Has New Jersey Learned Its Lesson on Nonprofit Donor Privacy?

May 2, 2023 | Luke Wachob

In 2019, New Jersey found itself in court after attempting to require nonprofit advocacy groups to publicly expose their supporters’ names and home addresses through the passage of S. 150. In an unusual twist, Governor Phil Murphy (D) expressed concern about the bill’s constitutionality when he signed it into law.

“I am concerned that extending the disclosure requirements to cover advocacy that is not connected to an issue before the electorate may infringe upon constitutionally protected speech and association rights,” Governor Murphy warned in his signing statement. “As detailed in my [veto message for S. 1500], the United States Supreme Court has long recognized the harm that overly broad disclosure requirements can cause to an organization, its mission and its members.”

Facing scrutiny of his former staffers’ involvement with a nonprofit, however, Governor Murphy was pressured by the then-Senate President to sign the legislation. It was up to the nonprofit community to clean up the state’s mess. Fortunately, several groups – including the ACLU of New Jersey and Americans for Prosperity, among others – soon challenged the law in federal court as a violation of their First Amendment rights.

“This law discourages people from donating to non-profit organizations that advocate for causes that they believe make people’s lives better,” said ACLU-NJ Legal Director Jeanne LoCicero. “The law sweeps up hundreds of advocacy organizations, including those that don’t take sides in elections, and even some that don’t directly engage in lobbying the government.”

It wasn’t long before a federal judge slapped down the law with a strong warning about the unconstitutionality of the sweeping disclosure regime. In his opinion, Judge Brian Martinotti, an Obama appointee, warned of the law’s harmful implications “[i]n a climate marked by the so-called cancel or call-out culture that has resulted in people losing employment, being ejected or driven out of restaurants while eating their meals; and where the Internet removes any geographic barriers to cyber harassment of others.”

The state settled the lawsuit with an agreement not to enforce the law, effectively killing it. Undeterred, the bill’s lead sponsors issued a statement announcing that they had “already begun working with the legislative leadership on the next steps,” declaring that “there is a clear path forward.” That threat came to fruition earlier this spring in a sweeping campaign finance bill, S. 2866, and its companion, A. 4372, dubbed “The Elections Transparency Act.”

Just like the 2019 law, the original version of S. 2866 would have forced many nonprofit advocacy groups to publicly expose their major donors’ names and home addresses for engaging in issue advocacy on topics of public concern. Rather than limiting these requirements to political action committees, the bill also included nonprofits that are shielded from revealing their members under federal law. It seemed like history was destined to repeat itself with another federal lawsuit.

Lest we think an old state can’t learn new tricks, S. 2866 was thankfully amended before it was passed to greatly reduce the threat to nonprofit donors. Unless supporters of advocacy nonprofits and trade associations earmark their gifts “for the purpose of furthering” political activity, they can maintain their privacy. Maybe the state learned a lesson from its last trip to court, or maybe some lawmakers heeded the warnings of the nonprofit community this time around. Either way, the full policy and political ramifications of the bill will be far-reaching, but nonprofit members can breathe a sigh of relief.

The final version of the law preserves the line all states must draw between speech that advocates for the election or defeat of candidates and speech about policy issues. It also makes it a lot less likely that New Jersey taxpayers will have to pay for another lawsuit on this issue in the near future.

The Constitution protects all Americans from being forced to disclose their beliefs and affiliations. That protection is vital to our democracy. Without privacy, the government or private entities could target us for our views and harass us into silence, just as Judge Martinotti cautioned. With so much at stake, laws that publicize Americans’ donations to political causes must be carefully tailored to avoid trampling on free speech.

It’s good to see a state that previously acted so recklessly manage to correct itself before making the same mistake again. Hopefully, New Jersey leaders will one day have the epiphany that privacy and freedom of association are virtues worthy of greater protection, not problems for government to solve.