Vol. VI, No. 1January - February 1998

FSC Sponsored Capitol Hill Legislative Breakfast with Senator McConnell
On April 10, 1997, U.S. Senator Mitch McConnell (R-KY) briefed 95 members and friends of the Free Speech Coalition on certain election law bills that limited the activities of IRC 501(c)(4) organizations. After the Senator's speech, a panel of four experts discussed the specific dangers to nonprofits. The panel included Curtis Gans, Robert Dahl, Brent Thompson and James Bopp, Jr.

I make no apologies whatsoever for defending the rights of Americans to participate in our political system. &emdash; U.S. Senator Mitch McConnell (R-KY)

Federal Legislation Threatened Nonprofits
The Tax Exemption Accountability Act would limit the compensation of officers of nonprofits and create a federally funded "clearinghouse" offering copies of nonprofit tax returns.

Campaign finance reform legislation did not at first appear to be of common concern to FSC members, but some bills contained provisions that would restrict or prohibit political free speech and issue advocacy, thus limiting the freedom of groups to communicate with their members and supporters, as well as with the public, before an election. Some bills sought to redefine the term "express advocacy," removing the "explicit" requirement, and giving FEC bureaucrats arbitrary power to determine whether a communication was express advocacy.

The Voter Empowerment Act (H.R. 1780), introduced by Congressman David Dreier, would require organizations who do issue advocacy to disclose their funding sources.

Two FSC members, Doug Johnson of National Right to Life and Mike Beard of the Coalition to Stop Gun Violence, authored a monograph entitled, "Campaign Reform: Let's Not Give Politicians the Power to Decide What We Can Say about Them," asserting that certain "campaign reform" legislation proposed by Congress violates the First Amendment.

Congressional Hearings Threatened Nonprofits and Agencies
FSC was one of the first advocacy organizations to alert nonprofits about the chilling effects of the Senate Committee on Governmental Affairs' special investigation. FSC member David Keene of the American Conservative Union wrote Chairman Fred Thompson a letter objecting to subpoenas issued to selected groups who lawfully practiced issue advocacy in 1996.

Legal Analysis in Opposition to Senate Subpoenas Released. FSC legal co-counsel Mark Weinberg and FSC member Michael Boos, Legal Director of the National Citizens Legal Network, wrote legal analyses which gave practical advice to nonprofits who were targets of the U.S. Senate's Special Investigation. FSC legal co-counsel Bill Olson authored a commentary on the Senate subpoenas for the NonProfit Times.

FSC and FSC Members Influenced FEC & IRS Regulations
• The Federal Election Commission (FEC) requested and received from FSC comments on independent expenditures by nonprofit organizations.

• The FEC requested and received from FSC comments on its proposed new definition of "member" for any association with a connected PAC.

• The Internal Revenue Service asked for and received from FSC comments on raising the income threshold to allow many more nonprofits to be exempt from filing a Form 990.

New Laws, Rules, Regulations and Requirements
FSC briefed its members when the Postal Service issued its final rule on "back-end" premiums.

The U.S. Supreme Court issued Rule 37.6, requiring anyone who files an amicus brief to indicate "in the first footnote on the first page of text" the name of the author and "every person or entity...who made a monetary contribution to the preparation and submission of the brief."

AICPA Released New Accounting Standards for Joint Cost Allocation
The American Institute of Certified Public Accountants (AICPA) released its long-expected change in accounting procedures entitled, "Accounting for Costs of Activities of Not-For-Profit Organizations and State and Local Government Entities That Include Fund Raising" (SOP 98-2, which supercedes SOP 87-2). As soon as FSC's legal counsel and an accounting procedures expert have reviewed the new standards, FSC will inform its members of the implications for nonprofits. If unchanged from the Exposure Draft that FSC opposed last year, accountants will begin classifying as fund-raising both the educational (or program) and fund-raising portions of most multi-purpose mailings that contain a request for funds.

Federal & State Efforts to Limit Free Speech
Internal Revenue Service. The IRS noticeably increased its audits of nonprofits, especially those which practiced issue advocacy during the 1996 election cycle.

Vermont's new campaign regulation law places limits on political campaign spending, and attempts to regulate issue advocacy if state bureaucrats determine that informing the public about an official's vote on an issue was done to indirectly affect the election. The new law challenges the U.S. Supreme Court's 1976 ruling in Buckley v. Valeo.

The Clinton Administration sought to find the right legal case to overturn the 1976 U.S. Supreme Court decision in Buckley v. Valeo, in which the Court ruled that limitations on issue advocacy are unconstitutional because they abridge freedom of speech as guaranteed by the First Amendment. As Buckley affirmed, the heart of free speech is the expression of political beliefs.

