538 U.S. 600 | SCOTUS | 2003
Lead Opinion
delivered the opinion of the Court.
This case concerns the amenability of for-profit fundraising corporations to suit by the Attorney General of Illinois for fraudulent charitable solicitations. The controversy arises from the fundraisers’ contracts with a charitable nonprofit corporation organized to advance the welfare of Vietnam veterans; under the contracts, the fundraisers were to retain 85 percent of the proceeds of their fundraising endeavors. The State Attorney General’s complaint alleges that the fundraisers defrauded members of the public by falsely representing that “a significant amount of each dollar donated would be paid over to [the veterans organization] for its [charitable] purposes while in fact the [fundraisers] knew that ... 15 cents or less of each dollar would be available” for those purposes. App. 9, ¶ 34. Complementing that allegation, the complaint states that the fundraisers falsely represented that “the funds donated would go to further . . . charitable purposes,” id., at 8, ¶ 29, when in fact “the amount . . . paid over to charity was merely incidental to the fund
The question presented is whether those allegations state a claim for relief that can survive a motion to dismiss. In accord with the Illinois trial and appellate courts, the Illinois Supreme Court held they did not. That court was “mindful of the opportunity for public misunderstanding and the potential for donor confusion which may be presented with fund-raising solicitations of the sort involved in th[is] case,” Ryan v. Telemarketing Associates, Inc., 198 Ill. 2d 345, 363, 763 N. E. 2d 289, 299 (2001); it nevertheless concluded that threshold dismissal of the complaint was compelled by this Court’s decisions in Schaumburg v. Citizens for a Better Environment, 444 U. S. 620 (1980), Secretary of State of Md. v. Joseph H. Munson Co., 467 U. S. 947 (1984), and Riley v. National Federation of Blind of N. C., Inc., 487 U. S. 781 (1988). Those decisions held that certain regulations of charitable subscriptions, barring fees in excess of a prescribed level, effectively imposed prior restraints on fund-raising, and were therefore incompatible with the First Amendment.
We reverse the judgment of the Illinois Supreme Court. Our prior decisions do not rule out, as supportive of a fraud claim against fundraisers, any and all reliance on the percentage of charitable donations fundraisers retain for themselves. While bare failure to disclose that information directly to potential donors does not suffice to establish fraud, when nondisclosure is accompanied by intentionally misleading statements designed to deceive the listener, the First Amendment leaves room for a fraud claim.
I
Defendants below, respondents here, Telemarketing Associates, Inc., and Armet, Inc., are Illinois for-profit fundraising corporations wholly owned and controlled by defendant-respondent Richard Troia. 198 Ill. 2d, at 847-348, 763
The contracts between the charity, VietNow, and the fundraisers, Telemarketers, provided that Telemarketers would retain 85 percent of the gross receipts from donors within Illinois, leaving 15 percent for VietNow. Ibid. Under the agreements, donor lists developed by Telemarketers would remain in their “sole and exclusive” control. App. 24,93-94, 102, ¶ 65. Telemarketers also brokered contracts on behalf of VietNow with out-of-state fundraisers; under those contracts, out-of-state fundraisers retained between 70 percent and 80 percent of donated funds, Telemarketers received between 10 percent and 20 percent as a finder’s fee, and Viet-Now received 10 percent. 198 Ill. 2d, at 348, 763 N. E. 2d, at 291. Between July 1987 and the end of 1995, Telemarketers collected approximately $7.1 million, keeping slightly more than $6 million for themselves, and leaving approximately $1.1 million for the charity. Ibid.
In 1991, the Illinois Attorney General filed a complaint against Telemarketers in state court. Id., at 348-350, 763 N. E. 2d, at 291-292.
