Amicus Curiae Brief — Illinois Ex Rel. Madigan, Attorney General of Illinois v. Telemarketing Associates, Inc.

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FOR ARGUMEAT —~\ Suprers.: Cout, w

(92) | FILE!

JAN 23 2003

No. 01-1806

IN THE CLERK

)

Supreme Court of the United Stare

THE PEOPLE OF THE STATE OF ILLINOIS

ex rel. JAMES E. RYAN, ATTORNEY GENERAL

OF THE STATE OF ILLINOIS,

Petitioner,

TELEMARKETING ASSOCIATES, INC.,

RICHARD TROIA and ARMET, INC.,

Respondents.

On Writ of Certiorari to the Supreme Court of Illinois

BRIEF OF AMICI CURIAE PUBLIC CITIZEN, INC.,

AMERICAN CHARITIES FOR REASONABLE

FUNDRAISING REGULATION, INC., AND

174 OTHER NONPROFIT ORGANIZATIONS

IN SUPPORT OF RESPONDENTS

BONNIE I. ROBIN- VERGEER

Counsel of Record

ALAN B. MORRISON

PUBLIC CITIZEN LITIGATION GROUP

1600 20th Street, N.W.

Washington, D.C. 20009

(202) 588-1000

JANUARY 2003 Counsel for Amici Curiae

QUESTION PRESENTED

Whether the First Amendment bars a State from pursuing

an action for fraud against a professional fundraiser soliciting

contributions on behalf of a charitable organization when the

allegation of fraud is based solely on the fact that the fundraiser

described tod prospective donors the charitable purposes for

which funds were being solicited without divulging the

percentage of gross contributions that the charity would pay the

fundraiser for its services.

TABLE OF CONTENTS

Page

QUESTION PRESENTED .............00eeeeeeeees

TABLE OF AUTHORITIES ............ceccecceces iv

INTERESTS OF AMICI CURIAE ..........0.0000005 1

STATEMENT OF THE CASE ........-eccceceeceees 2

SUMMARY OF ARGUMENT ..........cceeceeceees 4

ARGUMIBNT .....o<cceccccccceccenennnenennana 7

I. THIS COURT’S DECISIONS IN SCHAUMBURG,

MUNSON, AND RILEY DO NOT AUTHORIZE

STATES TO PURSUE INDIVIDUAL FRAUD

ACTIONS BASED ON A FAILURE TO

DISCLOSE FUNDRAISING COSTS TO

POTENTIAL DONORS ........0ccccceececcuces 7

A. There Is No Nexus Between High Fundraising

Costs an@ Frame... ccccvccccseccsesceseuues 7

B. Riley's Rationale in Barring States from

Compelling Before-the-Fact Disclosures of

Fundraising Cost Percentages Applies as

Surely to an After-the-Fact Disclosure

Pee, 11

C. Imposing Such a Requirement After the Fact

on a Case-by-Case Basis Presents an Even

Greater Risk to Charities’ Protected Speech

Than a Prophylactic Disclosure Requirement .. 18

Il. FACILITATING PUBLIC ACCESS TO

INFORMATION REGARDING CHARITIES,

COUPLED WITH EXISTING ENFORCEMENT

REMEDIES, PROVIDES MORE EFFECTIVE AND

CONSTITUTIONAL MEANS OF ADDRESSING

ABUSIVE CHARITABLE SOLICITATIONS ..... 24

EE Ledeeeccceccceccsocs 30

APPENDIX (listing amici curiae) .................. Al

TABLE OF AUTHORITIES

CASES

Page

Abrams v. New York Found 'n for the Homeless, Inc.,

148 Misc. 2d 791 (N.Y. Sup. Ct. 1990) ........cccccceeeees 27

Airlie Found 'n, Inc. v. United States, 826 F. Supp. 537

(D.D.C. 1993), aff'd, 55 F.3d 684 (D.C. Cir.

UTED «cossinitmsincetuiasiasidaeainhieiainaasipaidamsiadaamaiaimmaemeammanaadeaeiamamatans 30

American Campaign Academy v. Commissioner,

Ge Ve Ce ED crntntentreiennnetemnsmennins 30

Baggett v. Bullitt, 377 U.S. 360 (1964) ........ccccccesseeeeeeeeeees 21

Brattman v. Secretary of the Commonwealth,

GE Rae BE GD crceenenterencemenssnsmmtenenans 27

Buckley v. Valeo, 424 U.S. 1 (1976) .........cccccescssseeeseeresesenes 3

Caracci v. Commissioner, 118 T.C. 379 (2002) .............4. 30

Church By Mail, Inc. v. Commissioner, 765 F.2d 1387

Le 30

Church of Scientology of California v. Commissioner,

823 F.2d 1310 (9th Cir. 1987) ..........ccccceccccseceescceeseeee 30

City of Houston v. Hill, 482 U.S. 451 (1987) .......c.ccceeseees 23

Commonwealth ex rel. Preate v. Pennsylvania Chiefs

of Police Association, 572 A.2d 256

— Ge Cee GR, GRD cence 28

Famine Relief Fund v. West Virginia, 905 F.2d 747

UEP TIITII : sacieserhnsnsictshainndantapesiasienatadatiniacanenianeiimenenniamanes 15

FTC v. NCH, Inc., 1995 WL 623260 (D. Nev. 1995),

aff'd, 106 F.3d 407 (9th Cir. 1997) oo... eccccceeeeeeeeeeees 29

Gentile v. State Bar of Nevada, 501 U.S. 1030 (1991) ....... 23

Grayned v. City of Rockford, 408 U.S. 104 (1972) ............ 21

Hill v. Colorado, 530 U.S. 703 (2000) ...........cccccceeeeceeeeeeees 24

Hurley v. Irish-American Gay, Lesbian &

Bisexual Group, 515 U.S. 557 (1995) ........ccccccceceesees no oe

Hynes v. Mayor of Oradell, 425 U.S. 610 (1976) .............. 24

Ibanez v. Florida Department of Bus. & Prof'l Reg’n,

es ey STE nieritinsiibtdianrinaaiinneicetinteinniinmnaiaiiinnimunie 15

Indiana Voluntary Firemen’s Association v. Pearson,

700 F. Supp. 421 (S.D. Ind. 1988) ..................0 14, 25

Kentucky State Police Professional Association v.

Gorman, 870 F. Supp. 166 (E.D. Ky. 1994) ......... 22, 25

Kolender v. Lawson, 461 U.S. 352 (1983) .......cccccccceeceeseees 24

Lanzetta v. New Jersey, 306 U.S. 451 (1939) ......ccccccceeeeee 21

Marcus v. Jewish National Fund, 557 N.Y.S.2d 886

ee SR Os CED crcaninectecenteremsenstanieerenmntenecncees 28

McIntyre v. Ohio Elections Commission, 514 U.S.

ED tintrnrnisniiinintinnsinsntueninnnenmnaiinnnninnmionn 12

Meyer v. Grant, 486 U.S. 414 (1988) .0.........cccccccceceeeeeeeeees 24

NAACP v. Button, 371 U.S. 415 (1963) ......ccccccceeeees 3, 21,24

National Federation of the Blind of Colorado v.

Norton, 981 F. Supp. 1371 (D. Colo. 1997) ............0 25

Papachristou v. City of Jacksonville, 405 U.S. 156

IPOD ensancstseninutitinnnaiiiceeaienmmmninsintniammeuninnsemecees 23

People ex rel. Abrams v. Westchester County,

604 N.Y.S.2d 579 (N.Y. App. Div. 1993)... 27

People v. Caldwell, 290 N.E.2d 279 (Ill. App. Ct.

DPE cxsnevecsmnmnstatsinntanstnnineeeninaneninintimmencemanenente 27

People v. French, 762 P.2d 1369 (Colo. 1988) ............0008 22

People v. Knippenberg, 757 N.E.2d 667 (Ill. App. Ct.

SEED cscctunntoptpsicenimnsrnnamnesnanendinaniinmabeisiinensimemmenen 27

People v. Orange County Charitable Services,

73 Cal. App. 4th 1054 (Cal. Ct. App. 1999) ............06 28

Riley v. National Federation of the Blind

of North Carolina, 487 U.S. 781 (1988) .............. passim

Secretary of State v. Joseph H. Munson Co.,

ne passim

Shuttlesworth v. City of Birmingham, 394 U.S.

Be CE cntssiitanininicnnemabentinnsmimennennnienmanumnneinenn 20

Smith v. California, 361 U.S. 147 (1959) .......ccccccceeeeeseeees 21

State v. Events International, Inc., 528 A.2d 458

I SPU UED cinestesnssitcisistininiesnainiitinnhsiiamniiniticisinpacaibiinpibdbinbpeiiasiain 22

Vii

Strope v. Commonwealth, 2000 WL 389452

UI Se GAIA, SID etntrtieeeecinrsmemsinnenrsensnemeranesecmmene 28

Summers v. Cherokee Children & Family Servs., Inc.,

2002 WL 31126636 (Tenn. Ct. App. 2002) ................ 28

Telco Communications, Inc. v. Carbaugh, 885 F.2d 1225

IEEE: GURU Senieisorrmteneinesibnntidinartdiidnatiapcagemnsmeninesmmmamnentunens 14