Being free to engage in unlimited political expression subject to a ceiling on expenditures is like being free to drive an automobile as far and as often as one desires on a single tank of gasoline. &emdash; U.S. Supreme Court in Buckley v. Valeo, 1976.

Court Decisions Affecting Nonprofits
The U.S. Supreme Court, in Camps Newfound/Owatonna, Inc., v. Town of Harrison, Maine, et al. (May 19, 1997; No. 94-1988), ruled that a Maine law allowing the state to take property tax exemptions away from nonprofits that had extensive out-of-state interests was unconstitutional.

FSC Member Scored Victory Against North Carolina Regulators
When North Carolina regulators refused to renew the charitable solicitation license of Free Speech Coalition member Citizens United, the nonprofit fought back, arguing that the Department of Human Resources' interpretation of the state's charitable solicitation law violated both the First Amendment and the Commerce Clause. In the end, the state decided that it was better to issue Citizens United a renewal license than risk a precedent-setting decision that could have ultimately brought down the state's regulatory regime.

Up-To-Date Information on State Charitable Solicitation Laws
Twenty states and the District of Columbia decided to allow charities to use a common form when registering with each jurisdiction to solicit donations. However, many of these states still require charities to file additional materials and addenda to the common form.

California: The Attorney General released his "Report on Charitable Solicitation by Commercial Fundraisers," which has been criticized by FSC.

The 9th U.S. Circuit Court of Appeals, in Perry v. Los Angeles Police Department, 96-55545, ruled that a Los Angeles ordinance limiting solicitation for donations to registered non-profit organizations was unconstitutional and violated the First Amendment. The City of Los Angeles then repealed the requirement for information cards for nonprofit solicitation.

Illinois: The Attorney General released his "Professional Fundraising Report" (1995), which has been criticized by FSC.

Nebraska repealed its Charitable Solicitor registration laws in response to a State Supreme Court decision which invalidated large portions of the laws.

New Hampshire: FSC hired local counsel to research the oppressive new law affecting registration and regulation of nonprofits. The AG's "Report on Charitable Fundraising Campaigns in New Hampshire" may have prompted the changes to the law.

North Carolina issued its "1995 Detailed Summary of Professional Solicitors Activities in North Carolina from Final Accounting Reports Received Between May 1, 1995 & April 30, 1996."

Oklahoma had problems with nonprocessing of registration applications. There remains the possibility of legislation that would amend the state charitable solicitation laws. FSC retained attorneys who may resume work on this project in 1998.

Wisconsin has intrusive regulations controlling issue advocacy. There is a movement to increase registration requirements on agencies, and increase monitoring of nonprofits.

FSC issued informative brochure on high cost of state regulations. Because many state legislators lack understanding of the negative effects so-called "consumer protection" legislation has on nonprofits, members of FSC's diverse Leadership Group helped write and edit an informative brochure entitled, Consumer Protection or Bureaucratic Racket? Why Does More Than $100,000,000 A Year Go To Pay Bureaucrats Rather Than To The Causes For Which They Were Intended?

FSDEF Assisted Christian Action Network's Lawsuit
The Free Speech Defense and Education Fund, Inc. (FSDEF) assisted the Christian Action Network (CAN) after it appeared that CAN might be unable to pursue its appeal (after the case had been accepted by the West Virginia Supreme Court). FSDEF assisted with costs associated with the appeal which challenged unsuccessfully certain aspects of the West Virginia state charitable solicitation law.

FSDEF Rallied Support For Challenge to Utah Statute
26 Nonprofits and Companies Signed On To FSDEF Amicus Brief
In November 1997, the Free Speech Defense & Education Fund, Inc. (FSDEF) and 26 other nonprofits and companies filed an Amicus Curiae brief in support of FSC member American Target Advertising in its challenge to the Utah charitable solicitations statute (ATA v. Giani, U.S. District Court, Dist. of Utah, Central Div., Civil Case No. 2:97-CV-610B). It is the first direct challenge by an out-of-state agency to the constitutionality of a state's charitable solicitation laws. The brief was written by William J. Olson, Mark Weinberg and Herbert W. Titus.

Another brief in support of ATA was filed by FSC member Bruce Eberle, Chairman of Bruce W. Eberle & Associates, Inc. His attorney, F. Hayden Codding, wrote the Amicus brief.

After the FSDEF and Eberle Amicus briefs were filed on November 25, 1997, many state attorneys general must have become concerned that ATA might win the case. They immediately asked the judge to grant a six-week extension (which he did) to allow them time to file a counter amicus brief. On January 6, 1998, attorneys general from 16 states, two secretaries of state, and one county attorney sent their Memorandum of Amici Curiae to the U.S. District Court in Utah.

We have high hopes that ATA will win this case, and that the decision will provide a strong precedent for challenging unconstitutional regulations in states and localities. A court hearing is set for April 10, 1998.


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.