In the course of their telephone solicitations, the complaint states, Telemarketers misleadingly represented that “funds donated would go to further Viet[N]ow’s charitable purposes.” Id., at 8, ¶ 29. Affidavits attached to the complaint aver that Telemarketers told prospective donors their contributions would be used for specifically identified charitable endeavors; typical examples of those endeavors include “food baskets given to vets [and] their families for Thanksgiving,” id., at 124, paying “bills and rent to help physically and mentally disabled Vietnam vets and their families,” id., at 131, “jo[b] training,” id., at 145, and “rehabilitation [and] other services for Vietnam vets,” id., at 169 (some capitalization omitted in quotes). One affiant asked what percentage of her contribution would be used for fundraising expenses; she “was told 90% or more goes to the vets.” Ibid, (capitalization omitted). Another affiant stated she was told her donation would not be used for “labor expenses” because “all members are volunteers.” Id., at 111 (capitalization omitted).
The 15 cents or less of each solicited dollar actually made available to VietNow, the Attorney General charged, “was merely incidental to the fund raising effort”; consequently, she asserted, “representations made to donors [that a significant amount of each dollar donated would be paid over to Viet[N]ow for its purposes] were knowingly deceptive and materially false, constituted a fraud[,] and were made for the private pecuniary benefit of [Telemarketers].” Id., at 9, ¶¶ 34, 35.
Telemarketers moved to dismiss the fraud claims, urging that they were barred by the First Amendment. The trial court granted the motion,
The Illinois Supreme Court acknowledged that this case, unlike Schaumburg, Munson, and Riley, involves no prophylactic provision proscribing any charitable solicitation if fundraising costs exceeded a prescribed limit. Instead, the Attorney General sought to enforce the State’s generally applicable antifraud laws against Telemarketers for “specific instances of deliberate deception.” 198 Ill. 2d, at 358, 763 N. E. 2d, at 296 (quoting Riley, 487 U. S., at 803 (SCALIA, J., concurring)). “However,” the court said, “the statements made by [Telemarketers] during solicitation are alleged to be ‘false’ only because [Telemarketers] retained 85% of the gross receipts and failed to disclose this information to donors.” 198 Ill. 2d, at 359, 763 N. E. 2d, at 297. The Attorney General’s complaint, in the Illinois Supreme Court’s view, was “in essence, an attempt to regulate [Telemarketers’] ability to engage in a protected activity based upon a percentage-rate limitation” — “the same regulatory principle that was rejected in Schaumburg[,] Munson, and Riley.” Ibid.
“[H]igh solicitation costs,” the Illinois Supreme Court stressed, “can be attributable to a number of factors.” Ibid. In this case, the court noted, Telemarketers contracted to provide a “wide range” of services in addition to telephone solicitation. Ibid. For example, they agreed to publish a newsletter and to maintain a toll-free information hotline. Id., at 359-360, 763 N. E. 2d, at 297-298. Moreover, the court added, VietNow received “nonmonetary benefits by having [its] message disbursed by the solicitation process,” and Telemarketers were directed to solicit “in a manner that
The Illinois Supreme Court further determined that, under Riley, “fraud cannot be defined in such a way that it places on solicitors the affirmative duty to disclose to potential donors, at the point of solicitation, the net proceeds to be returned to the charity.” Id., at 361, 763 N. E. 2d, at 298.
II
The First Amendment protects the right to engage m charitable solicitation. See Schaumburg, 444 U. S., at 632 (“charitable appeals for funds ... involve a variety of speech interests — communication of information, the dissemination and propagation of views and ideas, and the advocacy of
The Court has not previously addressed the First Amendment’s application to individual fraud actions of the kind at issue here. It has, however, three times considered prophylactic statutes designed to combat fraud by imposing prior restraints on solicitation when fundraising fees exceeded a specified reasonable level. Each time, the Court held the prophylactic measures unconstitutional.
