On July 1, the U.S. Supreme Court decided the consolidated case Americans for Prosperity Foundation v. Bonta in favor of the nonprofit organizations that brought the suits, holding California’s donor disclosure law to be unconstitutional because it violates the First Amendment protection of freedom of association. The immediate effect of the Court’s ruling is that the Court invalidated California’s rule requiring charities registered to fundraise in the state to file with the state Attorney General an unredacted copy of IRS Form 990 Schedule B, which discloses the names and addresses of their major donors.

As we previously wrote when the Court decided to hear the case and later heard oral arguments, the case focused on two main issues: (1) the standard of review that must be applied to laws involving compelled disclosure that are challenged on First Amendment grounds, and (2) whether the law should be held unconstitutional only as applied to the two nonprofits that brought the cases, or if the law should be struck down on its face.

Continue Reading U.S. Supreme Court Finds California Donor Disclosure Law Unconstitutional

On April 26, 2021, the Supreme Court heard oral arguments in the consolidated case Americans for Prosperity Foundation v. Bonta,1 which argues that California’s donor disclosure law is unconstitutional under the First Amendment because it will discourage donors from contributing due to the fear that their names and addresses will be publicly disclosed. As we previously wrote, California requires nonprofit organizations registered to fundraise in the state to annually disclose to the California Attorney General’s Office their Schedule B donor information, which is typically filed on a confidential basis with the IRS as part of the otherwise public Form 990.

This is one of the rare cases where the Supreme Court has reviewed a case about charitable speech or charitable association. In the cases of Buckley v. Valeo and Doe v. Reed, the Supreme Court found that the standard of exacting scrutiny applies when assessing compelled disclosure in the electoral context. The Court’s questions to the parties during oral arguments probed whether California’s disclosure law would be properly reviewed under exacting scrutiny, how the standard of review should be applied, and whether the law can withstand such scrutiny facially (that is, as applied to everyone) or at least as applied to the two nonprofits that brought the cases. The case is considered by many to be vitally important, not only as it relates to disclosure of charitable donors, but as a potential “back door” into challenging rules requiring disclosure of donors under campaign finance laws.

Continue Reading U.S. Supreme Court Hears Oral Arguments on California Donor Disclosure Cases

Charitable and social welfare organizations that file annual financial reports with the New York Attorney General’s Charities Bureau now must file those reports—and potentially two other reports—with the New York Department of State. These requirements are a result of changes to the New York Executive Law, effective January 1, 2021. The following are key deadlines:

  • May 15: Annual financial reports (the CHAR 500) are due to the Charities Bureau and the Department of State by the fifteenth day of the fifth month after the close of the filing organization’s fiscal year. For organizations operating on a calendar year fiscal year, this means the CHAR 500 is due on May 15. Extensions are available for up to 180 days (mirroring the filing schedule for the IRS Form 990).
  • July 31 and January 31: New reports for 501(c)(3) and 501(c)(4) organizations related to certain advocacy activities in New York, if applicable, will be due to the Department of State before July 31 and January 31.

Continue Reading New Nonprofit Filing Requirements in New York

The U.S. Supreme Court has agreed to review two similar constitutional challenges to California’s law requiring that charitable organizations registered to fundraise in the state disclose the names and addresses of their major donors: Americans for Prosperity Foundation v. Becerra (No. 19-251) and Thomas More Law Center v. Becerra (No. 19-255).

Dozens of nonprofits nationwide have filed briefs opposing the California law, emphasizing concerns about the privacy of their donors and the risk of public disclosure of the organizations’ Schedule B donor information, which is typically filed on a confidential basis with the IRS as part of the otherwise public Form 990. The briefs represent diverse sectors of the nonprofit industry, such as public policy, research, and educational foundations; professional membership associations; and social welfare organizations.

The key issue in the case is whether California’s law has a chilling effect on First Amendment association rights, as donors to controversial causes may fear the fallout if their identity were to be made public. The petitioners argue that California has not shown a sufficient state interest to justify these First Amendment implications.

Continue Reading Nonprofits Weigh in on California Donor Disclosure Cases Before U.S. Supreme Court

Every two years, the FEC indexes certain contribution limits to inflation. New contribution limits for the 2021-2022 election cycle were announced on Tuesday.

Individuals may now give $2,900 per candidate, per election (with the primary and general elections considered separate elections), up from the previous limit of $2,800. Between primary and general election giving, an individual may now give a total of $5,800 per candidate, per election cycle. The new limits are in effect for the two-year election cycle beginning the day after the most recent general election and ending on the date of the next general election (November 4, 2020 to November 8, 2022).

The FEC also raised the limits on individual contributions to national party committees. Individuals may now give up to $36,500 per recipient, per year to the main account of the national party committees, up from the previous limit of $35,500. Individuals may also give up to $109,500 per account, per year, to each of the additional national party committee accounts maintained for presidential nominating conventions; election recounts, contests, and other legal proceedings; and national party headquarters buildings (up from the previous limit of $106,500). These new limits are in effect for the two-calendar-year period beginning January 1, 2021 and ending December 31, 2022.

