What a New Supreme Court Justice Could Mean for Nonprofit Groups

With the retirement of Justice Sandra Day O’Connor, nonprofit organizations from across the political spectrum are gearing up to influence the nomination and confirmation of her successor to the U.S. Supreme Court. They have war chests amounting to tens of millions of dollars to use, according to news-media reports — far more than nonprofit groups have spent on efforts to influence Congress as it considers ways to tighten the laws governing charities and foundations — and with good reason.

On many issues of concern to philanthropy, ranging from the rights of women and minorities to policies affecting the environment and social services, it is up to the courts to resolve a number of the sharpest differences among Americans.

Even the privileges that nonprofit groups enjoy, such as tax exemption and how they select their members, are subject to judicial review. And with the U.S. Supreme Court closely divided on many of these matters in recent years, Justice O’Connor’s successor could have a big impact on how philanthropy operates and what it accomplishes, as the most recent rulings in which she voted demonstrate.

One of those rulings, in a case called Kelo v. City of New London, involved an economic-development plan that has been praised as a model of how nonprofit groups could work with business and government to revitalize a declining city. At issue was the ability of the nonprofit partner, the New London Development Corporation, in Connecticut, to invoke New London’s power of eminent domain to take property occupied by city residents and sell it to private developers. The U.S. Constitution allows governments to seize land for public use, as long as the owners are fairly compensated. However, the owners of the New London property said that eminent domain could not be used in a case where businesses were the prime beneficiaries.

By a 5-to-4 vote, the Supreme Court sided with the New London government and its allies. Reaffirming a 50-year-old decision that established the foundation for the federal government’s urban-renewal programs, the majority of the justices ruled that economic development was a legitimate public purpose that justified seizing the property. Moreover, the plan devised by the New London Development Corporation and approved by state and local officials was expected to stave off deterioration of the city’s economic conditions and benefit the entire community, not just the businesses that would purchase the land.

The dissenters, led by Justice O’Connor, disagreed. “Under the banner of economic development,” she wrote, “all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded.” Furthermore, the New London Development Corporation “is not elected by popular vote, and its directors and employees are privately appointed,” suggesting that the nonprofit group’s actions might not really reflect the public’s interest, a position that strikes at the way many charities view themselves.

While the Kelo decision allows nonprofit groups to exercise public authority for economic development, a Supreme Court with a different makeup could readily change that. In so doing, the court could call into question the ability of nonprofit groups to act on behalf of government, not just to take land from property owners, but also when they seek to deliver services or undertake other activities.

Another important set of cases for nonprofit groups entailed challenges to depictions of the Ten Commandments on government-owned property. One was from Texas, where a monument had been erected 40 years ago on the grounds of the state Capitol; the other was from Kentucky, where two counties had hung plaques in their courthouses. Both gave the Supreme Court its seemingly annual opportunity to reinterpret the role of religion — and religious groups — in the public square. The First Amendment to the Constitution forbids the government from establishing or favoring a religion, but also protects its free exercise. How to balance the two requirements has been debated throughout American history.

The decisions issued last month do not do much to resolve the disagreements.

Again on 5-to-4 votes, a badly divided group of justices supported the Texas monument, largely because it was one of a group of commemorations of important contributions to the state’s history and had gone unchallenged for decades.

On the other hand, they ruled against the Kentucky counties, citing the religious motivations of those behind the displays and the inadequacy of efforts to surround them with secular documents.

Justice O’Connor aligned herself with the members of the court who doubted the legitimacy of both displays. Her reasoning, which was consistent with views she had expressed before, was that government should not take sides among different religions, nor between belief and disbelief.

But that leaves religious groups without any special place in American public life, despite the well-documented intent of the nation’s founders to give them one — a point carefully noted by the justices who said that both displays deserved constitutional protection.

For Justice O’Connor and some of her colleagues, the protection afforded other kinds of nonprofit groups is similarly limited. In one of her most important opinions, rendered in a 1984 case involving a policy by a Jaycees chapter to exclude women as members, she endorsed the notion that only very small organizations or those with a strong “expressive purpose” — such as the Boy Scouts, in claiming to stand for manly virtues — could be shielded from antidiscrimination laws. All other nonprofit groups had to admit anyone who wanted to join.

Gratifying as this stance might be to those who place a premium on individual liberties or who, in the case of religion, want no public acknowledgment of the American religious heritage, it leaves philanthropic groups on shaky constitutional ground, unless they can cover themselves in the mantle of freedom of speech.

To Justice O’Connor and others on the Supreme Court, nonprofit organizations are simply private groups, with no broader claim to be serving the public interest. The rights to associate without making a political statement or to express widely held beliefs outside the confines of the home or house of worship (or even, in the view of the Kelo minority, to carry out public projects) are not assured. And the courts, not Congress and state legislatures, have made them so.

Leslie Lenkowsky is a professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. His e-mail address is llenkows@iupui.edu