Stop California’s Attack on Charitable Giving

Privately funded efforts to address social problems, enrich culture, and strengthen society are among the most significant American undertakings and have been for hundreds of years. The United States is among the most generous nations in the world when it comes to charitable giving, with gifts by individuals (including bequests) totaling over $298 billion in 2015—a record-breaking sum. Over one million nonprofit organizations benefited from those donations, including religious groups, schools, hospitals, foundations, social-welfare organizations, and, yes, think tanks. This number includes approximately 118,000 registered charities in California alone.

America’s culture of charitable giving has flourished because its legal framework—including the national individual deduction for charitable donations and income-tax exemption for charitable organizations—marks a critically important boundary between government and civil society, one enshrined in our Constitution. Regrettably, the state of California has pushed to collect, in bulk, the names of charitable donors who choose to give anonymously—without any immediate need. Nearly an eighth of all U.S. charities are registered to solicit donations in California, so the stakes for donor privacy and freedom in this case implicate donors and charities across the country.

Americans for Prosperity Foundation is resisting this request, but a district court ruled against them. Now before the U.S. Court of Appeals for the Ninth Circuit, Cato has joined the Pacific Research Institute and Competitive Enterprise Institute on an amicus brief.

The Supreme Court ruled unanimously in NAACP v. Alabama (1958), that “freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the ‘liberty’ assured by the Due Process Clause of the Fourteenth Amendment.” As a result, the state of Alabama could not compel the NAACP to reveal the names and addresses of its members because doing so would expose its supporters “to economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility” and thereby restrain “their right to freedom of association.”

This case implicates the same concerns. It cannot seriously be questioned that many donors simply will not give unless they can keep their donations confidential. Many donors, for example, give anonymously out of deeply held religious or political convictions. Some do so to live a more private life. Others do so for the same reasons articulated by the Supreme Court in NAACP v. Alabama—to avoid “economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility” associated with supporting unpopular or controversial causes. Others may fear public or private retaliation and harassment, while still more do so to avoid unwanted solicitations by other groups.

Forced disclosure of donor names to state governments threatens serious consequences for both donors and charitable organizations. At the same time, California already has ample tools for carrying out its proper role in protecting the public from fraud and deceptive solicitation practices, including targeted use of the attorney general’s supervisory authority and subpoena power.

In Americans for Prosperity Foundation v. Harris,* the Ninth Circuit should reject the attorney general’s policy of unfettered donor disclosure and its chilling effect on constitutionally protected activity. This bulk disclosure policy—which has no statutory basis, serves no compelling state interest, and could be accomplished by less restrictive means—adversely affects the rights of all donors and nonprofit organizations operating in the nation’s largest state.

*For some reason the change hasn’t yet been made, but with Kamala Harris’s departure to the U.S. Senate and Xavier Becerra now California’s attorney general, the case will very soon be known as Americans for Prosperity Foundation v. Becerra.