At End of High Court’s Session, Nonprofit Principles Stand Unscathed

The Supreme Court session that ended last month did much to strengthen the legal protections for nonprofit groups. Although the justices completely or partially rejected views long held by many charitable organizations, the key principle on which U.S. philanthropy has traditionally been based—the idea that Americans may give to voluntary or political groups of their choice—remained unscathed.

The most unambiguous, and the most controversial, was the January decision known as Citizens United v. Federal Election Commission.

Before the decision, federal laws prohibited corporations and unions from directly spending money to influence the outcome of elections. Individuals face no such restrictions.

The nonprofit organization Citizens United challenged federal law, saying that it had violated the organization’s right to free speech as guaranteed by the First Amendment.

The Supreme Court agreed: A majority of the justices said there could not be a higher level of First Amendment protection for individuals and a lesser level of protection for corporations, whether for-profit or nonprofit.

Nonprofit groups that favor stricter campaign-finance laws have vigorously criticized this decision, arguing that it will give wealthy businesses too much ability to influence the political process.

At the end of June, in response to the court’s decision, the House of Representatives passed the Disclose Act, which seeks to require businesses and nonprofit organizations to reveal more information about their election spending.

The prospects for the measure in the Senate are uncertain.

More important, even if it becomes law, the act would not change the fact that the Citizens United decision has strengthened the ability of nonprofit organizations to play an active role in public life. Tax-exempt groups such as the Sierra Club, MoveOn.org Civic Action, the National Rifle Association, labor unions, business associations, and many others can now do more to advance their views in election campaigns.

In addition, the court’s reasoning raises the possibility of a challenge to the rules that keep other kinds of tax-exempt groups—especially charities—from taking part in such political activity.

The second big decision for philanthropy in this Supreme Court term involved a challenge to the federal restrictions on aid to organizations outside the United States that the Department of State has designated terrorist organizations. Civil-liberties groups have opposed those rules, especially after the State Department stepped up enforcement following the 2001 terrorist attacks.

Critics say federal restrictions prevent humanitarian aid from reaching needy people in conflict-torn parts of the world, where social services are often provided by groups that also engage in terrorist activity.

Moreover, money is not the only kind of aid subject to the ban. Providing personnel, expert advice, training, or other services is also forbidden, though medical or religious supplies are allowed.

In Holder v. Humanitarian Law Project, the Court held that money or other aid given to a terrorist group even if meant for humanitarian purposes, may free up resources for the group to use in illegal activities.

Consequently, the federal government had the authority to bar Americans from making contributions to such groups. However, the court also made clear that Americans can provide aid for humanitarian purposes if they do so through organizations independent of those that promote terrorism.

The court’s ruling will displease people who believe the federal government is overreacting to the threat of terrorism or using political criteria to judge the legitimacy of humanitarian efforts. However, they should take consolation in the fact that the court has affirmed Americans’ freedom to give to whatever humanitarian organizations they choose—even those that are affiliated with groups on the State Department’s terrorist list—as long as the gift is not made to the group itself, or in coordination with the terrorist group. For example, if a donor wants to support an orphanage run by Hamas, he or she can give to another organization that raises money for the orphanage even though the donor is prohibited from supporting the orphanage directly or giving money to Hamas.

The court’s third important decision for charities, Christian Legal Society v. Martinez, deals with the freedom of association. The case involved a complaint against the University of California’s Hastings College of the Law by a Christian student group, which wished to have only members who shared its religious views and therefore did not want gay members.

Hastings denied the organization official recognition, saying that the school’s nondiscrimination policy required all recognized campus groups to admit all students who wanted to join. Christian Legal Society claimed that Hastings had violated the group’s First Amendment freedom of association.

The Supreme Court sided with Hastings. However, the decision relied heavily on a disputed agreement by the parties that the Hastings policy applied equally to all student groups, which would have made the Hastings restrictions constitutionally acceptable in what the law calls a “limited public forum,” such as a college campus.

The dissenting justices questioned whether the policy was being applied equally, and even those in the majority acknowledged that a closer look at how the policy actually operated would be worthwhile. The case is headed back to lower federal courts for more scrutiny.

For civil-rights groups that believe that freedom of association should be limited by principles of nondiscrimination, Christian Legal Society will seem an encouraging change from a 10-year-old Supreme Court decision that allowed the Boy Scouts of America to refuse to hire a gay assistant scoutmaster because the group had a right to “expressive association.” According to the Boy Scouts, that right would have been compromised if it had been forced to hire employees who did not share its views, an argument a majority of the Supreme Court rejected in the Hastings case.

But the Hastings case is more limited. It deals not with a group’s right to choose its members but with the policies a school can use in recognizing student groups. The Christian Legal Society can still refuse to include gay students; if it does, it will merely have to forgo law-school recognition. And depending on what further review reveals about how the Hastings nondiscrimination policy actually works, it may not even have to do that.

Thus in all three cases, the court has affirmed the freedom of Americans’ giving and the freedom of nonprofit operations, short of direct coordination with a terrorist group.

The results may disappoint the particular groups involved, but this kind of balancing of legitimate claims is exactly what we should expect of the nation’s highest court.