NATIONAL FEDERATION OF BLIND
487 U.S. 781 (1988)
ATTORNEY OF THE
APPEAL FROM THE
UNITED STATES COURT OF APPEALS
The North Carolina Charitable Solicitations Act defines the prima facie "reasonable fee" that a professional fundraiser may charge according to a three-tiered schedule. A fee up to 20% of receipts collected is deemed reasonable. A fee between 20% and 35% is deemed unreasonable upon a showing that the solicitation at issue did not involve the "dissemination of information, discussion, or advocacy relating to public issues as directed by the [charitable organization] which is to benefit from the solicitation." A fee exceeding 35% is presumed unreasonable, but the fundraiser may rebut the presumption by showing that the fee was necessary either because the solicitation involved the dissemination of information or advocacy on public issues directed by the charity, or because otherwise the charity's ability to raise money or communicate would be significantly diminished. The Act also provides that a professional fundraiser must disclose to potential donors the average percentage of gross receipts actually turned over to charities by the fundraiser for all charitable solicitations conducted in the State within the previous 12 months. Finally, the Act provides that professional fundraisers may not solicit without an approved license, whereas volunteer fundraisers may solicit immediately upon submitting a license application. Appellees, a coalition of professional fundraisers, charitable organizations, and potential donors, brought suit against appellant government officials charged with the enforcement of the Act thereinafter collectively referred to as North Carolina or the State), seeking injunctive and declaratory relief. The District Court ruled that the challenged provisions on their face unconstitutionally infringed upon freedom of speech and enjoined their enforcement.
The Court of Appeals affirmed.
2. North Carolina's requirement that professional fundraisers disclose to potential donors, before an appeal for funds, the percentage of charitable contributions collected during the previous 12 months that were actually turned over to charity is unconstitutional. This provision of the Act is a content-based regulation because mandating speech that a speaker would not otherwise make necessarily alters the speech's content. Even assuming that the mandated speech, in the abstract, is merely "commercial," it does not retain its commercial character when it is inextricably intertwined with the otherwise fully protected speech involved in charitable solicitations, and thus the mandated speech is subject to the test for fully protected expression, not the more deferential commercial speech principles. Nor is a deferential test to be applied on the theory that the First Amendment interest in compelled speech is different than the interest in compelled silence. The difference is without constitutional significance, for the First Amendment guarantees "freedom of speech," a term necessarily comprising the decision of both what to say and what not to say. Moreover, for First Amendment purposes, a distinction cannot be drawn between compelled statements of opinion and, as here, compelled statements of "fact," since either form of compulsion burdens protected speech. Thus, North Carolina's content-based regulation is subject to exacting First Amendment scrutiny. The State's interest in informing donors how the money they contribute is spent to [487 U.S. 781, 783] dispel the alleged misperception that the money they give to professional fundraisers goes in greater-than-actual proportion to benefit charity, is not sufficiently weighty, and the means chosen to accomplish it are unduly burdensome and not narrowly tailored. Pp. 795-801.
3. North Carolina's licensing requirement for professional fundraisers is unconstitutional. A speaker's rights are not lost merely because compensation is received, and the State's asserted power to license professional fundraisers carries with it (unless properly constrained) the power directly and substantially to affect the speech they utter. Consequently, the statute is subject to First Amendment scrutiny. Generally, speakers need not obtain a license to speak. Even assuming that the State's interest in regulating those who solicit money justifies requiring fundraisers to obtain a license before soliciting, such a regulation must provide that the licensor will, within a specified brief period, either issue a license or go to court. That requirement is not met here, for the North Carolina Act permits a delay without limit. Nor can the State assert that its history of issuing licenses quickly constitutes a practice effectively constraining the licensor's discretion, since such history relates to a time (prior to amendment of the Act) when professional fundraisers were permitted to solicit as soon as their applications were filed. Pp. 801-804. 817 F.2d 102, affirmed.
BRENNAN, J., delivered the opinion of the Court, in which WHITE, MARSHALL, BLACKMUN, and KENNEDY, JJ., joined, in Parts I, II, and III, of which STEVENS, J., joined, and in all but n. 11 of which SCALIA, J., joined. SCALIA, J., filed an opinion concurring in part and concurring in the judgment, post, p. 803. STEVENS, J., filed an opinion concurring in part and dissenting in part, post, p. 804. REHNQUIST, C. J., filed a dissenting opinion, in which O'CONNOR, J., joined, post, p. 804.