Texas State Troopers Association v. Morales,

10 F. Supp. 2d 628 (N.D. Tex. 1998) ............. 16, 22, 25

Thomas v. Collins, 323 U.S. 516 (1945) .....ccccccccccececeeeeeeees 17

United Cancer Council v. Commissioner, 165 F.3d

TEED cnectninsicnsiiitisiiieashinianiaadiuniniiiananane 13, 30

United States v. Ciccone, 219 F.3d 1078 (9th Cir. 2000) .. 28

United States v. Hawkey, 148 F.3d 920 (8th Cir. 1998) .... 28

Village of Schaumburg v. Citizens for a Better

Environment, 444 U.S. 620 (1980) ............cccc00 passim

CONSTITUTION, STATUTES, AND REGULATIONS

8 > ae ee passim

USA Patriot Act of 2001, Pub. L. No. 107-56, § 1011

i 29

18 U.S.C. §§ 1341, 1343 ccccccccssccsssscsvecsssseessnessessensneseenen 28

26 U.S.C. § 501(C)(3) -esceeseseees “a aR Gee ns Me 29

26 U.S.C. § 501(C)(4)(B) cosccscscssssssececcscesssssssseseseenessnseseneeee 29

SI IE siccciccceansieisicienctetateeni 29

I I cincinnati 26

16 C.F.R. 310.3(d) & 310.4(€) (Dec. 2002) ..ccecscssssssseeeenee 29

26 C.F.R. § 1.501(c)(3)-1(a)(1) (2002) sesccccsssssssssveeeeeeeensen 29

26 C.F.R. § 1.501(c)(3)=1(C)(2) (2002) .essscssssseeseeesssseeseeee 29

26 C.F.R. Parts 53, 301 & 602 (2002) ...ccccssssssssssssseeeeeeseee 29

Illinois Solicitation for Charity Act

(225 Ill. Comp. Stat. 460/1):

ee > GR GRD, Ge erserscesecscncensececsnseamnemerecsnemes 25

225 Ill. Comp. Stat. 460/2(a) ..........scscccscssesesseeeseereees 25

BBS TE, Camp. BERR. SEALED nccccccvecccccsscsesscccscccsscnsevcees 25

SD Ce I GR, Ge cocenssevsnsenstescescscenessecessssesesns 25

ee GI ER, GI ercececevccczesencvcccececsesccersesssesees 25

225 Til. Comp. Stat. 460/6.5 ........ccscccsrosssssssssssesseseeees 25

22S Til. Cont. Stat. 460/7(a) ...0rceccscorcrscrsrecrveescsseesees 25

a 25

225 Ill. Comp. Stat. 460/9(1) .........:ccssseresssssessseesensseees 25

225 Ill. Comp. Stat. 460/17(a) ..........sccssscssseseesseceensees 14

I 15

225 Ill. Comp. Stat. 460/18(b) .........:cccccssssreesereeenes 12

MISCELLANEOUS

Attorney General Jim Ryan, Charity Fraud:

Investigate Before You Donate, available at

http://www.ag.state.il.us/charitable/

CREE cccncnennescernemnninneene 9

Gary Ellis, Making a Connection: DialAmerica Helps

Raise Awareness and Funds for MADD '’s Mission,

DRIVEN Magazine (Fall 2002), available at

http://www.madd.org/news/0,1056,5616,00.htm! ...... 13

Florida Gift Givers’ Guide: A Guide to Charitable

Giving in Florida (2002-2003), available at

http://www.800helpfla.com/~cs/

Se IID cthstnnintcicnntsennssmenesenenmmmmennee 25

Bruce R. Hopkins & D. Benson Tesdahl,

Intermediate Sanctions: Curbing Nonprofit Abuse

SITE -cciteseramereninntaiemnsiennnietenatneenienmnemnneene 29, 30

Bruce R. Hopkins, The Law of Fundraising

en 9, 10, 11, 29, 30

http://justice.hdcdojnet.state.ea.us/charitysr/default.asp .... 25

http://www.ag.state.il.us/charitable/charitydb.htm] ........... 25

http://www.citizen.org/about/articles.cfm?ID=5165 sennens 26

http://www.secstate.wa.gov/ charities/search.aspx ............ 26

Harvy Lipman, Calling Solicitors to Account,

XIII Chronicle of Philanthropy,

FR GTS centeetetenntieiemenmemnene 10, 14, 26

Henry C. Suhrke, The Future of Fundraising,

XXXII Philanthropy Monthly, Apr. 4, 1999 ................. 3

Henry C. Suhrke, What Can Be Done About Fund Raising

“Fraud"’?, XXVI Philanthropy Monthly,

SOUND, GOD cennscccnscssesccscnssenssscesendstennnesnenscsessnaneceecse 14

James M. Greenfield, The Nonprofit Handbook: Fund

Betetee GOB 66. BGT cccccecssenccsenssnscessesssssemnesmnansecscsnvese 9

New York State Department of Law, Charities Bureau,

Pennies for Charity: Where Your Money Goes

(Dec. 2002), available at http://www.oag.state.ny.us/

charities/penniesO2/penintro. html ............cccceeeeeeeesees 25

Press Release, Charity Scam Highlights Need for Scrutiny

in Making Donations (Dec. 12, 2000),

available at http://www.oag.state.ny.us/press/2000/dec/

GOED ccecenenesercscsrmasssseneemmenmnenennmenenn 28

Press Release, Settlement with United Children’s Fund

Permanently Bars Charity From Operating in

New York (Apr. 2, 2001), available at

http://www.0oag.state.ny.us/press/200 1/apr/

CT, RID cetittnecnnnennneccnsstcssssstietammscmmenmessecsen 28

Tips for Informed Charitable Giving, available at

http://www.ag.state.il.us/charitable/charitygive.htm .. 26

United States General Accounting Office,

September 11: Interim Report on the

Response of Charities (Sept. 2002) ......ccccccccsesceeeeeeeeees 3

United States General Accounting Office,

Tax-Exempt Organizations: Improvements

Possible in Public, IRS, and State Oversight

of Charities (Apr. 2002) ...........cssscssssssssssseseeseees 9,19, 11

U.S. Census Bureau, Statistical Abstract of the

United States 2001, No. 561, available at

http://www.census.gov/prod/2002pubs/

SEIS cnreennnentiensnenstinncstnsterrsnnenscsneseectones 2

CF IE GEED, censcsersennenennentnceennmenemmcnen a

Le 26

Sr i abeuisaeusaionailiniee 26

I csectistineecnsictnnnsansratcsntnsnscianisinsnstinanensnsinnnes 26

WWW. giVe.Org/TEpOrts/ INAEX.ASP ..........escceceesesscessesseeeeseecees 26

ITTY cerscicsshiesersinsinnainenconesidiniansesitanetetpiiiciemengttideats 26

I NOIEEEE dienusecccnsenisnenensienssnccienenensenianieasiantatitanaiianmnanenis 26

INTERESTS OF AMICI CURIAE

This brief in support of respondents is submitted by Public

Citizen, Inc., American Charities for Reasonable Fundraising

Regulation, Inc., and 174 other nonprofit organizations. Amici,

who are listed in the Appendix to this brief, are public charities

or other nonprofit organizations exempt from federal taxation

pursuant to various subsections of Section 50l(c) of the

Internal Revenue Code.'

The missions and viewpoints of amici vary greatly, but all

rely primarily on the public for financial support. Amici do not

take a position on the telemarketing contracts at issue here, but

submit this brief to express their concern about the prospect

that the Attorney General of Illinois (as well as state and local

regulators across the country) may be given the power to

pursue a fraud action, carrying the possibility of criminal

penalties or severe civil sanctions, based on nothing more than

the fact that a professional solicitor described the charitable

purposes for which funds were solicited without also

volunteering to prospective donors the organization’s supposed

“fundraising costs.”

Although Illinois brought this case against an outside

professional fundraiser, its theory, if successful, also would

allow the State to make a claim of fraud against any charity

that conducts solicitations using in-house staff rather than

outside fundraisers. See Secretary of State v. Joseph H.

Munson Co., 467 U.S. 947, 967 n.16 (1984). Therefore, many

of the amici, who may do much of their fundraising in-house

(with or without the help of consultants generally paid on a fee- _

for-service rather than a percentage basis) could also

potentially be defendants for not disclosing what the State now

contends—without any advance notice—was so excessive a

' No counsel! for any party to this case authored this brief in whole or in

part, and no person or entity other than amici and their counsel made any

monetary contribution to its preparation and submission. The parties’

letters consenting to the filing of this brief have been filed with the Clerk

of the Court.

fundraising cost as to leave a “misleading impression” with

donors regarding how their contributions would be spent.

The State’s theory would cover not only telemarketing, the

form of solicitation involved here, but all other forms of

solicitation, from special events to direct mail, including

solicitations prepared in-house, as is done by many amici. And

if Illinois can require charities, to avoid a fraud charge, to make

affirmative disclosures regarding the amount of money that

they spend on fundraising, so can other states and localities.

Given the considerable differences of opinion regarding how

fundraising costs should be calculated, the imposition of

diffuse and ill-defined state-by-state requirements for all

manner of charitable solicitations could severely cripple

charities’ efforts to fulfill their missions.

Amici are filing this brief to alert the Court both to the

dangers to all charities posed by the State’s newly minted

notion of fraud and to the existence of far less intrusive means,

consistent with the First Amendment, of assisting donors in

making informed choices about charitable giving and of

protecting charitable assets from overreaching by professional

fundraisers or wasting by charities.

STATEMENT OF THE CASE

i. In the aftermath of a trilogy of decisions by this

Court in the 1980s extending full First Amendment protection

to charitable solicitation, Riley v. National Fed’n of the Blind

of North Carolina, 487 U.S. 781 (1988); Secretary of State v.

Joseph H. Munson Co., 467 U.S. 947 (1984); Village of

Schaumburg v. Citizens for a Better Environment, 444 U.S. 620

(1980), general appeals to the public for charitable

contributions have flourished, and the public has answered the

call. In the 1990s, the level of public support for charities more

than doubled, from $101.4 billion in contributions in 1990 to

$203.5 billion in 2000. U.S. Census Bureau, Statistical

Abstract of the United States 2001, No. 561, available at

http://www.census.gov/prod/2002pubs/01 statab/socinsur.pdf.

Demand for charitable services soared to new heights after

the events of September 11, 2001. Hundreds of charitable

organizations stepped up to the task, helping thousands of

people directly and indirectly affected by the attacks. See

United States General Accounting Office, September 1/1:

Interim Report on the Response of Charities 2, 4 (Sept. 2002).

To meet this new, as well as historical, demand, charities

require funding from the public; securing that funding requires

communication with the public. To raise funds, a charity must

educate donors that a particular problem exists, that the charity

is addressing the problem, and that the donor can help by

donating funds. Henry C. Suhrke, The Future of Fundraising,

XXXII Philanthropy Monthly, Apr. 4, 1999, at 5 (“The key

ingredient to giving—and to increased giving as well—is

asking.”). To thrive, charities require “breathing space,”

NAACP v. Button, 371 U.S. 415, 433 (1963), to experiment

with innovative outreach methods, whose purpose can be as

much to educate and engage the public as to raise funds. Such

solicitations are often costly, combining a description of a

group’s charitable mission and a “call to action” urging the

public to join in its cause, with a request for a donation. See

Buckley v. Valeo, 424 U.S. 1, 19 (1976) (“[V]irtually every

means of communicating ideas in today’s mass society requires

the expenditure of money.”). To help in these efforts, charities

frequently turn to outside professional fundraisers.

Both the states and the federal government have important

oversight responsibilities to ensure that charities are operated

for charitable purposes and that neither charities nor those

soliciting the public on their behalf (whether in-house staff,

volunteers, or outside fundraisers) abuse their right to solicit

charitable donations from the general public. The question

presented here is whether Illinois’s fraud action in this case

oversteps the proper bounds of state enforcement authority and

infringes the First Amendment rights of professional

fundraisers and charities.