In Schaumburg, decided in 1980, the Court invalidated a village ordinance that prohibited charitable organizations from soliciting contributions unless they used at least 75 percent of their receipts “directly for the charitable purpose of the organization.” 444 U. S., at 624 (internal quotation marks omitted). The ordinance defined “charitable purposes” to exclude salaries and commissions paid to solicitors, and the administrative expenses of the charity, including salaries. Ibid. The village of Schaumburg’s “principal justification” for the ordinance was fraud prevention: “[A]ny organization using more than 25 percent of its receipts on fund-
The Court agreed with Schaumburg that fraud prevention ranks as “a substantial governmental interes[t],” ibid., but concluded that “the 75-percent requirement” promoted that interest “only peripherally.” Ibid. Spending “more than 25 percent of [an organization’s] receipts on fundraising, salaries, and overhead,” the Court explained, does not reliably indicate that the enterprise is “commercial” rather than “charitable.” Ibid. Such spending might be altogether appropriate, Schaumburg noted, for a charitable organization “primarily engaged in research, advocacy, or public education [that uses its] own paid staff to carry out these functions as well as to solicit financial support.” Id., at 636-637. “The Village’s legitimate interest in preventing fraud,” the Court stated, “can be better served by measures less intrusive than a direct prohibition on solicitation,” id., at 637: “Fraudulent misrepresentations can be prohibited and the penal laws used to punish such conduct directly,” ibid.
Four years later, in Munson, the Court invalidated a Maryland law that prohibited charitable organizations from soliciting if they paid or agreed to pay as expenses more than 25 percent of the amount raised. Unlike the inflexible ordinance in Schaumburg, the Maryland law authorized a waiver of the 25 percent limitation “where [it] would effectively prevent the charitable organization from raising contributions.” 467 U. S., at 950-951, n. 2. The Court held that the waiver provision did not save the statute. Id., at 962. “[No] reaso[n] other than financial necessity warranted] a waiver,” Munson observed. Id., at 963. The statute provided no shelter for a charity that incurred high solicitation costs because it chose to disseminate information as part of its fundraising. Ibid. Nor did it shield a charity
“[N]o doubt [there] are organizations that have high fund-raising costs not due to protected First Amendment activity,” the Court recognized; it concluded, however, that Maryland’s statute was incapable of “distinguishing] those organizations from charities that have high costs due to protected First Amendment activities.” Id., at 966. The statute’s fatal flaw, the Court said, was that it “operate[d] on [the] fundamentally mistaken premise that high solicitation costs are an accurate measure of fraud.” Ibid. As in Schaumburg, the Court noted, fraud could be checked by “measures less intrusive than a direct prohibition on solicitation”: Fraud could be punished directly and the State “could require disclosure of the finances of a charitable organization so that a member of the public could make an informed decision about whether to contribute.” 467 U. S., at 961, and n. 9.
Third in the trilogy of eases on which the Illinois Supreme Court relied was our 1988 decision in Riley. The village ordinance in Schaumburg and the Maryland law in Munson regulated charities; the North Carolina charitable solicitation controls at issue in Riley directly regulated professional fundraisers. North Carolina’s law prohibited professional fundraisers from retaining an “unreasonable” or “excessive” fee. 487 U. S., at 784 (internal quotation marks omitted). Fees up to 20 percent of the gross receipts collected were deemed reasonable; fees between 20 percent and 35 percent were deemed unreasonable if the State showed that the solicitation did not involve advocacy or dissemination of information. Id., at 784-785. Fees exceeding 35 percent were presumed unreasonable, but the fundraiser could rebut the presumption by showing either that the solicitation involved advocacy or information dissemination, or that, absent the higher fee, the charity’s “ability to raise money or communicate would be significantly diminished.” Id., at 785-786.
The opportunity to rebut the unreasonableness presumption attending a fee over 35 percent did not bring North Carolina’s scheme within the constitutional zone, the Court explained. Under the State’s law, “even where a prima facie showing of unreasonableness ha[d] been rebutted, the fact-finder [still had to] make an ultimate determination, on a case-by-case basis, as to whether the fee was reasonable — a showing that the solicitation involved . . . advocacy or [the] dissemination of information [did] not alone establish that the total fee was reasonable.” Id., at 786.
