Vol. II, No. 4 • September 1994

Free Speech Leadership Conference Set
The Free Speech Coalition's second annual conference, entitled "Endangered Species: First Amendment Rights and Nonprofit Organizations," will be held on October 6, 1994, at the Freedom Forum in Rosslyn, Virginia, for leaders in the nonprofit community, the public sector and others interested in First Amendment freedoms.

The Freedom Forum, cosponsor of this year's leadership conference, will host the meeting at its rooftop conference center. Freedom Forum president Charles Overby said that he was pleased with the diversity of groups attending the conference last year and with his ability to help groups, "who have concerns about preserving the freedom to petition government for redress of grievances, the right of free speech, and the right of assembly." Attendance is by invitation only, but leaders in the nonprofit community are encouraged to request invitations. Admission is free. At the conference, speakers will address the federal & state legislative and regulatory issues of vital concern to the nonprofit community.

Howard Segermark, Legislative Director of the FSC, cited the Coalition's concern about one issue he's working on. "The Lobby Disclosure Bill, now in front of a Congressional Conference Committee, would massively hike nonprofits' costs, especially the costs of passing their members' views on to public officials." Segermark added that if the bill becomes law, "it will stifle the flow of information from the grass roots that Congress needs to make good decisions." Over-reaction to the United Way scandal and some fly-by-night operators have led many on Capitol Hill and in state legislatures across the country to consider restrictions on the First Amendment rights of nonprofits. Segermark said, "While some believe there is justification for changes, new regulations may cause greater harm to nonprofit organizations who wish to raise funds and talk about issues of public policy."

Harriet Trudell, a lobbyist for the Feminist Majority and a Coalition member, said the diversity will be useful and positive. "When Right to Life gets to work with the Feminist Majority, and where Gun Owners of America works with the Coalition to Stop Gun Violence, you are going to get new insights along with new allies," Trudell said.

Steve Arter, a representative of the National Association of State Charitable Officers, will address the merits of and the need for state policies which more strictly regulate nonprofit organizations. Other speakers will include Dr. Thomas DiLorenzo, author of Unhealthy Charities, and attorney James Bopp, who has successfully fought cases against overly-restrictive election laws. In addition, Editors Henry Suhrke of Philanthropy Monthly and John McIlquham of NonProfit Times will join Eleanor Smeal, President of Feminist Majority, David Keene, Chairman of the American Conservative Union, attorney Mack Canter, and Ralph Reed, Executive Director of the Christian Coalition as panelists at the conference. FSC Legal Co-Counsel William Olson and Mark Weinberg will provide updates on federal agency action.

Other invited speakers include Ira Glasser of the ACLU and former Associate Justice Harry Blackmun. Last year's conference coverage appeared on C-SPAN, which is expected to broadcast this year's proceedings as well.

Leaders in the nonprofit community are encouraged to request invitations by calling (202) 547-2222.

FSC to Submit Amicus Brief For Second Circuit To Consider Regarding Legality of Professional Solicitor Fee
The Free Speech Coalition recently prepared a brief amicus curiae for submission to the United States Court of Appeals for the Second Circuit in the case of National Awareness Foundation, et al. v. Robert Abrams, Attorney General for the State of New York, et al., challenging the constitutionality of New York's Charitable Solicitation Statute ("statute").

The suit was brought by the National Awareness Foundation (NAF) and the Child Protection Program Foundation (CPPF) as well as by several individual professional solicitors.

NAF and CPPF are nonprofit organizations that would be subject to the statute as charities; they use professional solicitors in their fundraising efforts. Individual professional solicitors are required by the statute to register and pay an $80 annual fee. The federal trial court determined that the statute does not violate the First Amendment to the Constitution by imposing such a fee, despite the general rule against taxing free speech activities, because the costs of administering the statute, including enforcing it, are reasonably connected to the revenues produced by the fees charged to professional solicitors. The court also rejected the claim that imposing the fee violates the Equal Protection Clause of the Fourteenth Amendment.

FSC supports the NAF/CPPF position that the costs of enforcing such a statute should not be included in determining whether the fees charged as a precondition to the exercise of free speech rights are designed to defray the costs of administering the statute. If government agencies are allowed to include their enforcement costs in the fees charged to registrants, the price tag on free speech activity would be exorbitant and would amount to government censorship. FSC's amicus curiae brief also stresses the significant burden that charitable solicitation statutes are imposing on nonprofit advocacy organizations throughout the United States, and explains to the court the registration reporting requirements imposed by states and municipalities.

Kentucky Law Called an Impermissible Prior Restraint
Nonprofits are doing more than voicing concern and confusion over new restrictive laws. They have started to take action.