2. In this case, respondents are professional fundraisers

who called individuals to solicit donations to VietNow

National Headquarters (““VietNow’”’), pursuant to their contracts

with the charity. In the course of those exchanges, they

described VietNow’s charitable purposes of providing 10d,

shelter, and financial support for Vietnam War veterans, but

did not disclose that VietNow had agreed to pay them 85

percent of the gross receipts collected, a fee Illinois claims is

excessive. Am. Compl. § 32 (J.A. 9). The 85-percent fee

covered both fundraising and programmatic expenses, as the

fundraisers agreed to produce, publish, edit, and pay associated

expenses for a periodic publication “to increase community

awareness” of VietNow. J.A. 21, 36. Although the United

States attempts to portray the State’s ensuing fraud action as

predicated on intentional misrepresentations, U.S. Br. 15-22, its

theory diverges sharply from that upon which Illinois has

litigated this case. The State does not claim that the fundraisers

made intentional affirmative misrepresentations to prospective

donors, but predicates its fraud action on an implied

misrepresentation theory: that given the fundraisers’ allegedly

excessive fees, their solicitations describing the charitable

purposes for which funds were sought were misleading because

donors supposedly expected “much more” of their donations to

be used for charitable services. See, e.g., State Br. 5, 9, 12, 44;

Am. Compl. {9 37-38, 67F-I, 67K-O, 74 (J.A. 10, 85-88, 104).

The Illinois Supreme Court also construed this action as

premised on the fundraisers’ allegedly misleading omissions.

763 N.E.2d 289, 291 (2001) (“{T]here is no allegation that

defendants made affirmative misstatements to potential

donors.”’).

The Illinois trial court dismissed the State’s amended

complaint against the fundraisers. Relying on the

Riley/Munson/Schaumburg trilogy of decisions addressing the

regulation of charitable solicitation, both the Illinois Appellate

Court and Illinois Supreme Court affirmed.

SUMMARY OF ARGUMENT

The public’s confidence in the integrity and honesty of the

philanthropic sector is vital to the success of charitable

organizations across the country. Amici therefore do not

oppose the efforts of federal and state regulators to root out

genuine fraud—indeed, they agree with the states and the

United States that appropriate government regulation of

charitable solicitation serves legitimate governmental interests

(as well as their own) in preventing, detecting, and prosecuting

fraud. Moreover, amici do not object to government regulators

punishing false statements regarding how charitable

contributions will be allocated (e.g., solicitors informing

potential donors that a specific percentage of funds will be used

for charitable purposes, knowing that statement to be false).

Finally, amici do not ask this Court to hold that the State has no

authority to bring a fraud action unless a charity or professional

fundraiser has engaged in “outright lies” or “literal

falsehoods.” See State Br. 16, 31, 39. There is no dispute that

the State has the power to punish implied misrepresentations

regarding verifiable facts, see id. at 9, 17, 23, 32, 34, including

solicitations made under false pretenses.

The problem with the fraud action Illinois has pursued in

this instance, however, is that the percentage of charitable

contributions to be used to defray fundraising costs, which the

State maintains should have been disclosed by the professional

fundraisers to avoid leaving a misleading impression, is not

“factual,” “verifiable,” or even meaningful. See id. at 5, 9, 12,

44 (arguing that donors expected that “much more” of their

contributions would be spent on charitable purposes, without

specifying how much more). As this Court repeatedly has

recognized, fundraising cost information is of ma., inal, if any,

relevance to an assessment of a charity’s legitimacy or

efficacy. Indeed, there is no consensus as to what figure best

represents a fundraising cost percentage or how such a figure

should be derived. The State’s fraud action is thus an

attempted end-run around this Court’s holding in Riley that

states may not require professional solicitors to disclose to

potential donors the percentage of charitable funds to be turned

over to the charity—a holding that the State discusses in its

brief only as an afterthought. See id. at 46-48.

This case involves an after-the-fact judgment by a state

attorney general regarding when the failure to disclose a

fundraising cost percentage to prospective donors constitutes

fraud. As such, it represents a far more heavy-handed

approach, with a far more acute risk of chilling fully protected

speech by charities, than the more clearly defined (but also

unwarranted) prophylactic point-of-solicitation disclosure

requirement struck down in Riley. As the State concedes,

charities and fundraisers are entitled to “fair notice” regarding

speech that is proscribed or prescribed. No “authoritative

judicial construction” of fraud in Illinois or elsewhere, State

Br. 28, however, provides such fair warning of the point at

which “fundraising costs” become so high as to render a

description of a charity’s charitable services misleading (on the

theory that a donor would have expected “much more” of her

donation to be used for such services). The multitude of

imprecise formulations offered by the State, e.g., State Br. i

(“vast majority”), 16 (“trifling amount”), 42 (“negligible

amount actually used”), 44 (“insignificant degree”) highlight

the dangers of the broad authority the State seeks here and the

jeopardy in which it places charities and fundraisers.

This Court need not bless a fraud action of this type either

to ensure that the public possesses adequate information to

make wise choices about charitable giving or to preserve state

and federal regulators’ ability to punish and prevent genuine

fraud or shut down charities that do not operate for charitable

purposes. The notion that donors have little chance to learn

how their donations will be used is anachronistic given the

prodigious amount of financial and other information regarding

charities published (and publicized) by the states themselves

and by charity watchdog groups, typically on the Internet at no

charge. Finally, state and federal regulators already have an

ample arsenal of enforcement tools to root out real fraud in

charitable appeals, whether perpetrated through self-dealing,

improper diversion of funds for personal gain, or through false

representations (explicit or implicit) made in charitable

solicitations, and to revoke the charters or tax exemptions of

those charities that do not operate for charitable purposes.

ARGUMENT

I. THIS COURT’S DECISIONS IN SCHAUMBURG,

MUNSON, AND RILEY DO NOT AUTHORIZE

STATES TO PURSUE INDIVIDUAL FRAUD

ACTIONS BASED ON A FAILURE TO DISCLOSE

FUNDRAISING COSTS TO POTENTIAL DONORS.

The State argues that this Court’s decisions in

Schaumburg, Munson, and Riley invite a state to proceed in an

ad hoc, retrospective fashion against particular fundraisers

(and, presumably, against charities) for fraud based on their

failure to disclose fundraising costs to dispel an allegedly

misleading impression regarding how donations will be used.

State Br. 22. Not only does the State misread these decisions,

but its argument betrays a lack of appreciation of the profound

chilling effect on charitable speech that would result if state

regulators were permitted to make subjective, post hoc

decisions regarding which charitable solicitations are

fraudulent for failure to divulge a “fact” that, as discussed in

Part I.A., infra, is too elusive to be readily defined and too

peripherally related to the legitimacy of a charity to merit

government-compelled disclosure. If successful, Illinois’s

attempt to find yet another way to dictate the content of the

message solicitors must convey to potential donors would serve

only to hinder charities in their ability to communicate their

charitable appeals and successfully raise funds, while failing to

provide donors with meaningful information regarding the

legitimacy or actual merit of any given charity.

A. There Is No Nexus Between High Fundraising

Costs and Fraud.

1. In 1980, this Court struck down a municipal

ordinance prohibiting the solicitation of contributions by

charitable organizations that do not use at least 75 percent of

their receipts for “charitable purposes.” Village of Schaumburg

v. Citizens for a Better Environment, 444 U.S. 620 (1980).

Although charitable appeals involve requests for funds and are

frequently conducted by for-profit professional fundraisers, the

Court explained that because such appeals are

“characteristically intertwined with informative and perhaps

persuasive speech seeking support for particular causes or for

particular views on economic, political, or social issues,” they

are treated as speech fully protected by the First Amendment,

rather than as commercial speech. Jd. at 632. In Schaumburg,

the village defended its restriction as necessary to protect the

public from fraudulent solicitations, but this Court held that the

State’s legitimate interest in preventing fraud was only

“neripherally promoted” by a direct regulation of the amount

of money a charity must devote to its programmatic purposes.

Id. at 636. The Court recognized that fundraising or

administrative costs will be high for those organizations that

are primarily engaged in research, advocacy, or public

education, and indeed, that the costs associated with

fundraising campaigns “can vary dramatically depending upon

a wide range of variables, many of which are beyond the

control of the organization.” Jd. at 636-37 & n.10.

Accordingly, the ordinance was not a “narrowly drawn

regulation[{] designed to serve” the State’s interests “without

unnecessarily interfering with First Amendment freedoms.” /d.

at 637.

In the wake of Schaumburg, states became increasingly

creative in their efforts to restrict the percentage of funds

charities would be permitted to pay their outside fundraisers.

In Secretary of State v. Joseph H. Munson Co., 467 U.S. 947

(1984), and Riley v. National Federation of the Blind of North

Carolina, 487 U.S. 781 (1988), this Court rebuffed those

efforts because they were based “on a fundamentally mistaken

premise that high solicitation costs are an accurate measure of

fraud,” Munson, 467 U.S. at 966; see also id. at 961; accord

Riley, 487 U.S. at 793, and because higher fundraising costs for

a given charity may be attributable to a myriad of legitimate

factors. Riley, 487 U.S. at 791-93; Munson, 467 U.S. at 961.

2. The Court’s recognition in 1988 that fundraising

costs bear only a tenuous relationship, at best, to the question

of fraud, see Riley, 487 U.S. at 793 n.7, is no less valid today.

As the General Accounting Office (GAO) recently

acknowledged, spending efficiency continues to vary

depending upon the popularity of the cause, the age of the

charity, the type of charitable activity, and sudden changes in

events. Thus, expense data and related ratios provide little

perspective on how well charities actually achieve their

charitable purposes. United States General Accounting Office,

Tax-Exempt Organizations: Improvements Possible in Public,

IRS, and State Oversight of Charities 18-19 (Apr. 2002)

(“April 2002 GAO Report”).’

There is nothing fraudulent about this state of affairs,

which is recognized by charities, professional fundraisers, and

regulators alike. The Illinois Attorney General’s own

consumer pamphlet acknowledges that “(p]rofessional fund

raisers often charge 80% to 90% of your contribution as a fee.”

