On July 1, in their ruling on Americans for Prosperity Foundation v. Bonta, the United States Supreme Court struck down a ten-year-old California law that requires nonprofits to disclose their top donors to the IRS. This ruling sets a dangerous precedent about the transparency of contributions—not only to charity, but also potentially to politicians and lobbyists—which could have far-reaching and frightening implications for the health of our democracy.
Under its law, California required charities to report the names and addresses of their largest donors to the Internal Revenue Service. The donor information was given only to the IRS and was not released to the public.
The key petitioner in the Supreme Court case was the Americans for Prosperity Foundation (AFP), a think-tank founded by billionaire oilmen Charles and the late David Koch. The AFP argued to the Court that revealing their major donors to the IRS would violate the donors’ freedom of speech, because those donors could face negative reactions if their names were somehow accidentally released to the public.
AFP is a well-funded, politically powerful organization that works to reduce taxes on corporations and the wealthy; roll back environmental and labor regulations that constrain corporate profits; delegitimize climate science; privatize education and health care; and suppress the ability of ordinary citizens to organize, protest, and vote. As professors, Theda Skocpol and Alexander Hertel-Fernandez have written, the AFP is at the core of the Koch brothers’ infamous organizing network. With such a pro-corporate, anti-social agenda, it is no wonder that the AFP might not want their largest donors’ names to be revealed—even to the IRS.
In the past, this sort of transparency was presumed not only to be constitutional, but required for a fully-functioning democracy. Even the conservative justice Antonin Scalia wrote, in another decision, “I do not look forward to a society which…exercises the direct democracy of initiative and referendum hidden from public scrutiny and protected from the accountability of criticism.” And if organizations do have valid reasons for wanting to protect their donors, there are mechanisms for doing so—as the NAACP did in 1958 when it petitioned successfully to have its donors’ names hidden from the state of Alabama.
But the AFP v. Bonta ruling could set a precedent that any donor transparency requirements are unjustified—including, potentially, those governing donations to political campaigns, candidates, and PACs. As Justice Sonia Sotomayor wrote in her dissenting opinion, “today’s analysis marks reporting and disclosure requirements with a bull’s-eye.” And a Vox analysis of the ruling said that “the upshot is that wealthy donors now have far more ability to shape American politics in secret—and that ability is only likely to grow as judges rely on the decision in Americans for Prosperity to strike down other donor disclosure laws.”
The wealthiest people in our country already hold a disproportionate amount of charitable and political power. Unscrutinized, it will be even easier for them to wield it. The Court’s decision makes it ever more likely that billionaire donors will use their contributions to set the societal agenda for the rest of us. It allows them to speak with an ever more outsized voice—and to make it ever more difficult for those without means to be heard.
Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies, where he also co-edits Inequality.org. Helen Flannery is an Associate Fellow at the Institute for Policy Studies.
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