FSDEF Rallies Support For Challenge to Utah
A 501(c)(3) nonprofit located in Washington, D.C. retained ATA, a Virginia corporation, to assist them in preparing nationwide mailings. When the nonprofit attempted to register with the State of Utah, Francine A. Giani, who directs the office enforcing the Utah Charitable Solicitations Act, demanded that ATA also register with the State before the nonprofit could mail into Utah.
ATA refused to register with the State of
Utah for these and other reasons:
In response to ATA, Giani denied the nonprofit's registration, and would not allow it to mail into the state until ATA registered with her office, the Division of Consumer Protection (the "Division"). Later, the Division granted the nonprofit a license, but required it to agree not to correspond with Utah residents using any materials that ATA helped develop or conduct any fund-raising based on ATA's advice and consultation.
ATA sued Giani and the State of Utah for violating their constitutional rights, and those of their client. ATA argued, as FSDEF also argued in its amicus brief, that the Utah Act is unconstitutional, violating the First Amendment, due process of law guaranteed by the 14th Amendment, and the Commerce Clause.
ATA filed a motion for summary judgment. Giani opposed this motion, and filed her own cross-motion for summary judgment. Such motions allow the Court to decide the case without a trial if the judge chooses to do so.
NAAG appeared confident that Utah would win. At their annual convention, NAAG made the case a centerpiece of discussion, having Francine Giani as a keynote speaker. Initially the states decided that they were not going to file an amicus brief.
One member of FSC, Bruce Eberle of Eberle Communications, Inc., decided to take a stand in support of ATA. He instructed his attorney, F. Hayden Codding, Esquire, to write an amicus brief. Other FSC members realized that, if many nonprofits and agencies joined together as co-amici and filed another brief, important constitutional arguments could be raised and supported.
On October 14, 1997, at a lively FSDEF luncheon, many groups agreed to file the amicus brief, and pledged to give or raise funds to finance the brief. A follow-up luncheon to review the draft brief was held on November 13, 1997.
FSDEF co-counsel Bill Olson and Mark Weinberg, with the assistance of Herb Titus, wrote a clear and well-reasoned amicus brief. It was well received and 26 nonprofits and agencies joined FSDEF to file the brief. Of the 27 co-amici (including FSDEF), twelve were 501(c)(3) charitable/educational organizations; eight were 501(c)(4) social welfare organizations; and seven were for-profit direct mail agencies or vendors assisting nonprofits with their educational and fund-raising programs.
We'll keep you posted on the status of the case.
To receive a copy of the FSDEF Amicus
Curiae brief, please contact the Free Speech office at
FSC Tells Story Behind Headlines on Senate
The subpoenaed nonprofits were bewildered. They had violated no laws, but were coerced by the Committee to present massive amounts of confidential information. Some nonprofits complied, while others resisted because of the intrusive and possibly illegal nature of the subpoenas.
The tide turned in favor of the nonprofits soon after Chairman Thompson subpoenaed the AFL-CIO. The AFL-CIO strongly resisted the subpoena, and its lawyers sent a letter, arguing,
(N)either the legislative nor the executive branch of government has a license to rummage through all of the papers of individuals or their associations
Inquiries into political activity by its nature works an intrusion on the constitutional rights of free speech and free association that are integral to a free and democratic political system.
The AFL-CIO and all nonprofits subpoenaed had cause for concern. Committee staffers leaked confidential information about certain donors to the press.
Meanwhile, at the request of some of the targeted nonprofits, Mark Weinberg, legal co- counsel to the Free Speech Coalition, and Mike Boos of the National Citizens Legal Network, prepared memoranda of law on the constitutional grounds for and procedure involved in objecting to or resisting the subpoenas.
Although the Committee stopped its
investigation of nonprofits who practice issue advocacy for
now, the question remains: Was it legal for the Committee to
issue the subpoenas?
FEC Proposes New Definition of Member for
Associations with a PAC
Postal Service's Final Rule on Back-End
The final rule states that a nonprofit can mail offers of premiums at Nonprofit Standard Mail rates so long as the contribution (or membership dues) requested in the mailing is: 4 TIMES the cost of the premium item, AND 2 TIMES the represented value of the premium in the mailpiece. These rules apply when the premium advertised is not directly related to the "qualifying purposes" of the organization. BOTH criteria must be met. For example, if a nonprofit asks for a contribution of $100, then the cost of the premium offered cannot exceed $24.99, and the stated value of the premium cannot exceed $49.99.
When a nonprofit advertises a product
that is directly related to its "qualifying purpose," the
restrictions do not apply and the nonprofit may continue to
use Nonprofit Standard Mail rates.
IRS Contemplates Raising Threshold to File Form
The current rule is that if a nonprofit's
annual gross receipts exceed $25,000, then the nonprofit
must file a Form 990. The IRS is considering raising the
threshold to $40,000, or even to $100,000.
Comments should be mailed to: CP:E:EO:P:1
(#97-114), Room 6033, Internal Revenue Service, 111
Constitution Avenue, NW, Washington, DC 20224; or
transmitted to the web site:
The Free Speech Coalition, Inc. is a nonpartisan, nonprofit 501(c)(4) 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. However, contributions to the Free Speech Defense & Education Fund, Inc., a 501(c)(3) public charity, are tax-deductible.