Attorney General Jim Ryan, Charity Fraud: Investigate Before

You Donate, available at http://www.ag.state.il.us/charitable/

charity0301.pdf. Certain types of charities, such as groups that

provide human services, have a particularly difficult time

raising funds and accordingly have consistently high

fundraising costs. A 2001 survey of the industry found that

veterans groups, for instance, receive less than 17 percent of

? An institution such as a university or hospital, for example, is likely to

have an established donor base and a wide range of fundraising options and,

accordingly, a relatively low fundraising cost ratio. By contrast, newer

organizations undertaking costly campaigns to increase their donor base are

likely to have relatively high fundraising cost percentages, such as 80 or 90

percent, or even in excess of 100 percent. Bruce R. Hopkins, The Law of

Fundraising 90 (3d ed. 2002); see also id. at 103-04, 362-63. Donor-

acquisition mailings cost more money than they earn in the short-term, as

much as $1.25 to $1.50 to raise $1.00, though they hold out the potential for

long-term gains if new donors give substantial additional funds in

subsequent years. Telemarketing is an even more expensive, though often

more successful, fundraising technique. James M. Greenfield, The

Nonprofit Handbook: Fund Raising 259, 321 (2d ed. 1997); see also

Hopkins, supra, at 24-25, 31, 100.

the funds collected by professional solicitors—less than any

other type of charity. Harvy Lipman, Calling Solicitors to

Account, XTll Chron. of Philanthropy, Apr. 5, 2001, at 1, 24.

As the survey notes, a fundraiser that returns a low percentage

of collections to charity has not necessarily acted improperly,

as the percentage may simply reflect the size and type of its

charity clients. Jd. at 24.

Not only are fundraising cost percentages poor indicators

either of fraud or a charity’s intrinsic merit, but there is no

readily ascertainable fundraising percentage or expense figure

available that would constitute a material or verifiable “fact”

that must be disclosed to potential donors. See Hopkins, supra,

at 89-91 (explaining reasons for absence of agreed-upon base

or universal standard for computing fundraising costs or

percentages). As the GAO recently acknowledged, charities

have considerable discretion in determining how to allocate

expenses among the program services, management, and

fundraising categories, differences that can affect comparisons

across charities. Neither the IRS nor professional accounting

accrediting bodies require or prohibit particular allocation

methods, so long as they are reasonable and consistently

applied. April 2002 GAO Report at 2, 8, 13, 16-19; see also

Hopkins, supra, at 105 & n.29. Two organizations may have

identical fundraising expenses and yet derive different

fundraising cost ratios. This fact does not illustrate fraud, but

the lack of uniformity in, and intrinsic malleability of,

fundraising cost allocation methods.’

> Moreover, had the same activities, with the same fundraising expenses,

been conducted by VietNow entirely in-house, there would have been no

“percentage” in a fundraising contract for Illinois to point to as “excessive”

or to contend the charity must disclose to potential donors to dispel any

misleading impression. Yet there would be no economic difference in terms

of the group’s solicitation costs or amounts expended for charitable

services. See Riley, 487 U.S. at 799 (criticizing disclosure requirement’s

discrimination between those charities who must rely on professional

fundraisers and those that conduct their campaigns in-house). The

susceptibility of a fundraiser or charity to prosecution for fraud cannot be

The State’s effort, in other words, to force charities or

fundraisers to attempt to describe fundraising costs to potential

donors as a single percentage not only is not “a meaningful

indicator of anything,” but, even worse, “may be so misleading

as to be counterproductive to the disclosure motive and unfair

to certain categories of charitable groups.” Hopkins, supra, at

90; see also April 2002 GAO Report at 16. An in-house or

outside solicitor’s silence on the issue of fundraising expenses

simply is not an implied misrepresentation of fact. Even apart

from the legitimate variation of fundraising costs among

charities, the states’ insistence on making charitable spending

efficiency the lodestar of their regulatory approach is

fundamentally misguided. Cost of fundraising measures,

however calculated, are of marginal, if any, utility to the

potential donor attempting to ascertain the actual efficacy or

accomplishments of a charity soliciting donations. /d. at 19.

In short, any effort by the government to punish charitable

appeals or to compel crippling, but meaningless, disclosures to

potential donors on the ground that the charity’s fundraising

costs or the professional fundraiser’s fees are “higher than

expected,” both ignores the First Amendment value of these

appeals and discriminates against new, small, or unpopular

charities and those that combine education and solicitation.

B. Riley’s Rationale in Barring States from

Compelling Before-the-Fact Disclosures of

Fundraising Cost Percentages Applies as Surely

to an After-the-Fact Disclosure Requirement.

Illinois insists that regardless of whether the professional

fundraisers’ fee here can be labeled fraudulent in and of itself,

the fundraisers’ failure to disclose that fee to prospective

donors on the spot renders the solicitations fraudulently

misleading because the fundraisers described to donors the

charitable purposes for which funds were being solicited

without also revealing their (allegedly high) fee. To avoid

permitted to turn on such an artificial distinction.

leaving a false or misleading impression that “much more” than

a “trifling,” “negligible,” or “insignificant” amount of donated

funds would be used to further VietNow’s charitable purposes,

State Br. 5, 9, 12, 16, 42, 44, the State contends that the

fundraisers were required either to refrain from describing the

charitable purposes for which funds were solicited or to

disclose their fee. State’s Br. 46, 48.

The first alternative, that fundraisers refrain from

disclosing the charitable purposes for which donations are

sought, is not an option. Indeed, Illinois law explicitly

provides that a person soliciting contributions must disclose the

primary program service for which funds will be spent. 225 II.

Comp. Stat. 460/18(b). The only other alternative to avoid the

risk of a fraud action, then, is for charities and fundraisers to

make an affirmative disclosure of fundraising costs in any case

in which the fee is higher than some donor might expect. But

the State cannot compel such speech. Riley, 487 U.S. at 795

(“Mandating speech that a speaker would not otherwise make

necessarily alters the content of the speech.”’); see also Hurley

v. Irish-American Gay, Lesbian & Bisexual Group, 515 U.S.

557, 573 (1995) (the right of the speaker to choose “what not

to say” applies “equally to statements of fact the speaker would

rather avoid”); McIntyre v. Ohio Elections Comm'n, 514 U.S.

334, 348-49 (1995). Although Riley addressed a prophylactic

disclosure requirement, its rationale applies as surely to one

based on a post hoc judgment by a State that the magnitude of

fundraising costs rendered a description of the charitable

purposes for which funds were sought a deceptive “half truth.”

1. Just as Illinois argues here, North Carolina

maintained in Riley that a blanket disclosure to all potential

donors of the percentage of receipts turned over to charity was

necessary “‘to dispel the allege! misperception that the money

they give to professional fundraisers goes in greater-than-actual

proportion to benefit charity.” 487 U.S. at 798. The Court

rejected the proposed disclosure requirement as a content-

based regulation of speech, id. at 795, for several reasons all

fully applicable in this case.

First, the Court reasoned, North Carolina’s disclosure

requirement incorrectly presumed that the charity derived no

benefit from funds collected but not turned over to it. As the

Court had made clear in Schaumburg and Munson, “where the

solicitation is combined with the advocacy and dissemination

of information, the charity reaps a substantial benefit from the

act of solicitation itself.” Riley, 437 U.S. at 798. For some

charities, a substantial aspect of their programmatic purpose is

to broadly communicate a particular message. Amicus

MADD ’s mission, for instance, is to communicate the message

“Don’t Drink and Drive.” For such groups, “a significant

portion of the fundraiser’s ‘fee’ may well go toward achieving

the charity’s objectives even though it is not remitted to the

charity in cash.” Jd. at 798-99 (citations omitted); e.g., Gary

Ellis, Making a Connection: DialAmerica Helps Raise

Awareness and Funds for MADD’s Mission, DRIVEN

Magazine, at 23 (Fall 2002) (DialAmerica telemarketers “reach

millions of people a year, and each call educates the public

about the tragedy of drunk driving, provides statistics and asks

the customer to always designate a sober driver’’), available at

http://www.madd.org/news/0, 1056,5616,00.html.

Here Illinois has ignored the First Amendment value

inherent in the solicitations the professional fundraisers

conducted on VietNow’s behalf, attaching significance only to

the 85 percent figure in the contract without regard to how that

fee was spent and whether a portion of the fee was used for

programmatic purposes. As Judge Posner explained in

rejecting the IRS’s revocation of the tax exemption of a charity

that paid its professional fundraiser $26-plus million of the

$28-plus million in charitable funds it had raised: “These

figures are deceptive, because UCC got a charitable ‘bang’

from the mailings themselves, which contained educational

materials . . . in direct support of the charity’s central charitable

goal. A charity whose entire goal was to publish educational

materials would spend all or most of its revenues on

publishing, but this would be in support rather than in

derogation of its charitable purposes.” United Cancer Council

v. Commissioner, 165 F.3d 1173, 1178 (7th Cir. 1999).

Moreover, it is wrong for Illinois to suggest, absent an actual

diversion of charitable funds or violation of the terms of the

fundraising contracts, that the professional fundraisers in this

or similar instances “kept” for themselves a certain percentage

of charitable collections—as if to imply that the fee represents

pure profit. Henry C. Suhrke, What Can Be Done About Fund

Raising ‘‘Fraud"’?, XXV1 Philanthropy Monthly, July/Aug.

1993, at 11; see, e.g., State Br. 2, 3, 9, 45. Fundraising,

especially telemarketing, is expensive, often requiring the

outlay of hundreds of thousands of dollars to buy telephone

equipment, hire solicitors to make calls, pay phone bills, send

out follow-up mail to donors, and handle donation checks.

Lipman, XIII Chron. of Philanthropy, supra, at 24, 27.

Second, the Riley Court noted that an unchallenged portion

of North Carolina’s disclosure law required professional

fundraisers to disclose their professional status to potential

donors, “thereby giving notice that at least a portion of the

money contributed will be retained.” Riley, 487 U.S. at 799 &

n.11. The Court also recognized that donors are “undoubtedly

aware that solicitations incur costs, to which part of their

donation might apply.” Jd. at 799. Illinois likewise requires

that professional fundraisers inform prospective donors that the

solicitation is being made “by a paid professional fund raiser”

and “that contracts and reports regarding the charity are on file

with the Illinois Attorney General.” See 225 Ill. Comp. Stat.

