HAVE A QUESTION? THEN OPEN YOUR MOUTH: FEDERAL COURT STRIKES DOWN TEXAS CHARITABLE SOLICITATION STATUTE

DATELINE:  February 8, 2010, Chicago

Jon Stewart and Stephen Colbert have yet to pick up on last week’s Illinois primary election.   One Scott Lee Cohen won the Democratic spot on the ballot for lieutenant governor.  The people spoke, but the next day, the other shoe dropped.  Mr. Cohen had been...

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charged with holding a knife to the throat of a woman that some in the press referred to as a prostitute.    Mr. Cohen apparently thought that she was a massage therapist.  She was apparently his girlfriend at the time.  The charges in the 2005 incident were dropped when the woman failed to show for a court date.  It also came out that Mr. Cohen was allegedly delinquent in child support payments and was a user of anabolic steroids.  Oh, and the media kept referring to him as a pawnbroker, which is true, but we aren’t sure why the term was used pejoratively.   And then there was the $2 million of his money that he apparently spent to win the primary--that proved to be offensive, as if using your own money in a campaign is a new tactic.

During halftime at yesterday’s Super Bowl, Mr. Cohen tearfully withdrew as the Democratic candidate at a local Rogers Park bar. 

We are disgusted by the incident, but not by Mr. Cohen.  We wish Mr. Cohen would have had the fortitude to stay in the race.  One newspaper columnist at the Chicago Sun-Times uncovered some of these facts before the election.  The remaining facts would have been easy to uncover, but the media never picked up on the story.  People are so focused on trivial celebrity gossip that they don’t pay attention to elections, and then complain about having to wait an additional half-hour for a CTA bus or subway train because of the cuts in service that went into affect yesterday.  We get the government we deserve.  We don’t deserve much given our collective lack of engagement in the electoral process. 

Mr. Cohen won the election fair and square.  We shouldn’t have Mike Madigan, the Democratic Speaker of the House in the Illinois State Assembly, doing more backroom deals to override the popular will.  The Democratic Party should live with the problem they help create.

Which bring us to the State of Texas.  Last week a federal district court judge struck down a state law that required certain information to be disclosed by charities that collect donations of good by telephone, drop box, and other means.  National Federation of the Blind v. State of Texas (N.D. Dallas).   Grant Williams, Court Rejects Texas Rules on Solicitation Disclosure, Chronicle of Philanthropy (Feb. 7, 2010).  Under the law, the charity was required to disclose the amount of money that goes to the charity, indicating whether the amount is a flat amount or a percentage of value.  The U.S. Supreme Court has ruled on statutes designed to regulate charitable solicitations three times before—required disclosures of this nature are unconstitutional because they abridge free speech. 

The Texas legislature was feeling just a little paternalistic when it passed this law.  Potential donors always have the option of asking these questions before they give to a charity.  If they don’t like the answers they receive, they don’t have to give.  The District Court reached the same conclusion, but on far more technical grounds.  It concluded that the relevant portions of the law were subject to strict scrutiny because they regulated the content of speech, requiring the parties to engage in speech that they would not otherwise engage in.

Figuratively speaking, Texas knew it was in trouble when the court started to go down that road.  So Texas tried to distinguish the case from the well-known trilogy—Riley, Munson, and Schaumberg.  It argued that the statute focused on professional resellers who were not soliciting donations for charitable organizations.  Texas further argued that the statute only regulated professional resellers who solicit donations for themselves in the name of a charitable organization.  We fail to see the distinction supposedly lurking in this wooden statutory device.  Neither did the court, which held that the fact that the solicitation is being made by a professional fundraiser does not cause the solicitations to be any less intertwined with protected speech.  The court managed to work the January 21, 2010 Citizens United decision into its analysis, citing it for the proposition that the identity of the speaker is irrelevant.

At the end of the day, the court repeated what the Supreme Court said in the trilogy:  The state can regulate fraud, require filings making financial disclosures, and require solicitors to identify themselves as such, but it cannot require charities and their agents to affirmatively make statements to potential donors.

State legislatures and charity regulators should stop wasting resources trying to protect the public by enacting end runs around the holdings in the trilogy.  Donors, like the Illinois electorate, are in a position to curb many abuses by taking minimal protective actions.  Both can ask questions.  In the case of the electorate, people can stop paying attention to misleading campaign ads.  In the case of donors, people can make cash contributions directly to the charity rather than responding to phone calls and mail solicitations, which often result in part of the contribution being siphoned off by professional fundraisers.  Power is in hands of the people, not elected officials. 

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