On July 1, 2021, the U.S. Supreme Court published its decision in the Americans for Prosperity Foundation v. Bonta (Mr. Rob Bonta is the California State Attorney General) case, finding 6-3 against the Attorney General. The Court decided that the California Attorney General’s requirement that nonprofits file their IRS Schedule B form with the State is unconstitutional and a violation of the First Amendment right to freedom of association.

CalNonprofits filed an amicus ("friend of the court") brief in the case in support of the AG’s Schedule B requirement because we believe the information on the Schedule B form is important to protect against fraud, self-dealing, and other bad actions by organizations posing as nonprofits.

The AG uses the confidential information on the Schedule B to investigate possible wrongdoings by nonprofits and to prosecute when they have evidence of wrongdoing. The prosecution of wrongdoing by bad actors helps ensure that the public continues to trust the nonprofit sector. We want bad actors to be caught; we don’t want them using their tax-exempt status to engage in fraud or other illegal behavior.

A key question in the case was whether the Schedule B requirement was a burden on the right to freedom of association; in other words: would the State requirement of a list of large donors (through the Schedule B form) subject those donors to harassment in violation of their right to be associated with the nonprofit they are donating to?

Because only the AG can see that list of donors — since it is confidential and not made public — we believe there is no threat to those donors. And the advantages of being able to investigate fraud far outweighed any remote chance of the information becoming public.

Justice Sonia Sotomayor, in her dissenting opinion, which aligned with our brief, said that an assessment of the burden of the Schedule B requirement should be done to figure out whether the requirement was constitutional or not. But the Court majority, led by Chief Justice John Roberts, thought otherwise, and without assessing the burden, decided the Schedule B requirement was not narrow enough to accomplish the AG’s goals and still be constitutional.

Although we weren’t surprised by the outcome of the case, we are disappointed in the opinion and are concerned about its long-term consequences for our nonprofit community in California. We value the AG’s supervision of nonprofits and want to maintain the public trust that is so important for us as nonprofits to do the vital work we do in our communities.

As our CEO Jan Masaoka said in an interview with NPR, the AG is like the Federal Aviation Administration: just as the FAA needs information from airplane manufacturers and airlines to ensure safety and confidence in air travel, California and other states need information from charities to ferret out fraud and self-dealing.

And as Vox commented the day the Court published this opinion, July 1, was “a great day for dark money."

Read more:

CalNonprofits' official statement on the Court’s opinion

NPR story that includes a quote from Jan Masaoka, CalNonprofits’ CEO

From Vox: The Supreme Court just made Citizens United even worse

Our deep thanks to pro bono attorneys Ellen Aprill, Daniel Hemel, Anna-Rose Mathieson, and Rosemary Fei who worked with us on this widely circulated amicus brief. Read the full brief.