460/17(a). There is no reason that these disclosure

requirements are insufficient to put potential donors on notice

that part of their donation will be used to defray the solicitor’s

expenses.* Although both Illinois and the United States assert

* Amici do not object to Illinois’s requirement that fundraisers disclose

their paid professional status. Such a “brief, bland, and non-pejorative

disclosure” is unobjectionable because, unlike a fundraising percentage

disclosure requirement, it is “unlikely to discourage donations.” Telco

Communications, Inc. v. Carbaugh, 885 F.2d 1225, 1232 (4th Cir. 1989);

see also Indiana Voluntary Firemen’s Ass'n v. Pearson, 700 F. Supp. 421,

ee SR

that the amended complaint alleges that the fundraisers failed

to disclose their paid professional status here, see State Br. 4;

U.S. Br. 16, the complaint in fact makes no such claim, see

4 37 (J.A. 10): nor, unsurprisingly, did the Illinois courts

understand the Attorney General to assert such a claim.

Under the State’s theory, then, a general solicitation that

describes the charitable purposes to which funds will be used

is “misleading” not because the solicitor has falsely implied a

verifiable fact, but rather because the Attorney General has

made a subjective judgment that the fundraiser’s fee is “higher”

than a donor might have expected. As the Riley Court pointed

out, however, a donor is always “free to inquire how much of

the contribution will be turned over to the charity.” In fact, the

Court emphasized, North Carolina law (like the Illinois statute,

225 Ill. Comp. Stat. 460/17(b)) required the disclosure of such

information upon request by the donor. 487 U.S. at 799; see,

e.g., Famine Relief Fund v. West Virginia, 905 F.2d 747, 751-

52 (4th Cir. 1990) (sustaining disclosure-upon-request

requirement). Even without such a requirement, the potential

donor who is refused an answer is not likely to donate. Riley,

487 U.S. at 799. Such disclosure-on-demand statutes are far

less objectionable because specific requests for information

from potential coriributors provide a context for the solicitor

(or in-house staff or volunteer) to make fundraising expense

information understandable to a listener who presumably

(because she asked the question) is willing to attend to the

answer. Cf. Ibanez v. Florida Dep't of Bus. & Prof'l Regn,

512 U.S. 136, 145 n.9 (1994) (attorney advertisement of

credentials not misleading in part because consumers could call

the board to verify the credentials and state bar rules required

the provision of written information describing the attorney’s

expertise “to anyone who so inquires”). The State has not

alleged that the professional fundraisers refused to answer

candidly such informational requests here.

Finally, the Court in Riley rejected the fundraising

441-42 (S.D. Ind. 1988).

percentage disclosure requirement for the simple reason that it

“will almost certainly hamper the legitimate efforts of

professional fundraisers to raise money for the charities they

represent.” 487 U.S. at 799. Not only would such a

requirement discriminate against new, expanding, or unpopular

charities that rely on professional fundraisers and conduct

costly campaigns, but “in the context of a verbal solicitation, if

the potential donor is unhappy with the disclosed percentage,

the fundraiser will not likely be given a chance to explain the

figure; the disclosure will be the last words spoken as the donor

closes the door or hangs up the phone.” /d. at 799-800. In

short, the Court concluded: “The First Amendment mandates

that we presume that speakers, not the government, know best

both what they want to say and how to say it.” /d. at 790-91.

A charitable solicitation, particularly by telephone, is

made in a brief exchange with a prospective donor. A premium

is placed on the solicitor’s ability to convey effectively and

persuasively the importance of the charity’s mission and the

need for that potential donor’s involvement and financial

support, and to put to rest any reservations regarding the track

record of the organization or the popularity of its cause. In

short, it is a delicate and fleeting exchange. Similar concerns

arise for direct mail, as that mail competes with every other

piece of mail for the recipient’s limited attention. Any

government-compelled disclosure, other than the most basic

facts regarding the identity of the charity, the nature of its

mission, and, in the case of telemarketing, the status of the

caller, threatens the success of that exchange, hampering

charities’ protected speech and chilling the free flow of

information in the future. See Texas Siate Troopers Ass'n v.

Morales, 10 F. Supp. 2d 628, 634-35 (N.D. Tex. 1998).

(“[T]elephone solicitors have a limited and time sensitive

window of opportunity during which to communicate their

message. Mandating that the solicitors disclose [percentage]

information at the beginning of the phone call would certainly

inhibit the solicitors’ ability to effectively seek contributions

and, consequently, would impede the solicitation.”’).

2. Although the Riley Court reaffirmed that a State

“may vigorously enforce its antifraud laws to prohibit

professional fundraisers from obtaining money on false

pretenses or by making false statements,” 487 U.S. at 800; see

also Munson, 467 U.S. at 961 n.9; Schaumburg, 444 U.S. at

636-37, the Court plainly did not mean to imply that regulators

could bring fraud actions against fundraisers or charities for

failing to make a disclosure that the Court had just explained

was not required to render a solicitation non-misleading. See

Riley, 487 U.S. at 798-801. Indeed, the Court clarified that it

would “not immunize a law requiring a speaker favoring a

particular government project to state at the outset of every

address the average cost overruns in similar projects, or a law

requiring a speaker favoring an incumbent candidate to state

during every solicitation that candidate’s travel budget.”

Although “the foregoing factual information might be relevant

to the listener, and in the latter case, could encourage or

discourage the listener from making a political donation,” a

law compelling its disclosure would “clearly and substantially

burden the protected speech.” /d. at 798 (emphasis added).

A fundraiser’s failure to disclose a fundraising cost

percentage in a particular case where a state attorney general

has deemed the cost especially high is no different from these

other types of potentially discouraging disclosures that the

Riley Court denied the states the power to compel. Such

compulsion would impose an even more significant burden on

protected speech here because, as explained above, fundraising

cost percentages have no independent informational

significance, and there is no readily ascertainable or verifiable

“fact” to disclose. Charities and fundraisers alike would be left

wondering which disclosures they must make up front to

prospective donors to avoid the risk of a fraud action by state

regulators afterward. The specter of such enforcement action

whenever a charity or fundraiser has failed to disclose

fundraising costs that a state deems to be “excessive,”

“blankets with uncertainty whatever may be said,” compelling

“the speaker to hedge and trim” its speech. Thomas v. Collins,

a —_—EEn nea

323 U.S. 516, 535 (1945). The only other choice is for a

charity or fundraiser to make elaborate, distracting, and

potentially unappealing fundraising cost revelations in all

communications with potential donors to avoid the possibility

of losing the right to speak at all. Either course of action is

sure to inhibit charities’ efforts to build public support for their

missions.°

C. Imposing Such a Requirement After the Fact on

a Case-by-Case Basis Presents an Even Greater

Risk to Charities’ Protected Speech Than a

Prophylactic Disclosure Requirement.

The State contends, however, that the

Schaumburg/Munson/Riley trilogy is irrelevant to its ability to

bring an individual fraud action in this case because I]linois has

attempted neither to regulate the size of the professional

fundraisers’ fee nor to mandate any particular point-of-

solicitation disclosure that must be made in all cases. Instead,

it argues, a case-by-case approach is less intrusive because it

permits the State to evaluate in retrospect whether a fraud on

potential donors has occurred and to tailor its regulatory

approach to the particular facts. State Br. 12, 23-24, 48. -The

Illinois Supreme Court was right to reject this disingenuous

effort to distinguish Riley and its predecessors. 763 N.E.2d at

297. To be sure, a failure to disclose can constitute fraud in

some situations, but what is particularly striking about the

State’s lengthy discussion of fraud principles here is that it fails

to cite even a single fraud case in which the facts remotely

resemble these, let alone one where fully protected speech was

* This does not mean, however, that fundraising cost information should be

“categorically” barred as evidence in a fraud case brought against a charity

or a fundraiser or that fundraising costs are “irrelevant” to a fraud action

based on other indicia of fraud, as the State claims the Illinois Supreme

Court ruled. See State Br. i, 11, 43, 44. The court below simply held that

a fraud action may not be predicated on nothing more than a solicitor's

failure to divulge fundraising costs at the point of solicitation.

19 -

at issue. The blunt hammer of a fraud action for failure to

disclose fundraising fees when they are higher than some real

or hypothesized individual might expect is no more “narrowly

tailored” or able to survive “exacting First Amendment

scrutiny,” Riley, 487 U.S. at 789, than a disclosure requirement

that applies to all solicitations.

1. Asan initial matter, it is important to dispel the myth

that Riley is inapposite because the State does not propose to

compel any particular disclosures up front, but merely wishes

the option of prosecuting false or misleading statements after

they are made. State Br. 46; U.S. Br. 9, 24. There is nothing

about the alleged exchanges between the fundraisers here and

potential donors that takes them outside of the prototypical

exchange contemplated by this Court in Riley, in which a

professional fundraiser identifies the charitable purposes for

which funds are solicited, but does not volunteer the proportion

that will go toward paying the fundraiser’s fee (of which a

substantial portion is expended to fulfill the fundraiser’s

obligations to the charity). While amici do not dispute the

authority of state and federal regulators aggressively to pursue

actual fraud committed by fundraisers or charities, the use of

suggestive or inflammatory terms such as “deception,” “half

truths,” “deceit for pecuniary gain,” and “ingenious swindlers,”

State Br. 9, 11, 29, 39, cannot convert this case into something

other than what it is: a fraud action premised on the

fundraisers’ failure to disclose voluntarily to potential donors

the terms of their contract with VietNow.

Far from a saving grace, the State’s claimed discretion to

decide, without notice or fair warning, when to bring a fraud

action for failure to make a disclosure that this Court

previously held the states could not compel, renders this type

of enforcement activity far worse, from the standpoint of

safeguarding First Amendment freedoms, than the categorical

disclosure requirement struck down in Riley. The discretion

Illinois seeks to exercise here is no different, in effect, from the

“waiver” provision this Court rejected in Munson. The

Maryland law invalidated in that case prohibited charities from

paying or agreeing to pay more than 25 percent of the amount

raised, but provided for an administrative waiver for a charity

that could demonstrate financial necessity. The Court ruled

that this added flexibility did not save the statute because

Maryland’s waiver authority was tantamount to a “license” for

the dissemination of ideas and hence “inherently suspect.” 467

U.S. at 964 n.12; of Shuttlesworth v. City of Birmingham, 394

U.S. 147, 150-51 (1969) (“[A] law subjecting the exercise of

First Amendment freedoms to the prior restraint of a license,

without narrow, objective, and definite standards to guide the

licensing authority, is unconstitutional.”). As the Court aptly

concluded, charities whose First Amendment nights are

abridged by the fundraising limitation “simply would have

traded a direct prohibition on their activity for a licensing

scheme that, if it is available to them at all, is available only at

the unguided discretion of the Secretary of State.” 967 U.S. at

964 n.12; see also Riley, 487 U.S. at 793-94; Schaumburg, 444

U.S. at 643 n.1 (Rehnquist, J., dissenting).

