Delayed Enforcement of New York Donor Disclosure Requirements for 501(c)(3) Organizations
A federal court development has delayed enforcement of the recently enacted New York State legislation (described in our prior blog post) requiring 501(c)(3) organizations to publicly disclose the identities of certain donors if those 501(c)(3) organizations make donations to 501(c)(4) organizations engaged in significant lobbying in New York.
After the legislation went into effect, several groups challenged its constitutionality in federal court. Specifically, Citizens Union of the City of New York, a government reform group, and the affiliated Citizens Union Foundation filed suit on December 13, 2016 in the Southern District of New York, alleging that the new law violates their First Amendment rights as well as the First Amendment rights of their donors. The American Civil Liberties Union Foundation, New York Civil Liberties Union Foundation, and New York Civil Liberties Union have also filed a similar suit in the Southern District. Both cases requested preliminary and permanent injunctions against application of the new law.
Just before the new year, Judge Richard M. Berman, the district court judge hearing both cases, ordered a stipulation between the Citizens Union plaintiffs and the Attorney General’s office that provides that the Attorney General “shall not take any action to enforce or direct the enforcement” of the new provision while the plaintiffs’ application for a preliminary injunction is pending. (The AG later signed a similar stipulation in the case brought by the ACLUF, NYCLUF, and NYCLU) This stipulation affects all 501(c)(3) organizations covered by the new law.
In addition, in proceedings before the district court, the Attorney General represented that the Charities Bureau is in the process of drafting regulations to implement the new law, which it intends to release for public comment in February of 2017. The Attorney General further represented that under its interpretation of the law, the first disclosures under the law would be due no earlier than July 30, 2017 (covering the sixth-month period from January 1, 2017 through June 30, 2017). However, in any case, as noted above, the Attorney General has represented that enforcement will not occur while the injunction action is pending.
We will keep you posted on further developments.