The International Journal
of Not-for-Profit Law

Volume 2, Issue 3, March 2000

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Articles

Introduction: "Codes of Conduct for Partnership in Governance: Texts and Commentaries"
By Tatsuro Kunugi and Martha Schweitz

On the Establishment of Social Organizations Under Chinese Law
By Ge Yunsong

Australia's Nonprofit Taxation Reforms
By Myles McGregor-Lowndes

Reviews

Codes of Conduct for Partnerships in Governance: Text and Comments
Edited by Tatsuro Kunugi and Martha Schweitz
Reviewed by Catherine Shea

Case Notes

Central and Eastern Europe: Croatia | Poland | Serbia

Middle East and North Africa: Egypt

Newly Independent States: Azerbaijan

North America:
the United States

South Asia:
India

Country Reports

Asia Pacific:
Australia
| East Timor |
New Zealand
| the Philippines | Vietnam

Central and Eastern Europe: Regional | Kosovo | Romania

Latin America:
Regional | Belize | Brazil | Venezuela

Newly Independent States:
Russia | Ukraine

Middles East and North Africa: Sudan

North America:
Canada
| Mexico |
the United States

South Asia:
India

Sub-Saharan Africa:
Cameroon | Kenya |
Sierra Leone
| South Africa | Tanzania | Zimbabwe

Western Europe:
France | Germany |
the United Kingdom

Self Governance

Law and Governance-- A Lesson in Limits
By Leon Irish and Karla Simon

Trends in Self-Regulation and Transparency of Nonprofits in the U.S.
By Robert O. Bothwell

The Role of Governing Boards in Fostering Accountability
By Crispin Gregoire

Financial Implications Affecting Nonprofit Nongovernmental Organizations Today
By Michael A. Freedman

International Grantmaking

Grantmaking by U.S. Foundations in Canada: A Canadian Lawyer Provides a Plain Language Primer
By Blake Bromley

Community Philanthropy

Community Philanthropy Initiative of the European Foundation Centre

Transatlantic Community Foundation Network

New Website Buergerstiftung.de

Partnerships

General | Brazil | Kenya | Russia

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Editorial Board

Subscription Information

Previous Issues

ICNL Homepage

Case Notes: North America

The Impact of Anti-Discrimination Laws on NGOs

By Jeremy T. Springhart

Case Note on Dale v. Boy Scouts of America (Supreme Court of New Jersey), 734 A.2d 1196 (1999). 

The World Bank’s Handbook on Good Practices for Law Relating to Nongovernmental Organizations lists six reasons why a country would want to have a strong, vigorous, and independent NGO sector. The freedoms of association and speech are two of the reasons that the Handbook lists. As the Handbook points out the freedoms of speech and association are found in international law, regional covenants, and constitutions. The freedom of association carries with it the inferred freedom of non-association. That is to say, no one can be compelled to join or remain a member of an association. The question remains however, whether an organization may choose to associate with (i.e., may discriminate against) certain classes of people.

Recently the Supreme Court of the United States granted certiorari and heard arguments in a case entitled Dale v. Boy Scouts of America (Supreme Court of New Jersey), 734 A.2d 1196 (1999). The question presented in Dale is whether the Boy Scouts of America (BSA), as a “place of public accommodation,” may discriminate against certain classes of people. An organization is a “place of public accommodation” if it engages in broad public solicitation, maintains close relationships with an organization that engages in broad public solicitation, or maintains a close relationship with the government.

James Dale was an assistant scoutmaster who was expelled from the BSA after he publicly declared that he was homosexual. After being expelled, Dale brought an action against the BSA under the New Jersey Law Against Discrimination (LAD). Although this case addresses the interpretation of a particular New Jersey statute (N.J.S.A. §10:5-4), it raises a more general question. By forcing the Boy Scouts to include homosexuals in their membership, is the Supreme Court infringing upon their freedom of association—one of the underpinnings of a vibrant NGO sector?

Under US law, the freedom of association is inferred from the First Amendment guarantee of freedom of speech. See NAACP v. Button, 371 U.S. 415 (1963). The United States Supreme Court has referred to the freedom of association in two distinct contexts: intimate association and expressive association.

The freedom of “intimate association” is described as the right to enter into and maintain close personal relationships without undue intrusion by the State. Cases in this area consider an organization’s size, purpose, and selectivity in order to determine whether the organization has a protectable intimate interest. That is to say, the greater the role of selectivity and small size in enhancing the NGO’s purpose, the more likely that the NGO has a protectable interest. For example, in Board of Directors of Rotary International v. Rotary Club of Duarte, Rotary International argued that requiring it to admit women would infringe on its right to intimate association. 481 U.S. 537 (1987). The Court concluded that the relationship among the members was not the kind of intimate relation that warrants constitutional protection due to the inclusive nature of the organizations membership policy.

Alternatively, the Court has also recognized a right of “expressive association” for the purpose of engaging in those activities protected by the First Amendment -- speech, assembly, petition for the redress of grievances, and the exercise and establishment of religion. This right ensures that an organization’s ability to engage in these protected activities is not impeded. Cases in this area analyze whether one’s mere membership in the organization conveys a certain message about the organization. For example, in Rotary Club, the Court held that admitting women into Rotary Clubs does not significantly affect the existing members ability to carry out Rotary’s various missions. Rotary Club at 626. 

