The laws both required nonprofit entities to disclose donor information in some circumstances.
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Welcome to _The Disclosure Digest_, our monthly look at state and federal disclosure policies for nonprofit organizations and their donors.
** FEDERAL COURTS RULE AGAINST NEW YORK, NEW JERSEY DONOR DISCLOSURE LAWS
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Since Sept. 30, two U.S. District Courts have struck down or enjoined donor disclosure laws in New York and New Jersey.
** NEW YORK: CITIZENS UNION OF THE CITY OF NEW YORK V. ATTORNEY GENERAL OF THE STATE OF NEW YORK ([link removed]) (CASE NUMBER: 1:16-CV-09592-DLC-KHP)
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** _WHO ARE THE PARTIES TO THE SUIT?_
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The plaintiffs are the Citizens Union of the City of New York ([link removed]) , the New York Civil Liberties Union ([link removed]) , and the Lawyers Alliance for New York ([link removed]) , all 501(c) ([link removed]) nonprofits. The defendant is New York Attorney General Letitia James (D).
** _WHAT IS AT ISSUE?_
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Under a 2016 New York law ([link removed]) , 501(c)(3) ([link removed]) and 501(c)(4) ([link removed]) nonprofit entities are required to disclose personal information about their donors in select circumstances.
* A 501(c)(3) group must disclose the identities of donors who contribute more than $2,500 in a calendar year if the 501(c)(3) group made in-kind contributions to a 501(c)(4) group that engages in lobbying activity. This provision is contained within Section 172-e of the 2016 law.
* A 501(c)(4) group must disclose the identities of donors who contribute more than $1,000 if the 501(c)(4) group spends $10,000 or more per calendar year on covered communications (i.e., communications that advocate for or against an identified elected official). This provision is contained within Section 172-f of the 2016 law.
** _HOW DID THE COURT RULE? _
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On Sept. 30, Judge Denise Cote ([link removed]) , of the U.S. District Court for the Southern District of New York ([link removed]) , struck down both challenged provisions. Cote wrote, "A 'substantial number' of the applications of § 172-e are likely to result in interference with the rights to freely associate and speak." Cote also wrote, "Section 172-f sweeps far more broadly than any disclosure law that has survived judicial scrutiny." President Bill Clinton (D) appointed Cote to the court in 1994.
** _WHAT COMES NEXT?_
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Richard Azzopardi, a senior adviser to Governor Andrew Cuomo (D), said ([link removed]) , "We are reviewing this decision and considering next steps including appeal but the question remains, what is the advocacy industrial complex hiding?"
** NEW JERSEY: AMERICANS FOR PROSPERITY V. GURBIR GREWAL ([link removed]) (CASE NUMBER 3:19-CV-14228-BRM-LHG)
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** _WHO ARE THE PARTIES TO THE SUIT?_
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Americans for Prosperity ([link removed]) , the plaintiff, is a 501(c)(4) political advocacy group. The defendants are New Jersey Attorney General Gurbir Grewal ([link removed]) (D) and the commissioners of the Election Law Enforcement Commission: Eric Jaso, Stephen Holden, and Marguerite Simon.
** _WHAT IS AT ISSUE? _
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Under a New Jersey law ([link removed]) enacted earlier this year, 501(c)(4) and 527 entities that spend $3,000 or more annually to influence or provide political information about the outcome of any election or policy proposal must disclose the identities of their donors who contribute $10,000 or more.
** _HOW DID THE COURT RULE?_
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On Oct. 2, Judge Brian Martinotti ([link removed]) , of the U.S. District Court for the District of New Jersey ([link removed]) , enjoined the state from enforcing the challenged law while litigation continues. Martinotti wrote, "The Court … concludes Plaintiff has met its burden of demonstrating it has a reasonable probability of winning on the merits at trial on its claim that the Act is facially unconstitutional. Concomitantly, the Court concludes the State has not met its burden of demonstrating that 'the statute withstands scrutiny.'" President Barack Obama (D) appointed Martinotti to the court in 2016.
** _WHAT COMES NEXT?_
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On Oct. 3, a spokesperson for Grewal said ([link removed]) his office was reviewing the decision. No comment was made as to the possibility of an appeal.
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[link removed]
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** WHAT WE'RE READING
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* Tax Notes, "Feds Claim Donor Disclosure Regs Undermine Urgency in FOIA Feud," Oct. 21, 2019 ([link removed])
* JD Supra, "Duo of federal court rulings deal blow to dark money disclosure laws," Oct. 17, 2019 ([link removed])
* The National Law Review, "Federal Court Strikes Down as Facially Unconstitutional Portions of NYS 'Ethics Reform' Legislation Requiring Certain 501(c)(3) and 501(c)(4) Disclosures," Oct. 14, 2019 ([link removed])
* Bloomberg Tax, "Montana Governor Urges IRS to Reconsider Donor Disclosure Rules," Oct. 8, 2019 ([link removed])
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** THE BIG PICTURE
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** _NUMBER OF RELEVANT BILLS BY STATE_
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We're currently tracking 72 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we're tracking.
** RECENT LEGISLATIVE ACTIONS
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Below is a complete list of legislative actions taken on relevant bills in the past two weeks. Bills are listed in alphabetical order, first by state then by bill number. Know of any legislation we're missing? Please email us so we can include it on our tracking list.
* CALIFORNIA AB864 ([link removed]) : This bill would expand disclosure requirements for certain kinds of political advertisements made by independent expenditure groups and other entities.
* Governor signed into law Oct. 8.
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