Groups Argue New York Nonprofit Disclosure Rules Are Unconstitutional

The Lawyers Alliance for New York and the Nonprofit Coordinating Committee of New York (NPCC) have filed a complaint against New York State attorney general Eric Schneiderman, challenging provisions of New York Executive Law 172-e that, according to the organizations, are unconstitutional and harmful to nonprofit organizations.

The provisions in question require nonprofits in the state to report donations and in-kind gifts valued at more than $2,500 to 501(c)(4) advocacy groups, even when that support is not connected to lobbying or political speech. The complaint alleges that the provisions violate the First and Fourteenth Amendments in that they require the Lawyers Alliance, for example, to disclose the names of donors simply because it provided a 501(c)(4) with legal advice pertaining to incorporation or establishing by-laws, activities that have no connection to an entity's political activities. The case, which will be decided by Judge Richard M. Berman of U.S. District Court, Southern District of New York, is expected to be joined by the New York Civil Liberties Union, the American Civil Liberties Union, and the Citizens Union of the City of New York.

In 2016, Schneiderman cited sections 172 a-j, 172 (7), and 173 (4) of the Executive Law in issuing a Notice of Violation to the Donald J. Trump Foundation that, among other things, directed the foundation to stop soliciting contributions in the state and to provide the Charities Bureau in the AG’s office with missing financial reports.

"While other sections of the statute are intended to increase transparency in the electoral process, the provisions we challenge today are unrelated to those goals," said Sean Delany, executive director of the Lawyers Alliance for New York. "Nonprofits that provide technical support, make grants, or otherwise support advocacy organizations — with no intention of supporting lobbying activity — should not be required to disclose their donors without any connection to that activity. This is the first statute in the country to mandate such disclosure, and it is an ill-considered way to create such a legislative precedent."

"Nonprofits throughout New York State will be subject to burdensome reporting requirements that could harm their ability to fundraise and to meet their mission," added NPCC president Sharon Stapel. "Nonprofits must be accountable to the public, but this law does not achieve that goal."

"Lawyers Alliance, NPCC File Suit Objecting to New State Donor Disclosure Law." Lawyers Alliance for New York, Nonprofit Coordinating Committee of New York Press Release 03/06/2017.