Training on that aspect of North Carolina’s regulation, the Court stated: “Even if we agreed that some form of a percentage-based measure could be used, in part, to test for fraud, we could not agree to a measure that requires the speaker to prove ‘reasonableness’ case by case based upon what is at best a loose inference that the fee might be too high.” Id., at 793. “[E]very campaign incurring fees in excess of 35% . . . [would] subject [fundraisers] to potential litigation over the ‘reasonableness’ of the fee,” the Court observed; that litigation risk, the Court concluded, would “chill speech in direct contravention of the First Amendment’s dictates.” Id., at 794. Especially likely to be burdened, the Riley opinion noted, were solicitations combined with advocacy or the communication of information, and fundraising by small or unpopular charities. Ibid. The Court cautioned, however, as it did in Schaumburg and Munson, that States need not “sit idly by and allow their citizens to be de
Riley presented a further issue. North Carolina law required professional fundraisers to disclose to potential donors, before asking for money, the percentage of the prior year’s charitable contributions the fundraisers had actually turned over to charity. Ibid. The State defended this disclosure requirement as a proper means to dispel public mis-perception that the money donors gave to professional fundraisers went in greater-than-actual proportion to benefit charity. Id., at 798.
This Court condemned the measure as an “unduly burdensome” prophylactic rule, an exaction unnecessary to achieve the State’s goal of preventing donors from being misled. Id., at 800. The State’s rule, Riley emphasized, conclusively presumed that “the charity derive[d] no benefit from funds collected but not turned over to it.” Id., at 798. This was “not necessarily so,” the Court said, for charities might well benefit from the act of solicitation itself, when the request for funds conveyed information or involved cause-oriented advocacy. Ibid.
The Court noted in Riley that North Carolina (like Illinois here) required professional fundraisers to disclose their professional status. Id., at 799; see Ill. Comp. Stat., ch. 225, §460/17(a) (2001); supra, at 609, n. 4, 611, n. 6. That disclosure, the Court said, effectively notified contributors that a portion of the money they donated would underwrite solicitation costs. A concerned donor could ask how much of the contribution would be turned over to the charity, and under North Carolina law, fundraisers would be obliged to provide that information. Riley, 487 U. S., at 799 (citing N. C. Gen. Stat. § 131C-16 (1986)). But upfront telephone disclosure of the fundraiser’s fee, the Court believed, might end as well as begin the conversation: A potential contributor who thought the fee too high might simply hang up. 487 U. S., at 799-
Ill
A
The Court’s opinions in Schaumburg, Munson, and Riley took care to leave a corridor open for fraud actions to guard the public against false or misleading charitable solicitations. See Schaumburg, 444 U. S., at 637; Munson, 467 U. S., at 961, and n. 9; Riley, 487 U. S., at 795, 800.
Under Illinois law, similar to the Federal Rules of Civil Procedure, “[w]hen the legal sufficiency of a complaint is challenged by a . . . motion to dismiss, all well-pleaded facts in the complaint are taken as true and [the court] must determine whether the allegations . . . , when interpreted in the light most favorable to the plaintiff, are sufficient to establish a cause of action upon which relief may be granted.” Connick v. Suzuki Motor Co., Ltd., 174 Ill. 2d 482, 490, 675 N. E. 2d 584, 588 (1997) (emphasis added). Dismissal is proper “only if it clearly appears that no set of facts can be proved under the pleadings which will entitle the plaintiff to recover.” 198 Ill. 2d, at 351, 763 N. E. 2d, at 293.
Taking into account the affidavits, and reading the complaint in the light most favorable to the Attorney General, that pleading described misrepresentations our precedent does not place under the First Amendment’s cover. First, it asserted that Telemarketers affirmatively represented that “a significant amount of each dollar donated would be paid over to Viet[N]ow” to be used for specific charitable purposes — rehabilitation services, job training, food baskets, and assistance for rent and bills, App. 9, ¶ 34; id., at 124, 131, 145, 163, 169, 187, 189 — while in reality Telemarketers knew that “15 cents or less of each dollar” was “available to Viet-[N]ow for its purposes.” Id., at 9, ¶ 34. Second, the complaint alleged, essentially, that the charitable solicitation was a facade: Although Telemarketers represented that donated
Fraud actions so tailored, targeting misleading affirmative representations about how donations will be used, are plainly distinguishable, as we next discuss, from the measures invalidated in Schaumburg, Munson, and Riley: So long as the emphasis is on what the fundraisers misleadingly convey, and not on percentage limitations on solicitors’ fees per se, such actions need not impermissibly chill protected speech.
