Riley v. National Federation of Blind of North Carolina, Inc.

1988-06-29

Headline: State law governing paid charity fundraisers is struck down, invalidating percentage fee limits, mandatory pre-donation disclosures, and a licensing delay that would restrict who may solicit and how.

Holding: The Court affirmed the lower court and held that North Carolina’s rules setting percentage-based 'reasonable' fees, forcing fundraisers to state past gross percentages to donors, and delaying solicitation until licensing are unconstitutional.

Real World Impact:

Blocks state percentage-based caps on professional fundraisers’ fees.
Stops mandatory pre-donation disclosure of past gross retention percentages.
Prevents licensing delays that force paid fundraisers to wait before soliciting.

Topics: charity fundraising, free speech, donor disclosure, professional licensing

Summary

Background

A coalition of paid fundraisers, charitable groups, and potential donors sued North Carolina over changes to its Charitable Solicitations Act. The law set a three-tier percentage test for fundraiser fees (up to 20% deemed reasonable, 20–35% suspect, over 35% presumed excessive), required fundraisers to tell each potential donor the average gross percentage previously retained, and barred professional fundraisers from soliciting until licensed while volunteers could solicit upon application. The Fourth Circuit struck these provisions down, and the Supreme Court reviewed the case.

Reasoning

The Court treated charity solicitations as fully protected speech and relied on earlier decisions that rejected fixed percentage rules for fundraising. It held that using percentage thresholds to decide whether fees are “reasonable” is insufficiently tied to preventing fraud and chills speech by forcing fundraisers into litigation. The pre-donation disclosure requirement was treated as compelled, content-based speech and not narrowly tailored. The licensing rule failed because it allowed unlimited delay before a professional could solicit, impermissibly silencing paid fundraisers without prompt review.

Real world impact

The ruling prevents North Carolina from enforcing the percentage-fee formula, the mandated on-the-spot gross-percentage disclosure to donors, and the licensing delay for paid fundraisers. The opinion notes the State may still enforce fraud laws, require financial filings to the State, and adopt narrowly drawn, unambiguous disclosure requirements instead of the challenged rules. Charities, small groups, and paid fundraisers keep broader freedom to choose fundraising methods without those specific state constraints.

Dissents or concurrances

Justice Scalia largely agreed except for a narrow point about professional-status disclosure. Justice Stevens agreed on fees and disclosure but dissented about the licensing holding. Chief Justice Rehnquist would have upheld more of the law.