As the court below recognized, Illinois’s fraud action is no

“less intrusive” because it is an instance of individual litigation.

763 N.E.2d at 297. The post-solicitation approach invites

significantly more self-censorship because all fundraisers in the

State “would have the burden of defending the reasonableness

of their fees, on a case-by-case basis, whenever in the Attorney

General’s judgment the public was being deceived about the

charitable nature of a fund-raising campaign because the fund-

raiser’s fee was too high.” Jd. at 299. As a result, fundraisers

(and charities, as well) “would be at constant risk of incurring

litigation costs, as well as civil and criminal penalties, which

could produce a substantial chilling effect on protected speech,

based on nothing more than a ‘loose inference that the fee

might be too high.”” Jd. (quoting Riley, 487 U.S. at 793). And

although Illinois disclaims any intent to regulate the size of the

fees charged by fundraisers, see State Br. 11, 24 n.21, 41, a

fundraiser’s obligation to divulge its fee would be triggered

only when that fee was higher than a donor might expect, a

determination to be made at the discretion of state officials who

might be serving their own political interests in making such a

determination. The State’s fraud action, then, would have the

effect either of capping fundraising costs at whatever level

regulators decided was excessive, or driving fundraisers out of

a jurisdiction altogether to avoid making undesirable and even

misleading disclosures to potential contributors.

2. Further compounding the burden placed on charities

and fundraisers from fraud actions pursued on an “ad hoc and

subjective basis” by state regulators, Grayned v. City of

Rockford, 408 U.S. 104, 109 (1972), is the intractable difficulty

that charities would face in being denied “fair warning as to

what is prohibited.” /d. at 114. “All are entitled to be

informed as to what the State commands or forbids.” Lanzetta

v. New Jersey, 306 U.S. 451, 453 (1939). Still “stricter

standards of permissible statutory vagueness may be applied to

a statute having a potentially inhibiting effect on speech.”

Smith v. California, 361 U.S. 147, 151 (1959); accord Baggett

v. Bullitt, 377 U.S. 360, 372 & n.10 (1964). “Because First

Amendment freedoms need breathing space to survive,

government may regulate in the area only with narrow

specificity.” Button, 371 U.S. at 433. Such specificity is

completely lacking here: If this fraud action is permitted to

proceed, charities and fundraisers will be left to guess which

representations they may make without risk and which

disclosures they must make to avoid criminal penalties, loss of

charitable solicitation licenses, and other sanctions.

Conceding that charities and fundraisers must be provided

“fair notice” of what is proscribed before the State may bring

an action for fraud against them, State Br. 28, the State finds

that requirement satisfied here because there is a well-

developed law of misrepresentation, State Br. 28-30— in other

words, solicitors are on notice of their obligation not to commit

fraud. Yet there is no “authoritative judicial construction,”

State Br. 28, of the principles of implied misrepresentation that

would suggest that this kind of case is susceptible to a fraud

claim.’ The real-life scenarios in which charities and

fundraisers would be left to speculate, at their peril, about their

legal obligations are legion:

* Suppose a charity agreed to pay a professional fundraiser

85% of funds received for a risky and expensive

telemarketing campaign aimed at increasing the charity’s

donor base, but, over a several-year period, the charity

devoted more than 50% of its overall contributions to its

charitable services. Would it be misleading in that

instance for the charity or fundraiser to fail to disclose the

85% contract to potential donors?

¢ Suppose a charity spent 85% of funds received from a

particular campaign on fundraising costs, but all

fundraising was conducted entirely in-house. If the

charity’s staff described its charitable purposes in its

solicitations, but did not disclose its fundraising expenses

to potential donors, would the charity be guilty of fraud?

¢ Imagine the converse situation, in which a fundraising

contract provided that the charity would receive more than

half of the gross proceeds in a particular fundraising drive,

~ but overall the charity spent only 15% of funds received

on its charitable purposes. Would the charity or fundraiser

have to disclose the charity’s overall fundraising costs to

donors solicited in that fundraising drive?

¢ What is the relevant time-frame for determining whether

a solicitation left a false impression regarding how funds

* The lower courts’ treatment of state statutes that expressly stated the

principle upon which Illinois relies here—that at a specified fundraising

percentage level, it is a misrepresentation of fact for a solicitor to represent

to potential donors that funds will go to charitable purposes without

courts struck the statutes down. See, e.g., Texas State Troopers, \0 F. Supp.

2d 628; Kentucky State Police Professional Ass'n v. Gorman, $70 F. Supp.

166 (E.D. Ky. 1994); People v. French, 762 P.2d 1369 (Colo. 1988) (en

banc); State v. Events Int'l, Inc., 528 A.2d 458 (Me. 1987).

would be used? Should regulators focus on the alleged

misrepresentations or omissions made regarding the

fundraising costs involved in a particular campaign or

under a specific contract, or, instead, should they focus on

the charity’s overall allocation of funds between

fundraising and charitable expenses?

* Many of the amici enter into fundraising contracts, such as

fee-for-service agreements, that do not specify a

percentage payment to the fundraiser or return to the

charity. Will a charity or its fundraiser be held

accountable after the fact by state or local regulators, who

can review the charities’ IRS Form 990s, if it turns out fhat

a particular campaign—or, indeed, their fundraising effort

for the entire year—has been a financial failure, yielding

little to no return to the charity?

All charities incur high fundraising costs at some point.

The State offers no objective standard to govern when a charity

must qualify its description of its program services or reveal

fundraising costs to potential donors to avert a potential fraud

action. Under the State’s approach, virtually any statement a

solicitor might make in a solicitation could be viewed as

potentially misleading if not accompanied by a disclosure of

fundraising costs.

Without “explicit standards” governing when a fraud

action may be brought based on an omission of fundraising

cost information in a solicitation, it is left to the whim of the

state or local regulator to determine whether to target particular

charities or fundraisers for political or public relations gains or

to discriminate against those groups that have taken positions

in Opposition to regulators in a particular state. The very threat

of such selective enforcement raises serious First Amendment

concems. See, e.g., Gentile v. State Bar of Nevada, 501 U.S.

1030, 1051 (1991) (invalidating attorney disciplinary rule that

was “so imprecise that discriminatory enforcement [was] a real

possibility”); Papachristou v. City of Jacksonville, 405 U.S.

156, 170 (1972) (standardless local vagrancy ordinance

furnished “a convenient tool for ‘harsh and discriminatory

enforcement by local prosecuting officials, against particular

groups deemed to merit their displeasure”) (quoting Thornhill

v. Alabama, 310 U.S. 88, 97-98 (1940)); see also City of

Houston v. Hill, 482 U.S. 451, 465 & n.15 (1987); Kolender v.

Lawson, 461 U.S. 352, 357-61 (1983); Hynes v. Mayor of

Oradell, 425 U.S. 610, 622 (1976).

The conclusion is inescapable that the “substantial

imprecisions” of applying a common-law theory of fraud to the

failure to reveal fundraising cost. information to potential

donors “will chill speech.” Hill v. Colorado, 530 U.S. 703, 772

(2000) (Kennedy, J., dissenting); Button, 371 U.S. at 438

(“Precision of regulation must be the touchstone in an area so

closely touching our most precious freedoms.”). The end

result, if Illinois prevails, will be to inhibit charitable

solicitations and reduce the total quantity of protected speech.

See Schaumburg, 444 U.S. at 632 (without solicitation, “the

flow of... information and advocacy would likely cease’),

Meyer v. Grant, 486 U.S. 414, 423 (1988) (prohibition against

use of paid petition circulators had “the inevitable effect of

reducing the total quantum of speech on a public issue”’).

Il. FACILITATING PUBLIC ACCESS TO

INFORMATION REGARDING CHARITIES,

COUPLED WITH EXISTING ENFORCEMENT

REMEDIES, PROVIDES MORE EFFECTIVE AND

CONSTITUTIONAL MEANS OF ADDRESSING

ABUSIVE CHARITABLE SOLICITATIONS.

A. The State argues that donors have little opportunity

to learn how their contributions will be used, see State Br. 10-

11, 36, and that, therefore, states must protect consumers from

rapacious fundraisers by compelling, in certain instances,

affirmative disclosures to donors regarding fundraising costs.

If that were ever true, the notion is antiquated today, given the

extensive financial information regarding charities and

professional fundraisers that is reported to, made accessible to

the public by, and frequently published by the states.

Extensive information regarding charities is widely

disseminated, usually at no charge on the Internet, by the

states, charity watchdog groups, charities themselves, and

others.

This Court has invited the states to require charities and

fundraisers to submit financial information as part of their state

filings and to publish that information to educate the public.

See, e.g., Riley, 487 U.S. at 795, 800; Schaumburg, 444 U.S. at

637-38. Many lower courts have followed that lead, rejecting

regulations of charitable solicitations—many of them

compelled point-of-solicitation disclosures—because state

publication of the same information would be at least as

effective without offending the First Amendment. See, e.g.,

Texas State Troopers, 10 F. Supp. 2d at 634; National Fed'n of

the Blind of Colorado v. Norton, 981 F. Swpp. 1371, 1374 (D.

Colo. 1997); Gorman, 870 F. Supp. at 169; Pearson, 700 F.

Supp. at 443-44.

The states have accepted the courts’ invitation. Forty of

them, including Illinois, and the District of Columbia (in

addition to many local governments) have adopted charitable

solicitation acts that require charities and fundraisers soliciting

contributions in their jurisdictions to register and submit

financial information. See, e.g., 225 Ill. Comp. Stat. 460/2,

460/4 (registration and annual reporting requirements for

charities); id 460/6, 460/6.5, 460/8 (registration, annual

reporting requirements, and contract requirements for

professional fundraisers). Charities~ and professional

fundraisers alike are required to file copies of their fundraising

contracts with the Illinois Attorney General. Jd. 460/2(a)(10);

id. 460/7(a). All of this extensive information is open to public

inspection, id. 460/2(f), and the Attorney General is authorized

to publish an annual report on charities, including the amount

of money and percentage of collections spent on program

services. Jd. 460/9(i); see http://www.ag.state.il.us/charitable/

charitydb.html (future Illinois charity database).’ States,

including Illinois, often publish guides for the general public

on charitable giving. E.g., Tips for Informed Charitable

Giving, available at http://www.ag.state.il.us/charitable/

charitygive.htm. In addition, the Internal Revenue Code

requires nonprofits to provide copies of their annual tax filings,

the IRS Form 990s, to the public upon request. 26 U.S.C.

