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Federal appeals court rules foundation must disclose donors to California – September 2018

San Francisco, CA

In Americans for Prosperity Foundation (AFP Foundation) v. Becerra, a federal appeals court ruled that California, could compel charities to disclose donor lists, overturning a district judge’s decision that such a move infringed on the foundation’s First Amendment rights.

Key Players

Americans for Prosperity Foundation is a charitable group backed by brothers Charles and David Koch. The pair of billionaire philanthropists oversee a network of nonprofits that manage hundreds of millions of dollars flowing into politics. While most know them for their unwavering commitment to reducing regulation, advancing libertarian ideas, and promoting free-market Republican candidates, the brothers are also staunch advocates of Free Speech, and have openly disagreed with some of Donald Trump’s trade and immigration policies. AFP, which is the brothers’ primary vehicle for political advocacy, has strong libertarian and conservative leanings, and has been heavily involved in Republican politics, contributing to the rise of the Tea Party and of GOP majorities in both houses of Congress. The group is classified as a public charity, making it a nonprofit entity exempt from federal taxes; consequently, AFP Foundation is not required to disclose its donors publicly. However, California requires such charities to disclose to the state attorney general (AG) the same information it does to the Internal Revenue Service, according to The Washington Post.

Xavier Becerra, as California’s current AG, now has jurisdiction over the state’s dealings with AFP Foundation, but U.S. Sen. Kamala Harris (D-Calif.) was California’s AG when this litigation began.

Further Details

The attempt to force AFP Foundation to disclose its donors began in 2016 under Harris, who claimed she needed donor lists to determine if the group had “violated the law, including laws against self-dealing, improper loans, interested persons, or illegal or unfair business practices.”

U.S. District Court Judge Manuel Real, of Los Angeles, the longest-sitting federal trial court judge in the country, issued a permanent injunction on April 21, 2016, which prevented Harris and the AG’s office from obtaining the lists. Real found dubious Harris’s claim that she needed them for investigative purposes, Politico reported. He also cited repeated previous instances in which the state had inadvertently published such donor lists, which were supposed to remain confidential in state files, Politico said.

Harris’s office immediately announced plans to appeal the ruling, with a spokeswoman saying that the disclosure of documents similar to AFP Foundation’s donor lists “is a long-standing requirement that has helped Attorneys General for more than a decade protect taxpayers against fraud,” according to Politico, which corroborated this assertion.

Real, in turn, noted that this requirement had been enforced inconsistently, and that violent threats against the Koch brothers, which he had learned about through court testimony, would only be exacerbated by the release of the documents.

The judge also made clear that his decision, along with an earlier one from the Ninth US Circuit Court of Appeals, let stand the principle of requiring disclosure of donor lists, but allowed exceptions for groups that could prove their donors would be intimidated by such disclosure, as with the AFP Foundation.


Federal appellate judges overturn lower court decision, rule in favor of California

On Sept. 11, 2018, a three-judge panel of the Ninth U.S. Circuit Court of Appeals unanimously overturned Judge Real’s decision, ruling that AFP Foundation must disclose its donors to the California AG’s office, according to The Washington Post. Judge Raymond C. Fisher wrote that obtaining donors’ information was in the state’s interest and did not infringe on AFP Foundation’s First Amendment rights, because of the non-public nature of the collection and the relatively minor risk of inadvertent publication, according to the Post.

An AFP Foundation spokesman said it “intends to continue doing all it can to … protect the important constitutional rights at stake,” leading some to believe it would ask that the case be reheard by the full complement of Ninth Circuit judges, sitting en banc, or appeal it to the US Supreme Court. The foundation also claims the decision “imperils people’s First Amendment right to freedom of speech and of association,” the Post reports. Timothy Phillips, president of the foundation, testified during the case that the group felt politically targeted, given that both Harris and Becerra are Democrats.

David Keating, president of the Institute for Free Speech, a nonprofit that opposes limits on free speech, called the ruling “appallingly wrong.”

“Basically, the panel is saying there’s no right to privacy in California if you speak on anything,” Keating was quoted as saying in a Post article. “The implications of that are pretty chilling and pretty stunning.”

But AG Becerra defended and upheld the state’s disclosure laws, saying they were intended to “protect Californians who donate their hard-earned dollars to charity.”

External References

Koch-linked group scores legal victory over California AG, Politico

CASE NO. CV 14-9448-R: Americans for Prosperity Foundation v. Kamala Harris

Koch-backed charity must reveal donor list to California officials, appeals panel rules, The Washington Post

Koch group loses donor secrecy fight at appeals court, Politico

Prepared by Maya Gandhi ’20

Uploaded September 30, 2018