In Dale, the Supreme Court of New Jersey found that the BSA’s “large size, nonselectivity, inclusive rather than exclusive purpose, and the practice of allowing nonmembers to attend meetings, establish[ed] that the organization is not sufficiently personal or private to warrant constitutional protection under the freedom of intimate association.” (73 A.2d 1196, 1220). In addition, the court held that compliance with the LAD did not violate their freedom of expressive association. The court dismissed this claim because it held that forcing the BSA to accept a homosexual leader does not hinder its message.

Finally, the court dismissed BSA’s argument that compliance with the LAD violated its freedom of speech. The BSA attempted to analogize this case with the opinion in Hurley v. Irish-American Gay, Lesbian, and Bisexual Group of Boston, 515 U.S. 557 (1995). In Hurley, a gay and lesbian support group was “formed for the sole purpose of marching in the St. Patrick’s Day Parade to express pride in the members’ Irish heritage as openly gay.” Hurley at 561. Hurley held that inclusion of the group in the parade would violate the Council’s First Amendment rights. However, Dale did not accept the BSA’s analogy to the facts in Hurley. In the court’s view, Dale was not promoting homosexuality, therefore in accepting Dale as a scout leader, the BSA is not being forced to endorse any message.

As a basic rule, members of an organization may associate with whomever they choose. This is, after all, one of the fundamental purposes behind developing a strong NGO sector. However, in U.S. law, if the organization is a “place of public accommodation” and the inclusion of these classes does not infringe upon the organization’s purpose, then the organization may not discriminate.  Dale v. Boy Scouts of America has implications for other jurisdictions outside the United States. When, if ever, should a country allow the freedom of association to trump their anti-discrimination laws if the organization is large, open to the public, or closely linked with the government?

The IJNL will cover this issue in greater detail after the Supreme Court has decided the case.

Tenth Circuit Court of Appeals Invalidates Portions of Charitable Solicitation Regulation

 By Cathy Shea

The United States Court of Appeals for the Tenth Circuit has held that several provisions of the state of Utah’s charitable solicitation regulation violate the guarantee of free speech under the first amendment to the United States Constitution. American Target Advertising v. Giani, 199 F.3d 1241 (10th Cir. 2000). The Court’s decision, which will likely be appealed to the United States Supreme Court, sets the stage for the first major review by the nation’s highest court in over a decade of the first amendment’s application to the regulation of charitable solicitations.

The case involves a claim by American Target Advertising, a professional fundraising consultant for Judicial Watch, a not-for-profit conservative advocacy group, challenging a Utah statute establishing registration procedures for professional charity fundraisers as well as for not-for-profit groups seeking to raise money in the state. Under the Utah law, professional fundraisers must submit an application containing mandatory disclosures regarding the solicitation process, register and obtain a permit, pay a $250 fee, and post a $25,000 bond. The bond is to be payable to the state to compensate those who might be injured by a violation of the statute. American Target Advertising declined to comply with the registration requirements and was therefore prohibited from soliciting funds within the state of Utah.

American Target Advertising sued, challenging the constitutionality of the registration and bonding provisions. It argued that these provisions violated the first amendment’s guarantee of free speech. The Tenth Circuit acknowledged that charitable solicitations are protected speech under the first amendment, relying on a trio of Supreme Court cases from the 1970s. Because the goal of the Utah statute was to prevent harmful effects from professional solicitation, i.e., fraud and misrepresentation, rather than to regulate the content of particular speech, the court reviewed the regulation under “intermediate scrutiny.” The Court therefore considered whether the regulation was narrowly drawn to serve a substantial government interest “without unnecessarily interfering with first amendment freedoms.” The Court acknowledged that protecting the public from fraud was a substantial government interest. However, it held that while several of the registration provisions were narrowly drawn to serve that interest, one, the bonding requirement, was not.

The Court upheld the registration and disclosure provisions as narrowly tailored to the state’s interest in preventing fraud, because such provisions enable citizens to make informed decisions about their charitable donations and as such are prophylactic measures aiding in the oversight of fundraisers. The Court further upheld the $250 registration fee, on the grounds that it merely defrayed reasonable administrative costs associated with the registration process.

The Court held, however, that the $25,000 bond requirement was not narrowly tailored to the state’s legitimate interests in fraud prevention. The bond essentially financed a victim compensation fund. The Court determined that the interest in compensating victims was no different, (i.e., no more significant) in the charitable solicitation context than with respect to any other tort, and further, that the state’s interest was adequately protected by the statute’s other provisions. While the bonding requirement only peripherally promoted the state’s interests, it imposed a substantial hardship on solicitors because of the high price of the bond. This hardship, the Court found, unnecessarily interfered with the right of free speech, by barring anyone who was unable to meet the high cost from soliciting in Utah.

The Court invalidated two other provisions of the Utah statute as unconstitutional prior restraints on speech. It held that a provision of the statute granting authority to the state official charged with enforcing the law to request any additional information that he or she may require before permitting registration conferred an “unbridled” and thus unconstitutional level of discretion to determine how to enforce the law. The Court further invalidated a provision that permitted denial of registration if a professional fundraiser failed to supervise agents as vague, without a definition limiting the nature of the supervision required, and thus conferring an unconstitutional level of discretion upon the regulating officials.

 

Copyright 2008 The International Center for Not-for-Profit Law (ICNL)
ISSN: 1556-5157