§ 6104(d). Charities often post these forms on their websites,

see, €.g., http://www.citizen.org/abouv/articles.cfm?ID=5 165

(amicus Public Citizen’s Form 990s), along with other

information about their missions and accomplishments.

In addition to information made publicly available by the

states and charities themselves, considerable information

regarding charities is disseminated by third parties. GuideStar,

a national database of nonprofit organizations, provides

information on 850,000 nonprofits nationwide, including their

IRS Form 990s. See www.guidestar.org. Numerous charity

watchdog groups provide fundraising percentage information

or prepare reports evaluating or rating charities according to

varied criteria.* The trade press provides similar information.

See, e.g., Lipman, XIII Chron. of Philanthropy, supra (analysis

of nonprofit groups and professional fundraising fees).

Offering such information to the donating public through

? Numerous states publish sch information. See, eg.,

http://justice.hdcdojnet.state.ca.us/charitysr/default.asp (California charities

database search); Florida Gift Givers’ Guide: A Guide to Charitable Giving

in Florida (2002-2003), available « http://www.800helpfla.com/~cs/

gift_givers/search.html; New York State Department of Law, Charities

Bureau, Pennies for Charity: Where Your Money Goes (Dec. 2002),

available at http://www.oag.state.ny.us/charities/pennies02/penintro. html;

http://www.secstate.wa.gov/ charities/search.aspx (Washington database for

charities and commercial fundraisers).

* See, e.g., Better Business Bureau Wise Giving Alliance (www.give.org/

reports/index.asp); Charity Navigator (www.charitynavigator.org);

American Institute of Philanthropy (www.charitywatch.org); Charitable

Choices (www.charitychoices.com); Minnesota Charity Review Council

(www.crcmn.org); National Crime Prevention Council (www.ncpc.org).

multiple channels not only respects First Amendment values,

but is likely to be a more effective means of ensuring that

potential donors have at their fingertips the information that

they believe to be most important in deciding whether to make

a charitable contribution. See Riley, 487 U.S. at 804 (Scalia, J.,

concurring) (“[W]here the dissemination of ideas is concerned,

it is safer to assume that the people are smart enough to get the

information they need than to assume that the government is

wise or impartial enough to make the judgment for them.”).

B. This emphasis on publication of information

regarding charities is not meant to suggest that amici believe

that there is no place for fraud actions or other enforcement

activities by federal or state regulators seeking to shut down

charities or fundraisers engaged in abusive solicitation

practices or to force them to comply with legal obligations.

The enforcement tools available to federal and state regulators

that do not compel speech of the government’s choosing,

however, are already adequate for the task.

As noted above, the great majority of states regulate

charities and fundraisers soliciting in their jurisdictions. The

states have successfully enjoined solicitations by, and have

even dissolved, or revoked the charitable charters of, those

charities that have refused to register or satisfy annual

reporting requirements.’ State regulators likewise have been

unhindered in their efforts to root out real fraud in charitable

appeals, whether that fraud is perpetrated through the improper

diversion of funds for personal benefit or through false

representations (explicit or implicit) made in solicitations

themselves. See, e.g., People v. Knippenberg, 757 N.E.2d 667

(ill. App. Ct. 2001) (affirming fundraiser’s criminal

convictions for theft and for using charitable contributions for

his own personal benefit); People v. Caldwell, 290 N.E.2d 279

® See, e.g., Brattman v. Secretary of the Commonwealth, 658 N.E.2d 159

(1995) (Mass. 1995); People ex rel. Abrams v. Westchester County, 604

N.Y.S.2d 579 (N.Y. App. Div. 1993); Abrams v. New York Found 'n for the

Homeless, Inc., 148 Misc. 2d 791 (N.Y. Sup. Ct. 1990).

(Ill. App. Ct. 1972) (affirming conviction of organizer of

charity art auction for unauthorized use of a person’s name to

promote the auction).'° The array of existing criminal and civil

sanctions gives the states considerable leverage over charities

and professional fundraisers to negotiate settlements barring

offending persons from further solicitation activities within

their jurisdictions.'' And states long have possessed the

authority at common law (as well as by statute) to supervise the

administration of assets given for charitable purposes. See

State Br. 39 n.30; e.g., Summers v. Cherokee Children &

Family Servs., Inc., 2002 WL 31126636 (Tenn. Ct. App. 2002)

(upholding dissolution of two nonprofits that had abandoned

their charitable purposes and been used for private gain). This

responsibility includes the legitimate authority to ensure that

charitable assets are not grossly mismanaged or wasted—so

long as the State provides advance notice through statutes,

regulations, or authoritative judicial constructions regarding the

circumstances in which it will intervene to preserve those

assets, revoke a charitable charter, or dissolve the corporation.

Furthermore, the states do not act alone in this endeavor.

The federal government has several enforcement options at its

disposal as well. Federal fraud law applies to charitable

solicitations made through the mail or by telephone. See 18

U.S.C. §§ 1341, 1343; e.g., United States v. Ciccone, 219 F.3d

1054 (Cal. Ct. App. 1999); Marcus v. Jewish National Fund, 557 N.Y.S.2d

886 (N.Y. App. Div. 1990); Commonwealth ex rel. Preate v. Pennsylvania

Chiefs of Police Ass'n, 572 A.2d 256 (Pa. Commw. Ct. 1990); Strope v.

Commonwealth, 2000 WL 389452 (Va. Ct. App. 2000).

'' See, e.g., Press Release, Settlement with United Children’s Fund

Permanently Bars Charity From Operating in New York (Apr. 2, 2001),

available at http://www.oag.state.ny.us/press/2001/apr/apr02a_01.html

(misrepresentation of percentage of fundraising actually supporting

charitable purpose); Press Release, Charity Scam Highlights Need for

Scrutiny in Making Donations (Dec. 12, 2000), available at

_ http://www.oag.state.ny.us/press/2000/dec/dec12a_00.html (failure to

forward charitable contributions to the charity).

29 ”

1078 (9th Cir. 2000); United States v. Hawkey, 148 F.3d 920

(8th Cir. 1998). The FTC has successfully obtained injunctive

and monetary relief against telemarketers that have engaged in

deceptive fundraising practices, see, e.g., FTC v. NCH, Inc.,

1995 WL 623260 (D. Nev. 1995), aff'd, 106 F.3d 407 (9th Cir.

1997), authority that Congress has recently expanded. See

USA Patriot Act of 2001, Pub. L. No. 107-56, § 1011 (Oct. 26,

2001); see also 16 C.F.R. 310.3(d) & 310.4(e) (Dec. 2002);

U.S. Br. 1-2. Research has uncovered no case, however, in

which either a state or the federal government has successfully

brought a fraud action against a charity or fundraiser for the

failure to disclose fundraising costs to potential donors because

fundraising costs were higher, or the percentage of funds used

for charitable purposes was lower, than a donor might have

expected, absent a false statement.

Finally, the IRS has considerable oversight authority over

tax-exempt organizations, with both its long-established power

to revoke a charity’s tax exemption and its newer authority,

conferred by Congress in 1996, to impose intermediate

sanctions, in the form of substantial excise taxes, on “excess

benefit transactions.” See 26 U.S.C. § 4958; 26 C.F.R. Parts

53, 301 & 602 (2002) (implementing regulations). To maintain

their tax-exempt status, charities must, among various

requirements, be operated (1) so they do not cause any

inurement of their net earnings to the benefit of private

individuals, primarily insiders, who maintain a special

relationship to the charity, 26 U.S.C. § 501(c)(3) & (c)(4)(B);

26 C.F.R. § 1.501(c)(3)-1(c)(2) (2002); and (2) so they do not

confer any other impermissible private benefit, such as when

the charity is not organized and operated primarily for the

advancement of charitable purposes. 26 C.F.R.

§ 1.501(c)(3)-1(a)(1) (2002). See generally Hopkins, supra, at

272-79; Bruce R. Hopkins & D. Benson Tesdahl, /ntermediate

Sanctions: Curbing Nonprofit Abuse 52-59 (1997).

Thus, charities that pay excessive or otherwise

unreasonable compensation for services, or engage in self-

dealing or related-party transactions that primarily benefit

individuals with control over the organization, are at risk of

losing their tax exemptions under either the private inurement

doctrine (if insiders are involved) or the more encompassing

private benefit doctrine. See, e.g., United Cancer Council, 165

F.3d at 1179-80 (remanding for determination whether the

charity was operated exclusively for charitable purposes rather

than for the private benefit of its professional fundraisers).'?

Indeed, compensation for performance of services to

disqualified persons that exceeds the value of the consideration

is the principal focus of IRS’s new authority to tax excess

benefit transactions, which are, in essence, private inurement

transactions. See Hopkins, supra, at 206-14; Hopkins &

Tesdahl, supra, Chapter 4; cf Caracci v. Commissioner, 118

T.C. 379 (2002) (upholding imposition of sanctions on excess

benefit transactions where nonprofit home health care

organizations transferred their assets to for-profit entities for

less than market value).

In sum, if charities fail to comply with state registration

and reporting requirements, engage in charitable solicitations

that actually are fraudulent, enter into fundraising or other

contracts that are not at arms length, engage in self-dealing or

related-party transactions with controlling individuals or

entities without adequate consideration, are grossly

mismanaged, or, for whatever reason, are not operated

exclusively for charitable purposes, both the states and the

federal government have ample authority to respond without

running afoul of the First Amendment.

CONCLUSION

For the foregoing reasons, amici respectfully urge this

Court to affirm the judgment of the Illinois Supreme Court.

'2 See also Church of Scientology of California v. Commissioner, 823 F.2d

1310 (9th Cir. 1987); Church By Mail, Inc. v. Commissioner, 765 F.2d 1387

(9th Cir. 1985); Airlie Found'n, Inc. v. United States, 826 F. Supp. 537

(D.D.C. 1993), aff'd, 55 F.3d 684 (D.C. Cir. 1995) (per curiam); American

Campaign Academy v. Commissioner, 92 T.C. 1053 (1989).

JANUARY 2003

Respectfully submitted,

Bonnie I. Robin-Vergeer

Counsel of Record

Alan B. Morrison

PUBLIC CITIZEN

LITIGATION GROUP

1600 20th Street, N.W.

Washington, D.C. 20009

(202) 588-1000

Counsel for Amici Curiae

Public Citizen, Inc., ef al.

APPENDIX

The foregoing brief is submitted on behalf of the following

176 nonprofit organizations:

American Academy of Family, Leawood, Kansas

American Association of State Troopers, Tallahassee, Florida

American Breast Cancer Foundation, Inc.,

Baltimore, Maryland

American Cell Therapy Research Foundation,

Clarksburg, Maryland

American Charities for Reasonable Fundraising

Regulation, Inc., Arlington, Virginia

American Council of the Blind, Washington, D.C.