Continue Reading Federal Election Commission Announces New Contribution Limits for 2021-2022 Cycle

The ethics rules that apply to presidential appointees have undergone significant changes this month, with wide-ranging implications for incoming Biden appointees and their former employers, as well as for outgoing Trump officials and their prospective employers.

President Biden issued an executive order just hours after being sworn in as president, requiring certain members of his administration to sign an ethics pledge outlining incoming and outgoing employment, gift, and lobbying restrictions. The pledge requires presidential appointees throughout the federal government to commit to the following:

Continue Reading Biden Requires Ethics Pledge from Executive Branch Appointees, While Trump Appointees Are Released from Theirs

In 2018, the District of Columbia Council adopted a “pay-to-play” law banning political contributions from contractors and their senior officers that was scheduled to take effect on November 4, 2020. But like many other things in 2020, the rollout of the law did not go as planned. Because of funding shortfalls, the effective date of the new law has been postponed indefinitely, and contractors and their officers may continue making political contributions to District officials.

In the original version of the Campaign Finance Reform Amendment Act, contracts valued at $250,000 or more that are sought, entered into, or executed on or after November 4, 2020 would trigger the contribution restrictions. The law had passed the DC Council unanimously, so all seemed to be in order.

Continue Reading DC Pay-to-Play Law on Pause

As states across the country finalize and certify the results of the 2020 general election, President-elect Joseph R. Biden and Vice President-elect Kamala D. Harris have begun preparing to assume control of the executive branch on January 20. The Biden-Harris Transition Team has already assembled and dispatched agency review teams to survey and report on the current organization and priorities of the various executive branch agencies. And while it remains unclear how traditional Inauguration Day festivities will be affected by the ongoing Covid-19 pandemic, President-elect Biden’s yet-to-be-organized Inaugural Committee will be responsible for planning and funding any official Inauguration Day parades or galas or any other official events.

As this new chapter of American government unfolds, many individuals, companies, and nonprofits are no doubt interested in reaching out to the Biden-Harris Transition Team and the Biden Inaugural Committee. This short alert sets out high-level guidelines regarding interactions with both the Transition Team and the Inaugural Committee. If you have any questions about these topics, please contact a member of our Political Law Group.

Continue Reading Interacting with the Biden-Harris Transition Team and Inaugural Committee

On September 1, Ron Jacobs participated in a webinar, “Political Digital Ads: Disclosure, Free Speech and Legislation,” hosted by the National Conference of State Legislatures. Along with fellow panelists David Voorman from Americans for Prosperity and Jared de Marinis from the Maryland State Board of Elections, Ron discussed the current state of digital campaign ads, including how online platforms and social media networks are working to find ways to comply with the many different states’ requirements. Moreover, the panelists each shared their perspectives on the inherent challenges of ensuring free speech while maintaining transparency.

During his presentation, Ron also provided an overview of the complex digital advertising ecosystem, which involves numerous players, ranging from the candidates themselves to political action committees, trade associations, and digital consultants, strategists, and publishers; offered an explanation of the various demand- and supply-side platforms that help to move the digital ads through this ecosystem to the end user; and the regulations governing this process.

To view the complete webinar, click here. To learn more about Venable’s political law practice, click here.

The Foreign Agent Registration Act (FARA) continues to get attention as the Department of Justice (DOJ) issues more advisory opinions. FARA is the U.S. statute that requires a person to register with the Department of Justice when engaged on behalf of a foreign principal in certain registrable activities aimed at influencing U.S. public opinion, policy, and laws.

Perhaps as a consequence of the current political environment, the DOJ has been taking an increasingly aggressive interpretation of the statute in its advisory opinions, particularly concerning the scope of activities that trigger registration. While these advisory opinions are not binding, they reflect the DOJ’s current views on the statute and likely approach to investigations. Below are summaries of a few advisory opinions that highlight the DOJ’s broad reading of FARA:

Advisory Opinion to Law Firm

The FARA Unit concluded in an advisory opinion on April 21, 2020, that the majority of work a U.S. law firm conducted on behalf of a foreign embassy required registration. At the request of the U.S. firm, the FARA Unit explained which conduct undertaken by the firm fell outside the parameters of the legal representation exemption and required registration under FARA.

The legal representation exemption, found under Section 3(g) of FARA, provides that a person is exempt from registration if they are “qualified to practice law” and “engage in the legal representation of a disclosed foreign principal before any court of law of the Government of the United States.” This exemption is not available to attorneys who “attempt to influence or persuade agency personnel or officials,” other than in the course of judicial proceedings, law enforcement inquiries, investigations, or agency proceedings.

