Larson v. Valente

1982-06-07

Headline: Minnesota rule that forced some religious groups to register based on more than half their funds from nonmembers is struck down as discriminatory, preventing the State from using that rule to force registration and reporting.

Holding: The Court held that Minnesota’s fifty percent exemption rule discriminates among religious organizations, violates the Establishment Clause, and cannot be used to force organizations to register and report under the Act.

Real World Impact:

Prevents Minnesota from enforcing the fifty percent registration rule against religious groups.
Means states must use other, neutral grounds to require charity registration or show fraud.
Requires States to prove an organization is not religious before denying exemption.

Topics: religious freedom, charitable fundraising rules, government and religion, state regulation of charities

Summary

Background

Minnesota officials enforced a state law requiring charities to register and file annual financial reports. In 1978 the Legislature added a “fifty percent rule” that removed the exemption for any religious organization that got more than half its contributions from nonmembers. The Unification Church and several followers were told to register and sued, claiming the rule treated different religions unequally and violated the First Amendment’s ban on government preference for one religion over another. Lower courts and the Eighth Circuit considered standing and the rule’s constitutionality before the case reached this Court.

Reasoning

The Court examined whether the fifty percent rule singled out some denominations for burdens while exempting others. It applied the heightened scrutiny appropriate to laws that make denominational distinctions. The Court found the rule was not closely tailored to the State’s interest in preventing fraud or protecting donors. The record showed little support for the law’s assumptions about member control and the Legislature’s history suggested the rule targeted particular sects. Because the registration and reporting duties are substantial, the selective rule created an impermissible denominational preference and thus violated the Establishment Clause.

Real world impact

The decision means Minnesota cannot require religious organizations to register and report under this statute solely by relying on the fifty percent rule. States remain able to regulate charitable activity for fraud, to require proof that an organization is not religious, or to enforce other neutral provisions. The ruling removes a simple statutory basis for singling out certain religious groups but does not guarantee any particular group permanent exemption.

Dissents or concurrances

Justice Stevens joined the judgment and emphasized practical burdens and standing. Other Justices dissented, arguing the Court reached the question prematurely and should have required factual proof about the Church’s religious status before deciding the constitutional issue.