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Upheld: NY Can Require Nonprofits to Report Major Donors

By William Vogeler, Esq. on February 16, 2018 | Last updated on March 21, 2019

Over free speech arguments, the U.S. Second Circuit Court of Appeals upheld New York's law requiring registered charities to disclose their donors.

Citizens United had challenged the law, saying it violated the First Amendment by intimidating donors who want to remain anonymous. The free speech group also said the law was a prior restraint on the ability to solicit donations.

In Citizens United and Citizens United Foundation v. Schneiderman, the appeals court said the state has an important interest in stopping fraud and abuse by charities by requiring them to disclose donor information.

Content Neutral

The judges said Attorney General Eric Schneiderman, the named defendant, had no reason to enforce the disclosure law "in anything but a uniformly content-neutral fashion."

"We find that the mere requirement on a tax exempt organization to disclose its donor list to a state's authority charged with regulating nonprofits does not impermissibly chill speech or assembly rights," Judge Rosemary Pooler wrote in the 3-0 opinion. "Nor does it operate as a prior restraint on nonprofits' solicitation of donations."

Schneiderman said the law demands organizations, including Citizens United, to disclose their donors to regulators "so they can police fraud and abuse in the nonprofit sector."

Citizens United, on the other hand, said it may take the case to the U.S. Supreme Court. It wouldn't be its first rodeo.

Second Rodeo

In Citizens United v. Federal Election Commission, the group won a major decision for corporate speech. A divided U.S. Supreme Court ruled that political spending is protected by the First Amendment.

The High Court said the government cannot stop corporations and unions from spending money to support or denounce candidates. They may not give money directly to campaigns, the court said, but they may seek to persuade the public through ads and other means.

Citizens United Vice President and General Counsel Michael Boos said the group is "extremely disappointed" by the Second Circuit's ruling. However, he said, they are deciding whether to seek en banc review or to petition the Supreme Court.

"We suffered a similar fate when we challenged the federal ban on corporate sponsored political speech, but were ultimately vindicated at the U.S. Supreme Court," Boos said.

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