B
In Schaumburg, Munson, and Riley, the Court invalidated laws that prohibited charitable organizations or fundraisers from engaging in charitable solicitation if they spent high percentages of donated funds on fundraising — whether or not any fraudulent representations were made to potential donors. Truthfulness even of all representations was not a defense. See supra, at 612-616. In contrast to the prior restraints inspected in those cases, a properly tailored fraud action targeting fraudulent representations themselves employs no “[b]road prophylactic rul[e],” Schaumburg, 444 U. S., at 637 (internal quotation marks and citation omitted), lacking any “nexus ... [to] the likelihood that the solicitation is fraudulent,” Riley, 487 U. S., at 793. Such an action thus falls on the constitutional side of the line the Court’s cases draw “between regulation aimed at fraud and regulation
Of prime importance, and in contrast to a prior restraint on solicitation, or a regulation that imposes on fundraisers an uphill burden to prove their conduct lawful, in a properly tailored fraud action the State bears the full burden of proof. False statement alone does not subject a fundraiser to fraud liability. As restated in Illinois case law, to prove a defendant liable for fraud, the complainant must show that the defendant made a false representation of a material fact knowing that the representation was false; further, the complainant must demonstrate that the defendant made the representation with the intent to mislead the listener, and succeeded in doing so. See In re Witt, 145 Ill. 2d 380, 391, 583 N. E. 2d 526, 531 (1991). Heightening the complainant’s burden, these showings must be made by clear and convincing evidence. See Hofmann v. Hofmann, 94 Ill. 2d 205, 222, 446 N. E. 2d 499, 506 (1983).
Exacting proof requirements of this order, in other contexts, have been held to provide sufficient breathing room for protected speech. See New York Times Co. v. Sullivan, 376 U. S. 254, 279-280 (1964) (action for defamation of public
The Illinois Supreme Court in the instant case correctly observed that “the percentage of [fundraising] proceeds turned over to a charity is not an accurate measure of the amount of funds used ‘for’ a charitable purpose.” 198 Ill. 2d, at 360, 763 N. E. 2d, at 298 (citing Munson, 467 U. S., at 967, n. 16). But the gravamen of the fraud action in this case is not high costs or fees, it is particular representations made with intent to mislead. If, for example, a charity conducted an advertising or awareness campaign that advanced charitable purposes in conjunction with its fundraising activity, its representation that donated funds were going to “charitable purposes” would not be misleading, much less intentionally so. Similarly, charitable organizations that engage primarily in advocacy or information dissemination could get and spend money for their activities without risking a fraud
The Illinois Attorney General here has not suggested that a charity must desist from using donations for information dissemination, advocacy, the promotion of public awareness, the production of advertising material, the development or enlargement of the charity’s contributor base,
We do not agree with Telemarketers that the Illinois Attorney General’s fraud action is simply an end run around Riley’s holding that fundraisers may not be required, in every telephone solicitation, to state the percentage of receipts the fundraiser would retain. See Brief for Respondents 14-19. It is one thing to compel every fundraiser to disclose its fee arrangements at the start of a telephone conversation, quite another to take fee arrangements into
C
Our decisions have repeatedly recognized the legitimacy of government efforts to enable donors to make informed choices about their charitable contributions. In Schaum-burg, the Court thought it proper to require “disclosure of the finances of charitable organizations,” thereby to prevent fraud “by informing the public of the ways in which their contributions will be employed.” 444 U. S., at 638. In Munson, the Court reiterated that “disclosure of the finances of a charitable organization” could be required “so that a member of the public could make an informed decision about whether to contribute.” 467 U. S., at 961-962, n. 9. And in Riley, the Court said the State may require professional fundraisers to file “detailed financial disclosure forms” and may communicate that information to the public. 487 U. S., at 800; see also id., at 799, n. 11 (State may require fundraisers “to disclose unambiguously [their] professional status”).