For example, the Commonwealth of Kentucky enacted a "point-of-solicitation" disclosure requirement to add to its charitable solicitation law, but enforcement of the new law was enjoined even before Kentucky had a chance to enforce the new provision. The challenged statute would make it a deceptive practice (and a crime) to state in a solicitation that a charity will be the recipient of funds if the charity's professional solicitor is allowed to receive as compensation more than 50 percent of the solicited funds. The charity could avail itself of a "defense" against enforcement by adequately disclosing (in the solicitation) the net percentage of funds retained by the charity. This attempt at forced disclosure is obviously premised upon a continuation of the assumption (rejected by the U.S. Supreme Court in more than one case) made by state regulators in the past that fundraising solicitations have no programmatic value and that there is some kind of connection between fraudulent conduct by charities and fundraising expenses.

The Kentucky State Police Professional Association (KSPPA), a nonprofit organization subject to Kentucky's charitable solicitation statute which employs professional solicitors, represented by Errol Copilevitz, Esquire, filed suit against the Kentucky Attorney General and immediately obtained a Temporary Restraining Order against enforcement of the statute. KSPPA has now filed a motion for summary judgment, asking that enforcement of the statute be permanently enjoined as content-based regulation of protected First Amendment speech which does not promote a compelling state interest and, even if did, which is not the least restrictive means of furthering such an interest.

Telemarketing Fraud Bill Signed Into Law
On August 16, 1994, President Clinton signed the "Civil Telemarketing Fraud Bill," which strengthens the authority of the Federal Trade Commission and state attorneys general over the telemarketing industry. Under the law, the FTC is required to issue new regulations barring "deceptive, fraudulent or abusive" telemarketing practices, and state attorneys general have greater latitude with which to bring legal action against telemarketers in state and federal courts across the country. In particular, state attorneys general are now empowered to bring civil suits against telemarketers on behalf of their residents to obtain injunctions, enforce compliance with the new FTC rules, and seek damages.

Nonprofits who engage in telemarketing activities did not escape lawmakers' attention. The final legislation was crafted to allow the FTC, which has no jurisdiction over nonprofit organizations, to separate the commercial telemarketing arm of an organization from the nonprofit body and to regulate the telemarketers with the new FTC rules.

In addition to the enhanced enforcement authority given to state attorneys general, the law restricts the hours during which telemarketing firms can make unsolicited calls and prohibits certain telemarketing practices. It also requires disclosure to the consumer that the call is being made to sell goods or services, and their nature and price. Further, the law opens the door for private parties with more than $50,000 in damages to sue telemarketers directly.

Additional telemarketing restrictions contained in the Crime Bill, were also signed into law on September 13th, after its struggle through Congress.

While the legislation in both bills was passed as consumer protection, questions remain. Chief among those concerns is whether the broad authority granted to federal and state agencies under new laws will lead to abuse by enforcement officials. Whether First Amendment rights of the nonprofit community will erode under the new regulations also remains unclear.

Social Security Administrative Reform Act of 1994
On August 15, 1994, President Clinton signed into law the Social Security Administrative Reform Act of 1994, Public Law 103-296. Congress quietly inserted into this law several provisions designed to stifle certain advocacy groups which often criticize policies of Congress, the U.S. Department of Health and Human Services, and the Social Security Administration. The ostensible purpose of the change is to protect people from potentially being confused &endash; a rather broad objective which could justify broad government censorship.

Under this new law, an advocacy organization arguing that the nation's social security system is headed toward insolvency, which uses the "teaser" on its carrier envelope "IMPORTANT INFORMATION REGARDING FUTURE SSA BENEFITS" could be found in violation of the law. The law bans use of (or "any colorable imitation" of) the words "Administration," Department of Health and Human Services," "Health and Human Services," Supplemental Security Income Program," "Medicaid," "Department of the Treasury," or the name of any service, bureau, office, or subdivision of the Department of the Treasury; bans use of the letters "SSA," "HCFA," "DHHS," "HHS," or "SSI"; and bans use of any abbreviations, initials, symbols, or emblems of any service, bureau, office, or subdivision of the Department of the Treasury. Even "the design of any envelope or stationery" could constitute a violation.

The Act makes it easier for the government to prove violations of the law in court. It instructs courts to ignore the presence of a disclaimer "of affiliation with the United States Government or any particular agency or instrumentality thereof." The act also removed the requirement that the Department of Health and Human Services obtain a formal declination from the Department of Justice before filing a civil suit. Civil penalties are up to $5,000 per violation ($25,000 for broadcast/telecast violations). Criminal penalties are up to $10,000 per violation ($50,000 for broadcast/telecast violations) or up to one year in jail. (Thus, it would appear that use of a bulk mail permit in making improper solicitations could result in multiple life sentences.) Please call FSC for a packet of information on this new law.

The Free Speech Coalition, Inc. is a nonpartisan, nonprofit organization which educates, lobbies, and litigates to defend the rights of advocacy organizations and their members. FSC needs your support to continue its fight to protect the rights of citizens to associate together and exercise their First Amendment right to petition their government for redress of their grievances. Contributions to the Free Speech Coalition, Inc. are not tax-deductible. For information on FSC legislative programs and membership, please call 202-547-2222.