Lacy H. Thornburg, Attorney General of North Carolina, argued the cause for appellants. With him on the briefs were Jean A. Benoy, Senior Deputy Attorney General, and Charles M. Hensey, Special Deputy Attorney General. Errol Copilevitz argued the cause for appellees. With him on the brief was John P. Jennings, Jr.*
*Briefs of amici curiae urging reversal were filed for the State of Indiana et al. by Linley E. Pearson, Attorney General of Indiana, David A. Miller, Christine M. Page, and David M. Sommers, Deputy Attorneys General, and Charlie Brown, Attorney General of West Virginia; and for the State of Maine et al. by James E. Tierney, Attorney General of Maine, [487 U.S. 781, 784] and Stephen L. Wessler, Assistant Attorney General, Joseph J. Lieberman, Attorney General of Connecticut, and David E. Ormstedt, Assistant Attorney General. Briefs of amici curiae urging affirmance were filed for the Alabama Sheriffs' Association et al. by Eric J. Magnuson; for the California Council of the Blind by Barry A. Fisher and David Grosz; and for Independent Sector et al. by Thomas R. Asher and Adam Yarmolinsky. [487 U.S. 781, 784]
JUSTICE BRENNAN delivered the opinion of the Court.
Responding to a study showing that in the previous five years the State's largest professional fundraisers had retained as fees and costs well over 50% of the gross revenues collected in charitable solicitation drives, North Carolina amended its Charitable Solicitations Act in 1985. As amended, the Act prohibits professional fundraisers from retaining an "unreasonable" or "excessive" fee,1 a term defined by a three-tiered schedule.2 A fee up to 20% of the gross [487 U.S. 781, 785] receipts collected is deemed reasonable. If the fee retained is between 20% and 35%, the Act deems it unreasonable upon a showing that the solicitation at issue did not involve the "dissemination of information, discussion, or advocacy relating to public issues as directed by the [charitable organization] which is to benefit from the solicitation." Finally, a fee exceeding 35% is presumed unreasonable, but the fundraiser may rebut the presumption by showing that the amount of the fee was necessary either (1) because the solicitation involved the dissemination of information or advocacy on public issues directed by the charity, or (2) because otherwise the charity's ability to raise money or communicate would be significantly [487 U.S. 781, 786] diminished. As the State describes the Act, even where a prima facie showing of unreasonableness has been rebutted, the factfinder must still make an ultimate determination, on a case-by-case basis, as to whether the fee was reasonable - a showing that the solicitation involved the advocacy or dissemination of information does not alone establish that the total fee was reasonable. See Brief for Appellants 10-11; Reply Brief for Appellants 2-3.
The Act also provides that, prior to any appeal for funds, a professional fundraiser must disclose to potential donors: (1) his or her name; (2) the name of the professional solicitor or professional fundraising counsel by whom he or she is employed and the name and address of his or her employer; and (3) the average percentage of gross receipts actually turned over to charities by the fundraiser for all charitable solicitations conducted in North Carolina within the previous 12 months.3 Only the third disclosure requirement is challenged here.
Finally, professional fundraisers may not solicit without an approved license.4 In contrast, volunteer fundraisers [487 U.S. 781, 787] may solicit immediately upon submitting a license application. N.C. Gen. Stat. 131C-4 (1986). A licensing provision had been in effect prior to the 1985 amendments, but the prior law allowed both professional and volunteer fundraisers to solicit as soon as a license application was submitted.
A coalition of professional fundraisers, charitable organizations, and potential charitable donors brought suit against various government officials charged with the enforcement of the Act (hereinafter collectively referred to as North Carolina or the State), seeking injunctive and declaratory relief. The District Court for the Eastern District of North Carolina ruled on summary judgment that the foregoing aspects of the Act on their face unconstitutionally infringed upon freedom of speech (it also found the Act constitutional in other respects not before us now), and enjoined enforcement of the unconstitutional provisions. 635 F. Supp. 256 (1986). The Court of Appeals for the Fourth Circuit affirmed in a per curiam opinion. 817 F.2d 102 (judgment order), and we noted probable jurisdiction, 484 U.S. 911 (1987).