In accord with our precedent, as Telemarketers and their amici acknowledge, in “[a]lmost all of [the] states and many localities,” charities and professional fundraisers must “register and file regular reports on activities^] particularly fundraising costs.” Brief for Respondents 37; see Brief for Independent Sector et al. as Amici Curiae 6-8. These reports are generally available to the public; indeed, “[m]any states have placed the reports they receive from charities and professional fundraisers on the Internet.” Brief for Respondents 39; see Brief for Independent Sector et al. as Amici Curiae 9-10. Telemarketers do not object on First Amendment grounds to these disclosure requirements. Tr. of Oral Arg. 43.
Just as government may seek to inform the public and prevent fraud through such disclosure requirements, so it may
* * *
For the reasons stated, the judgment of the Illinois Supreme Court is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.
It is so ordered.
The petition for certiorari further alleges that, of the money raised by Telemarketers, VietNow in the end spent only about 3 percent to provide charitable services to veterans. Pet. for Cert. 2, and n. 1; see IRS Form 990, filed by VietNow in 2000, available at http://167.10.5.131/Ct0601_0700/ 0652/1M11INDV.PDF (as visited Apr. 10, 2003) (available in Clerk of Court’s case file).
References to the complaint in this opinion include all amendments to that pleading.
Under Illinois law, exhibits attached to a complaint and referred to in a pleading become part of the pleading “for all purposes.” Ill. Comp. Stat., ch. 735, § 5/2-606 (1992); Pure Oil Co. v. Miller-McFarland Drilling Co., 376 Ill. 486, 497-498, 34 N. E. 2d 854, 859 (1941); 3 R. Michael, Illinois Practice §23.9, pp. 332-333, nn. 7-9 and accompanying text (1989) (collecting Illinois cases). Telemarketers’ counsel stated at oral argument that the Illinois Supreme Court had ‘found as a matter of law that [the] affidavits were not part of the complaint.” Tr. of Oral Arg. 40. We can locate no such finding in the court’s opinion. Asked to supply a citation after argument, see id., at 41, counsel directed us to the court’s statement that “there is no allegation that [Telemarketers] made affirmative misstatements to potential donors.” 198 Ill. 2d 345, 348, 763 N. E. 2d 289, 291 (2001)); see Letter from William E. Raney to William K. Suter, Clerk of the Court (Mar. 4, 2003). In so stating, the Illinois court overlooked, most obviously, the two affidavits attesting to Telemarketers’ representations that “90% or more goes to the vets,” and that there would be no “labor
Illinois law provides that “[i]n any solicitation to the public for a charitable organization by a professional fund raiser or professional solicitor!,] [t]he public member shall be promptly informed by statement in verbal communications and by clear and unambiguous disclosure in written materials that the solicitation is being made by a paid professional fund raiser. The fund raiser, solicitor, and materials used shall also provide the professional fund raiser’s name and a statement that contracts and reports regarding the charity are on file with the Illinois Attorney General and additionally, in verbal communications, the solicitor’s true name must be provided.” Ill. Comp. Stat., ch. 225, §460/17(a) (2001).
The parties subsequently stipulated to the dismissal of all remaining claims. App. to Pet. for Cert. 30-31.
Contracts for fundraising campaigns in Illinois must be filed with the State’s Attorney General, see Ill. Comp. Stat., ch. 225, §§460/2(a)(10) and 460/7 (2001), and those contracts must disclose all fundraiser fees, including any “stated percentage of the gross amount raised” to be retained by the fundraiser, §460/7(b); see §460/7(d). The filings are open for public inspection. §460/2(f). Illinois law also provides that fundraisers must disclose “the percentage to be received by the charitable organization from each contribution, if such disclosure is requested by the person solicited.” §460/17(b). Telemarketers did not challenge these requirements.