American Council of the Blind Enterprises and Services, Inc.,

Minneapolis, Minnesota

American Diabetes Association, Alexandria, Virginia

American Health Assistance Foundation, Clarksburg, Maryland

American Humane Association, Englewood, Colorado

American Institute for Cancer Research, Washington, D.C.

Americas Second Harvest, Chicago, Illinois

Amnesty International of the USA, New York, New York

ARRISE Centers, Inc., Glen Ellyn, Illinois

Associated Fire Fighters of Illinois, Springfield, Illinois

Association of Marian Helpers, Stockbridge, Virginia

Association of the Miraculous Medal, Perrville, Missouri

Blinded Veterans Association, Washington, D.C.

Bread for the World, Washington, D.C.

Cal Farley’s Boys Ranch and Affiliates, Amarillo, Texas

Cancer Care, New York, New York

Cancer Recovery Foundation of America,

Harrisburg, Pennsylvania

Central Pennsylvania Food Bank, Harrisburg, Pennsylvania

Childhelp, Inc., Scottsdale, Arizona

Childhood Leukemia Foundation, Inc., Brick, New Jersey

Children Awaiting Parents, Inc., Rochester, New York

Children International, Kansas City, Missouri

Children’s Hunger Relief Fund, Santa Rosa, California

Children’s Organ Transplant Association,

Bloomington, Indiana

Children’s Wish Foundation International, Atlanta, Georgia

Christian Appalachian Project, Lancaster, Kentucky

Concerned Women for America, Washington, D.C.

Concerns of Police Survivors, Camdenton, Missouri

Council for Government Reform, Arlington, Virginia

Covenant House, New York, New York

Dakota Boys Ranch Association, Minot, North Dakota

Defeat Diabetes Foundation, Inc., Madeira Beach, Florida

Disabled American Veterans, Cincinnati, Ohio

Doris Day Animal League, Washington, D.C.

Ducks Unlimited, Memphis, Tennessee

Eastern Paralyzed Veterans Association,

Jackson Heights, New York

Elderhostel, Inc., Boston, Massachusetts

Endometriosis Association, Milwaukee, Wisconsin

Food For The Poor, Inc., Deerfield Beach, Florida

Food Bank of the Rockies, Denver, Colorado

Food Bank of the Southern Tier, Elmira, New York

Franciscan Friars of the Atonement-Graymoor,

Garrison, New York

Freedom from Hunger, Davis, California

Girls Incorporated, New York, New York

Good Shepherd Food Bank, Auburn, Maine

Guide Dog Foundation for the Blind, Inc.,

Smithtown, New York

Guiding Eyes forthe Blind ,Yorktown Heights, New York

Haggai Institute for Advance Leadership Training, Inc.,

Norcross, Georgia

HALT, Inc.—An Organization of Americans for Legal Reform,

Washington, D.C.

Have A Heart Children’s Cancer Society, Inc.,

Levittown, New York

Help Hospitalized Veterans, Winchester, California

Hemophilia Association of New York, Inc.,

New York, New York

Hospitaller Brothers of St. John of God, Westville, New Jersey

Infact, Boston, Massachusetts

Inner-City Scholarship Fund, Inc., New York, New York

International Association of Fire Fighters, Washington, D.C.

International Fund for Animal Welfare,

Yarmouthport, Massachusetts

lowa Professional Firefighters, West Des Moines, lowa

Israel Children’s Cancer Foundation, Inc.,

New York, New York

Kentucky Special Olympics, Inc., Frankfort, Kentucky

Kids Wish Network, Inc., Oldsmar, Florida

Lifesavers, Inc., Lancaster, California

Little Shelter Animal Adoption Center, Inc.,

Huntington, New York

March of Dimes Birth Defects Foundation,

White Plains, New York

Marine Corps Heritage Foundation, Quantico, Virginia

Mays Mission for the Handicapped, Heber Springs, Arkansas

Messengers of Christ—Lutheran Bible Translators, Inc.,

Aurora, Illinois

Michigan Professional Fire Fighters Union, Trenton, Michigan

Missionary Servants of the Most Holy Trinity dba

Trinity Missions, Silver Spring, Maryland

Missouri State Council of Fire Fighters, Kansas City, Missouri

Moose Charities, Inc., Mooseheart, Illinois

Mothers Against Drunk Driving, Irving, Texas

Multiple Sclerosis Association of America,

Cherry Hill, New Jersey

Multiple Sclerosis Foundation, Fort Lauderdale, Florida

Muscular Dystrophy Family Foundation, Indianapolis, Indiana

National Association for the Terminally III,

Shelbyville, Kentucky

National Children’s Cancer Society, St. Louis, Missouri

National Coalition of Prayer, Inc., Springville, Tennessee

National Committee to Preserve Social Security and Medicare,

Washington, D.C.

National Federation of the Blind, Baltimore, Maryland

National Humane Education Society,

Charles Town, West Virginia

National Law Enforcement Officers Memonal Fund,

Washington, D.C.

National Multiple Sclerosis Society, New York, New York

National Museum of Women in the Arts, Washington, D.C.

National Troopers Coalition, Howell, Michigan

National Trust for Historic Preservation, Washington, D.C.

North Shore Animal League of America,

Port Washington, New York

Notre Dame India Mission, Chardon, Ohio

Ohio Right to Life Society, Inc., Columbus, Ohio

Omega Institute for Holistic Studies, Rhinebeck, New York

Osmond Foundation for the Children of the World

Salt Lake City, Utah

Paralyzed Veterans of America, Washington, D.C.

Pennsylvania Professional Firefighters Association,

Harrisburg, Pennsylvania

People for the American Way, Washington, D.C.

Plan International - USA, Warwick, Rhode Island

Priests of the Sacred Heart, Hales Corners, Wisconsin

Professional Firefighters of Utah, Farmington, Utah

Professional Firefighters of Wisconsin, Inc.,

Waukesha, Wisconsin

Project on Government Oversight, Washington, D.C.

ProLiteracy Worldwide, Syracuse, New York

Public Citizen, Inc., Washington, D.C.

Public Citizen Foundation, Inc., Washington, D.C.

Reach Our Children, St. Louis, Missouri

Sacred Heart League, Walls, Mississippi

Salesian Missions, New Rochelle, New York

Save A Child Foundation, Flint, Montana

Second Harvest Foodbank of Eastern Tennessee,

Knoxville, Tennessee

Shiloh International Ministries, Inc., La Verne, California

Southern Poverty Law Center, Montgomery, Alabama

Special Olympics, Inc., Washington, D.C.

a a

Special Olympics Alabama, Inc., Montgomery, Alabama

Special Olympics Arizona, Inc., Phoenix, Arizona

Special Olympics Arkansas, Inc., North Little Rock, Arkansas

Special Olympics Colorado, Inc., Denver, Colorado

Special Olympics Connecticut, Inc., Hamden, Connecticut

Special Olympics Delaware, Inc., Newark, Delaware

Special Olympics District of Columbia, Inc., Washington, D.C.

Special Olympics Florida, Inc., Clermont, Florida

Special Olympics Georgia, Inc., Atlanta, Georgia

Special Olympics Hawaii, Inc., Honolulu, Hawaii

Special Olympics Illinois, Inc., Normal, Illinois

Special Olympics Indiana, Inc., Indianapolis, Indiana

Special Olympics Iowa, Inc., West Des Moines, Iowa

Special Olympics Kansas, Inc., Mission, Kansas

Special Olympics Louisiana, Inc., Hammond, Louisiana

Special Olympics Maine, Inc., South Portland, Maine

Special Olympics Maryland, Inc., Columbia, Maryland

Special Olympics Massachusetts, Inc.,

Hathorne, Massachusetts

Special Olympics Michigan, Inc., Mount Pleasant, Michigan

Special Olympics Minnesota, Inc., Minneapolis, Minnesota

Special Olympics Missouri, Inc., Jefferson City, Missouri

Special Olympics Montana, Inc., Great Falls, Montana

Special Olympics Nebraska, Inc., Omaha, Nebraska

Special Olympics Nevada, Inc., Las Vegas, Nevada

Special Olympics New Hampshire, Inc.,

Manchester, New Hampshire

Special Olympics New Mexico, Inc.,

Albuquerque, New Mexico

Special Olympics North Dakota, Inc.,

Grand Forks, North Dakota

Special Olympics Northern California, Inc.,

Pleasant Hills, California

Special Olympics Ohio, Inc., Columbus, Ohio

Special Olympics Oklahoma, Tulsa, Oklahoma

Special Olympics Pennsylvania, Inc.,

Norristown, Pennsylvania

Special Olympics Rhode Island, Inc., Warwick, Rhode Island

Special Olympics South Carolina, Inc.,

Columbia, South Carolina

Special Olympics South Dakota, Inc.,

Sioux Falls, South Dakota

Special Olympics Southern California, Inc.,

Culver City, California

Special Olympics Tennessee, Inc., Nashville, Tennessee

Special Olympics Texas, Inc., Austin, Texas

Special Olympics Virginia, Inc., Richmond, Virginia

Special Olympics Washington, Inc., Seattle, Washington

Special Olympics West Virginia, Inc.,

Charleston, West Virginia

Special Olympics Wisconsin, Inc., Madison, Wisconsin

St. Anthony’s Guild, New York, New York

St. Elizabeth Mission Society, Inc., Allegany, New York

St. Francis Missions, St. Francis, South Dakota

St. Joseph’s Indian School, Chamberlain, South Dakota

Support Our Aging Religious!, Silver Spring, Maryland

The Arc of the United States, Silver Spring, Maryland

The Center for Food Safety, Washington, D.C.

The Committee for Missing Children, Lawrenceville, Georgia

The Magic Foundation, Oak Park, Illinois

The National Center for Public Policy Research,

Washington, D.C.

The Patagonia Land Trust, Mill Valley, California

The V Foundation, Cary, North Carolina

United States Sportsmen’s Alliance Foundation,

Columbus, Ohio

Utah Special Olympics, Inc., Salt Lake City, Utah

Vermont Public Television, Colchester, Vermont

Vermont Special Olympics, Inc., Williston, Vermont

Veterans Charitable Foundation, Inc., Boynton Beach, Florida

Vietnam Veterans Memorial Fund, Washington, D.C.

Wheat Ridge Ministries, Itasca, Illinois

World Emergency Relief, Carlsbad, California

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.