Supreme Court Strikes Down California Donor Disclosure Rule

On July 1, 2021, the U.S. Supreme Court ruled that California’s nonprofit donor disclosure requirements violate the First Amendment. The case, which is also seen as having a potential impact on campaign finance regulations, opens the door for further legal challenges against states that have similar rules requiring tax-exempt organizations to share their IRS Form 990 Schedule B, Schedule of Contributors, with state officials. This schedule generally includes the names, addresses, and total contributions of all donors who contribute more than $5,000.

Sixteen states, plus Washington, D.C., have urged the court to uphold California’s requirements, arguing that donor data allows state regulators to check the accuracy of financial reporting by charities, ensure compliance with regulations, and identify fraud and abuse. However, the court, in a 6-3 opinion authored by Chief Justice John Roberts, held that California’s requirement was too broad. “California casts a dragnet for sensitive donor information from tens of thousands of charities each year, even though that information will become relevant in only a small number of cases involving filed complaints,” Roberts said.

Opponents of the requirement hailed the ruling as a major victory for free speech.  Under this ruling, Schedule B no longer needs to be included in any state charitable filings that request a copy of Federal Form 990 returns.

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