On October 1, the U.S. District Court for the Southern District of New York ruled state laws enacted in 2016 requiring disclosure of donors to tax exempt organizations to be invalid.

In Citizens Union of the City of New York, et al., v. Attorney General of the State of New York, the U.S. District Court found provisions in the state’s ethics laws requiring entities exempt from federal taxation under 26 USC §§501(c)(3) and 501(c)(4) to publicly report donors under certain circumstances to be unconstitutional.

The district court found the disclosure of funding sources requirement for 501(c)(3) entities making an in-kind donation over $2,500 to a 501(c)(4) entity engaged in lobbying violates the First Amendment because it chills speech and burdens donors’ rights to free association and privacy.

The district court also struck down the rule requiring 501(c)(4) to publicly disclose donors if the entity makes a public statement that refers to the position of an official regarding any potential legislation.

The second provision was found to intrude on donors’ right to express opinions anonymously.