Originally published on Forbes.com.
The Thomas More Law Center is very concerned about donor confidentiality and is quite pleased about its recent win in the Ninth Circuit where it was opposing the California Attorney General. The argument was over whether TMLC should be required to provide the AG with the Schedule B of IRS Form 990 that discloses information about donors who have given $5,000 or more in a year. Unlike the rest of Form 990, Schedule B is not a public record. The little commentary I have seen on the decision sees it as a victory for free speech. I don’t know. Maybe. That and dark money too.
Why the Concern?
On a variety of issues TMLC sort of plays the role of the anti-ACLU as they explain:
Using the metaphor, “a wall of separation between church and state,” which is found nowhere in our Constitution, they attack crosses, Ten Commandment monuments, Nativity displays, Christmas celebrations in public schools, the Pledge of Allegiance, our national motto, “In God We Trust” and prayers at public meetings. The main battleground in this culture war is the courtroom and that is where the Thomas More Law Center is defending the religious freedom of Christians.
That’s under “Defending the Religious Freedom of Christians”. Also among key issues are “Restoring Family Values”, “Defending the Sanctity of Human Life”, “Confronting the Threat of Radical Islam” and “Defending National Security”. These are issues that raise passions, which is why TMLC wants to be able to reassure its donors that their identities will remain confidential.
Kind Of A WinTMLC had a victory, but hardly a sweeping one. They won’t have to turn their Schedule B over to the California AG, but almost every other charity that wants to raise money in California still does. Stephen Yosifon of Perlman+Perlman noted in the EO Tax Journal.
While I agree that keeping up with the various cases is challenging, summarizing the status of the law is not. Schedule B of Form 990 must still be submitted to California for all organizations obligated to register there, except for Thomas More Law Center and Americans for Prosperity. Those two organizations succeeded in their “as applied” challenges by providing sufficient evidence at trial to show that compelled disclosure of their contributors’ names will subject them to threats, harassment, or reprisals. Judge Real has now ruled that those two organizations (and only those two) do not have to submit Schedule B with their registration filings. For every other organization registering in California, Schedule B must still be submitted, as determined in Center for Competitive Politics v. Harris, 784 F.3d 1307 (9th Cir. 2015), cert denied. The status of the law is also clear in New York, following Citizens United v. Schneiderman, 116 AFTR 2d 2015-5400 (SDNY 2015). In New York, as in California, unless an organization brings an as applied challenge and successfully demonstrates that there is a reasonable probability that their donors would face threats, harassment, or reprisals if their names were disclosed, Schedule B of Form 990 must be submitted with registration filings.
In order to get this exemption, TMLC had to make a strong showing that their donors might be subject to harassment. They managed that.
These positions taken by TMLC have led to threats, harassing calls, intimidating and obscene emails, and even pornographic letters sent to TMLC. (See, e.g., Exhibit 38, 39). In one particularly angry letter to TMLC in response to a request for donations an opponent wrote, “YOU ******* FEAR MONGERING PIECE OF **** **** YOU!!!” (Exhibit 38). Opponents also mailed pornographic images to TMLC. (Exhibit 39). The level of harassment and “vehement criticism” directed towards TMLC has necessitated the Law Center’s President, Richard Thompson, to train his employees how to effectively handle and respond to the negativity. Members and donors of TMLC obviously share the same views as TMLC. Thus, the evidence of threats and harassment directed toward TMLC because of their views indicates a high likelihood of similar treatment towards donors. It also satisfies the requirement of Center for Competitive Politics that an organization show “a reasonable probability” that the disclosure of TMLC’s donors would subject them to threats or harassment. (Bowdlerizing enhanced)
The Easy Path To Avoid Donation Disclosure
It does seem to me that this litigation is much ado about not much. The contributors are still disclosed to the IRS. And if people are attached to their anonymity, they now have the much better option of donor-advised funds. The biggest player in that field now is probably Fidelity Charitable. When they accept your recommendations to give to particular, not for profits, it is up to you whether your identity is disclosed to the recipient organization. If you run all your controversial contributions through Fidelity Charitable or some other donor-advised fund, the only report going to the IRS (and by extension the California AG) will show that you made a contribution to Fidelity Charitable or some other donor-advised fund. The recipient organization will report that it received money from the donor-advised fund.
Of course, Fidelity Charitable knows that it was you that made the recommendation. I spoke with them and they assured me that they are very careful about donor confidentiality. They have over 80,000 gift accounts so connecting you to your controversial donation is probably not something that is going to happen from an IRS or state AG leak.
Changing Views Of Federalism
If we go back to the prehistory of the IRS scandal, we find a statement by Lois Lerner
The Supreme Court dealt a huge blow, overturning a 100-year old precedent that basically corporations couldn’t give directly to political campaigns. And everyone is up in arms because they don’t like it. The Federal Election Commission can’t do anything about it. They want the IRS to fix the problem.
Actually, it is not just political stuff, although that was what created the scandal, but overall there has been an expectation that the IRS is regulating the not-for-profit sector. Thanks to the scandal, IRS has been significantly dis-empowered, which leaves the regulation in the hands of state agencies.
With the federal government now in conservative hands, the bloom may be off the rose in the romance between conservatives and states’ rights. You see that in this decision as a conservative organization went to federal court to get a state regulator off its back. A true believer in federalism would be sympathizing with the California AG in this case. Just saying.
About Thomas More
I always get this warm feeling, when I see the name Thomas More involved in tax litigation, regardless of my sense of the merits of the issue. Thomas More is, literally, the patron saint of lawyers and politicians. You have to wonder if it gets lonely up there sometimes. My particular fondness for him relates to the movie A Man For All Seasons
It is one of those tribal things. The version of early modern European history that inhabits American popular culture has a strong Protestant tilt to it so the story of Thomas More’s principled stand against Henry VIII, that made him a Catholic martyr taking Best Picture for 1966 was a really big deal. I absolutely have to share with you my favorite lines from the movie.
God made the angels to show Him splendor, as He made animals for innocence and plants for their simplicity. But Man He made to serve Him wittily, in the tangle of his mind.
I really loved that movie and was somewhat surprised when my Aunt Dorothy told me that Uncle Buddy and Cousin Jimmy (God rest all their souls) were disappointed by the lack of sword fighting.
Other Coverage
Y. Peter Kang had something in Law360 – Conservative Group Beats Calif. AG’s Bid To Get Donor List. As you might expect Kaufman Dolowich Voluck, TMLC’s counsel, patted themselves on the back for “Defending First Amendment Free Speech Rights”.
Since NAACP v. Alabama, 357 U.S. 449 (1958), the Supreme Court of the United States has recognized that supporters of organizations advocating controversial views have the right to donate anonymously, with their identities free from disclosure from prying government eyes other than disclosure to the IRS. KDV’s team established a reasonable probability that the compelled disclosure “would burden the donors’ First Amendment Rights,” as the court found.
Joe Kristan also viewed the decision as a “First Amendment Victory”.
Unrelated to this particular decision, but of interest to illustrate the nature of TMLC is this CNN story in which Bill O’Reilly, who all my relatives hope is not related, is quoted as saying:
The Thomas More Law Center is the antidote to the ACLU