In narrowly interpreting the legal representation exemption, the Unit found that the majority of the firm’s conduct would require registration, including: (1) “providing legal advice and analysis on law and policy” that “affect[ed] US-[foreign country] relations, such as . . . pending legislation, and executive decisions and policy;” (2) “attending regular meetings between Embassy officials and [foreign country]’s U.S. lobbyists where proposed legislation and legislative strategy are discussed;” (3) sharing a memo “prepared by the US firm with the foreign country’s lobbyists and public relations firm” that involves “pending legislation in the House of Representatives;” (4) drafting potential responses to media inquiries for the Embassy about litigation in which the US firm was counsel;” and (5) “providing the Embassy with written arguments against [the] passage of [a] resolution in the [US] House of Representatives.”*

The Unit also stated that the firm must not only disclose revenues or expenditures related to the registrable activities but that they are also required to disclose “all revenues and expenditures received from or spent on behalf of the [foreign government] through its Embassy” and “all activities undertaken” by the firm, even activities that did not fall within the scope of the statute.

This advisory opinion is notable for several reasons. First, the opinion covers a wide range of activities that law firms often engage in on behalf of foreign clients, and thereby provides insight into how the DOJ is likely to assess law firm representations of foreign principals in the future. Second, the DOJ found that most of the activities it considered require registration, even where the law firm’s activities were limited to providing internal guidance to its client, and notwithstanding that FARA has often been viewed as limited to public efforts to influence U.S. policy. Third, the opinion raises many interesting questions about the intersection of a disclosure statute like FARA and the attorney-client privilege, especially where the DOJ takes the position that once a law firm engages in a registrable activity on behalf of a client, the law firm is required to disclose all of its activities on behalf of the client, even those that are not subject to FARA.

Advisory Opinion to Non-Profit

In another opinion issued on March 13, 2020, the FARA Unit determined that a U.S. non-profit organization that received a grant from a foreign government entity to “serve . . . as a general contractor” on a program that focused on environmental issues was required to register under FARA.

Although the non-profit asserted that its agreement with the foreign government entity did not give the foreign government “any ability to direct or control” the organization, the FARA Unit disagreed. The Unit took the position that the non-profit was acting as an agent under the direction or control of the foreign government because “pursuant to the grant agreement” the non-profit was obligated to “engage in activities to advance the deforestation priorities of the [foreign government.]” Thus, the DOJ’s position appears to be that if a non-profit takes funds from a foreign government to carry out a pre-existing mission then the non-profit is required to register under FARA, even if the non-profit engages in similar activities on its own and through the receipt of funds from non-foreign sources.

The non-profit also argued that its interactions with the U.S. government were not inherently “political activities” because they had “nothing to do with formulating, adopting, or changing the domestic or foreign policies of the United States.” The Unit again disagreed, finding that as defined by Section 611(o) of FARA, the non-profit’s activities were “political activities” because they “directly advance[d] the product-sourcing practices that are in the political and public interests of, and are the policies of, the foreign government. . . .”

It is important for non-profits to be aware of this opinion, as they may be required to register under FARA, even if funding they receive from foreign governments is only part of the organization’s financial resources and the proposed work aligns with the non-profits existing mission.

Advisory Opinion to Firm Providing Media Relations

In a February 20, 2020, opinion, the FARA Unit advised that a firm that provides media relations to a foreign country’s U.S. ambassador” must register under FARA if the work provides “reputational benefits,” even if there is no outward interaction with the US government.

The firm provided “media relations and communications support” to the foreign county’s ambassador, as well as “related announcements about the activities of the [Foreign Country’s fund]” to support recovery efforts after a hurricane in the U.S. According to the FARA unit, such activities provided the foreign country with “obvious reputational benefits.” The firm’s work did not involve any direct interaction with the U.S. government.

The FARA Unit determined that registration was required because the firm was providing services as a “public-relations counsel” to the foreign country’s ambassador. As defined in Section 611(g), “public-relations counsel” includes any person who is engaged in “informing, advising or in any way representing a [foreign] principal in any public relations matter” that pertains to “political or public interests, policies, or relations” of the foreign principal. The Unit determined that this definition includes firms that provide “reputational benefits” to foreign countries by “advising and facilitating the [foreign country’s] interests” through various media outlets. The Unit’s interpretation of “public-relations counsel” raises the question of where the line is drawn for what activity is considered “political” and suggests that work that is categorized as “media relations” will now be encompassed within the definition of “public-relations counsel.”

While in the past many took the position that public-relations work did not trigger FARA absent a clear link to political ends (typically interactions with the U.S. government), the DOJ appears to be taking a broader interpretation where any activity on behalf of a foreign government that provides reputational benefits may require registration. This position would seem to dramatically expand the scope of FARA (assuming, of course, that the work does not fall within one of FARA’s exemptions).

Venable’s Political Law Group advises companies on all aspects of lobbying compliance. If you have a question about the Advisory Opinion, please contact an author.

*The FARA Unit found that the following conduct would qualify for the legal representation exemption: (1) evaluating the merits of initiating, defending, or undertaking particular litigation; (2) “attending meetings with the Department of Justice officials to discuss pending extradition requests filed by [the foreign government];” and (3) “participating in requests for legal assistance from the United States Government” made pursuant to a specific treaty.