A federal judge this week struck down on First Amendment grounds two provisions of New York's lobbying law that would have required nonprofits to disclose their donors.
In 2016, New York state legislators passed legislation changing the state’s lobbying and campaign finance laws. Two important provisions dramatically expanded donor disclosure requirements for 501(c)(3) and 501(c)(4) organizations engaged in issue advocacy and lobbying in New York:
501(c)(4) Rules: The law required 501(c)(4) organizations to disclose all of their donors in public filings with the state when they spend over $10,000 in a calendar year on communications to at least 500 members of the public concerning the position of any elected official on potential or pending legislation.
501(c)(3) Rules: The law also required 501(c)(3) charitable organizations to disclose donors of $2,500 or more if the charitable organization made an in-kind donation of more than $2,500 to a Section 501(c)(4) organization engaged in lobbying in New York.
Several groups quickly filed suit challenging these provisions in federal court. The court temporarily blocked enforcement of the provisions while the case proceeded. After a two-and-a-half-year battle, the court invalidated both provisions on First Amendment grounds, concluding that they impermissibly burdened donors’ rights to free speech, association, and privacy. While the court acknowledged that the state has authority to regulate “electioneering communications” that refer to a clearly identified candidate and are disseminated in a defined period before an election, the court concluded that the state lacks authority to “regulate issue advocacy untethered to any electioneering communication.” In addition, the Court found that the connection between the identity of Section 501(c)(3) donors and lobbying communications by Section 501(c)(4) organizations was “too attenuated to effectively advance any informational interest” the state might have, especially given that Section 501(c)(3) organizations are prohibited by federal law from engaging in partisan electoral activity and are subject to limits on lobbying.
Had the court upheld the law, these sweeping provisions would have had profound consequences for fundraising and issue advocacy by nonprofits operating in New York. The government is considering whether it will appeal the District Court’s decision. In the meantime, these provisions of New York’s lobbying law are invalid and are no longer enforceable.
The order and opinion were issued in Citizens Union of the City of New York v. Att’y Gen. of New York, No. 16cv9592 (S.D.N.Y. Sept. 30, 2019).
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