RILEY v. NATIONAL FEDERATION OF THE BLIND OF NORTH CAROLINA

Legal Principle at Issue

Whether then "reasonable fee" provision of North Carolinas Charitable Solicitations Act, particularly its professional fundraisers disclosure provision, violates the First Amendment.

Action

Affirmed (includes modified). Petitioning party did not receive a favorable disposition.

Facts/Syllabus

The North Carolina Charitable Solicitations Act regulates professional fundraisers by limiting the fees they may retain from charitable donations, requiring certain disclosures to donors, and mandating licensing before solicitation. After studies showed that many fundraisers kept over half of donated funds as fees and costs, the state amended the law in 1985 to define what counts as a “reasonable” fee. Fees under 20% of gross receipts were automatically considered reasonable, fees between 20% and 35% could be deemed unreasonable unless tied to advocacy or public information efforts, and fees above 35% were presumed unreasonable unless justified as necessary for the charity’s communication or fundraising efforts. The law also required fundraisers to disclose the average percentage of donations previously turned over to charities and prohibited professional solicitors from operating without an approved license. 

A coalition of professional fundraisers, charities, and donors challenged these provisions, arguing that they violated freedom of speech under the First Amendment. The United States Court of Appeals for the Fourth Circuit agreed, holding that the fee restrictions, disclosure requirements, and licensing provisions unconstitutionally burdened protected speech.