at Columbia University, the Human Rights Campaign and PEN America have all filed a brief agreeing that requiring the plaintiffs to disclose their donors under these circumstances would violate their First Amendment rights. In fact, more than 60 amicus briefs have been filed in the case, with voting rights groups, Senators and even states weighing in. But progressive groups are split on the issue, and the First Amendment questions at play have created unusual coalitions of conservative libertarian groups and left-leaning groups that advocate for individual liberties.
“Although the ACLU does not agree with the Americans for Prosperity Foundation on every issue, or perhaps even most issues, we thought this was an important case to stand up for the First Amendment right of association,” says Brian Hauss, a staff attorney with the ACLU Speech, Privacy and Technology Project.
Some voting rights groups, on the other hand, including the League of Women Voters of California, have filed a brief urging the Court to side with California, arguing the state has proven collecting donor names, which are supposed to be kept confidential, is necessary for preventing fraud. Whitehouse and 14 other Democratic Senators have also filed a brief in the case supporting California’s position.
But looming over both sides are questions about how these positions on donor transparency could impact civic life. The ACLU’s brief urges the Court to not issue “overbroad pronouncements” that would impact disclosure requirements in other contexts, and when asked whether they are concerned about the consequences the case could have on campaign finance law, Hauss says that while that’s “a totally understandable concern,” he does not believe campaign finance laws will be affected by the case.
Others are more skeptical. “The concern is that the court could use this pretty limited law as an opportunity to opine more broadly on the First Amendment rights of anonymity,” says Tara Malloy, the senior director of appellate litigation and strategy at Campaign Legal Center (CLC), which has signed onto the brief with the League of Women Voters of California urging the court to uphold the policy. While the plaintiffs have said they have no desire to strike down electoral disclosure laws, “the type of legal arguments they’re making seem to threaten those laws,” Malloy says. “They’re arguing that the court be more skeptical, really, of disclosure and review it more carefully, which has broader repercussions.”
Campaign finance implications
The Supreme Court will consider this case more than a decade after its last major donor disclosure decision, which opened the floodgates to enormous sums of anonymous money influencing elections.
In 2010’s landmark campaign finance case Citizens United v. FEC, the Supreme Court struck down limitations on corporate spending in political communications. While Citizens United also affirmed financial disclosure requirements in certain instances, it’s unclear how the newest conservative justices—Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett—might feel about such requirements, says Richard Briffault, a professor at Columbia Law School.
Sen. Whitehouse argues those three justices “were put on the court through a process that was heavily controlled by dark money interests,” referring in part to campaigns in support of their confirmations by 501(c)(4) groups, which are not legally required to disclose their donors. On April 16, Whitehouse, along with Democrats Sen. Richard Blumenthal and Rep. Hank Johnson, sent a letter to Barrett urging her to recuse herself from the case, pointing out that Americans for Prosperity, the 501(c)(4) sister organization of Americans for Prosperity Foundation, launched a campaign last fall urging Senators to vote for her confirmation. The Hill reported at the time that the organization said it intended to spend “in the seven figures” on the confirmation battle. None of the justices have indicated that they will recuse themselves, and the Supreme Court did not respond to a request for comment on the letter.
Oral arguments are set for April 26, and a decision will likely come by June. How the justices rule—and the precedent they set for reviewing financial disclosure requirements in the future—could further affirm or erode some organizations’ ability to keep their donors private.
“The case is a part of the never-ending efforts on [the part of] advocates of dark money spending to cloak their behavior in even more secrecy,” says Norman Eisen, a senior fellow at the Brookings Institution who served as President Barack Obama’s chief ethics lawyer. If the Supreme Court believes disclosure laws need to clear a higher constitutional bar, Eisen says, “I think the advocates of secrecy would try to take the ball and run with it.”