We are therefore unpersuaded by Telemarketers’ plea that they lacked fair notice of their vulnerability to fraud actions. See Brief for Respondents 46, 49-50.
Although fundraiser retention of 85 percent of donations is significantly higher than the 35 percent limit in Riley, this Court has not yet accepted any percentage-based measure as dispositive. See supra, at 615 (quoting Riley v. National Federation of Blind of N. C., Inc., 487 U. S. 781, 793 (1988)).
In Riley, this Court expressed concern that case-by-case litigation over the reasonableness of fundraising fees would inhibit speech. 487 U. S., at 793-794. That concern arose in large measure because the North Carolina statute there at issue placed the burden of proof on the fundraiser. The Court has long cautioned that, to avoid chilling protected speech, the government must bear the burden of proving that the speech it seeks to prohibit is unprotected. See Freedman v. Maryland, 380 U. S. 51, 58 (1965); Speiser v. Randall, 357 U. S. 513, 525-526 (1958). The government shoulders that burden in a fraud action.
Although this case does not present the issue, the Illinois Attorney General urges that a constitutional requirement resembling “actual malice” does not attend “every form of liability by charitable solicitors who misrepresent the use of donations.” Reply Brief 16-17, n. 11 (internal quotation marks omitted). We confine our consideration to the complaint in this case, which alleged that Telemarketers- “acted with knowledge of the falsity of their representations.” Ibid.
Amicus Mothers Against Drunk Driving (MADD), for example, states that its mission is “to communicate the message ‘Don’t Drink and Drive.’ ” Brief for Public Citizen, Inc., et al. as Amici Curiae 13. Telephone solicitors retained by MADD “reach millions of people a year, and each call educates the public about the tragedy of drunk driving, provides statistics and asks the customer to always designate a sober driver.” Ibid, (internal quotation marks and citation omitted). Solicitations that described MADD’s charitable mission would not be fraudulent simply because MADD devotes a large proportion of its resources to fundraising calls, for those calls themselves ftilfill its advocacy/information dissemination mission.
This Court has consistently recognized that small or unpopular charities would be hindered by limitations on the portion of receipts they could devote to subscription building. See Secretary of State of Md. v. Joseph H. Munson Co., 467 U. S. 947, 967 (1984); Riley, 487 U. S., at 794.
Concurrence Opinion
with whom Justice Thomas joins, concurring.
The question presented by the petition for certiorari in this case reads as follows: “Whether the First Amendment categorically prohibits a State from pursuing a fraud action against a professional fundraiser who represents that donations will be used for charitable purposes but in fact keeps the vast majority (in this case 85 percent) of all funds donated.” Pet. for Cert. i. I join the Court’s opinion because I think it clear from the opinion that if the only representation made by the fundraiser were the one set forth in the question presented (“that donations will be used for charitable purposes”), and if the only evidence of alleged failure to comply with that representation were the evidence set forth in the question presented (that the fundraiser “keeps the
It is the teaching of Riley v. National Federation of Blind of N. C., Inc., 487 U. S. 781, 793 (1988), and Secretary of State of Md. v. Joseph H. Munson Co., 467 U. S. 947, 966 (1984), that since there is such wide disparity in the legitimate expenses borne by charities, it is not possible to establish a maximum percentage that is reasonable. It also follows from that premise that there can in general be no reasonable expectation on the part of donors as to what fraction of the gross proceeds goes to expenses. When that proposition is combined with the unquestionable fact that one who is promised, without further specification, that his charitable contribution will go to a particular cause must reasonably understand that it will go there after the deduction of legitimate expenses, the conclusion must be that the promise is not broken (and hence fraud is not committed) by the mere fact that expenses are very high. Today’s judgment, however, rests upon a “solid core” of misrepresentations, ante, at 620, that go well beyond mere commitment of the collected funds to the charitable purpose.