We turn first to the "reasonable fee" provision. In deciding this issue, we do not write on a blank slate; the Court has heretofore twice considered laws regulating the financial aspects of charitable solicitations. We first examined such a law in Schaumburg v. Citizens for a Better Environment, 444 U.S. 620 (1980). There we invalidated a local ordinance requiring charitable solicitors to use, for charitable purposes (defined to exclude funds used toward administrative expenses and the costs of conducting the solicitation), 75% of the funds solicited. We began our analysis by categorizing the type of speech at issue. The village argued that charitable solicitation is akin to a business proposition, and therefore constitutes merely commercial speech. We rejected [487 U.S. 781, 788] that approach and squarely held, on the basis of considerable precedent, that charitable solicitations "involve a variety of speech interests . . . that are within the protection of the First Amendment," and therefore have not been dealt with as "purely commercial speech." Id., at 632. Applying standard First Amendment analysis, we determined that the ordinance was not narrowly tailored to achieve the village's principal asserted interest: the prevention of fraud. We concluded that some charities, especially those formed primarily to advocate, collect, or disseminate information, would of necessity need to expend more than 25% of the funds collected on administration or fundraising expenses. Id., at 635-637. Yet such an eventuality would not render a solicitation by these charities fraudulent. In short, the prevention of fraud was only "peripherally promoted by the 75-percent requirement and could be sufficiently served by measures less destructive of First Amendment interests." Id., at 636-637. We also observed that the village was free to enforce its already existing fraud laws and to require charities to file financial disclosure reports. Id., at 637-638, and nn. 11-12.
We revisited the charitable solicitation field four years later in Secretary of State of Maryland v. Joseph H. Munson Co., 467 U.S. 947 (1984), a case closer to the present one in that the statute directly regulated contracts between charities and professional fundraisers. Specifically, the statute in question forbade such contracts if, after allowing for a deduction of many of the costs associated with the solicitation, the fundraiser retained more than 25% of the money collected. Although the Secretary was empowered to waive this limitation where it would effectively prevent the charitable organization from raising contributions, we held the law unconstitutional under the force of Schaumburg. We rejected the State's argument that restraints on the relationship between the charity and the fundraiser were mere "economic regulations" free of First Amendment implication. Rather, we viewed the law as "a direct restriction on the amount of [487 U.S. 781, 789] money a charity can spend on fundraising activity," and therefore "a direct restriction on protected First Amendment activity." 467 U.S., at 967, and n. 16. Consequently, we subjected the State's statute to exacting First Amendment scrutiny. Again, the State asserted the prevention of fraud as its principal interest, and again we held that the use of a percentage-based test was not narrowly tailored to achieve that goal. In fact, we found that if the statute actually prevented fraud in some cases it would be "little more than fortuitous." An "equally likely" result would be that the law would "restrict First Amendment activity that results in high costs but is itself a part of the charity's goal or that is simply attributable to the fact that the charity's cause proves to be unpopular." Id., at 966-967.
As in Schaumburg and Munson, we are unpersuaded by the State's argument here that its three-tiered, percentage-based definition of "unreasonable" passes constitutional muster. Our prior cases teach that the solicitation of charitable contributions is protected speech, and that using percentages to decide the legality of the fundraiser's fee is not narrowly tailored to the State's interest in preventing fraud.5 That much established, unless the State can meaningfully distinguish its statute from those discussed in our precedents, its statute must fall. The State offers two distinctions. First, it asserts a motivating interest not expressed in Schaumburg or Munson: ensuring that the maximum amount of funds reach the charity or, somewhat relatedly, to guarantee that the fee charged charities is not "unreasonable." [487 U.S. 781, 790] Second, the State contends that the Act's flexibility more narrowly tailors it to the State's asserted interests than the laws considered in our prior cases. We find both arguments unavailing.
The State's additional interest in regulating the fairness of the fee may rest on either of two premises (or both): (1) that charitable organizations are economically unable to negotiate fair or reasonable contracts without governmental assistance; or (2) that charities are incapable of deciding for themselves the most effective way to exercise their First Amendment rights. Accordingly, the State claims the power to establish a single transcendent criterion by which it can bind the charities' speaking decisions. We reject both premises.
The first premise, notwithstanding the State's almost talismanic reliance on the mere assertion of it, amounts to little more than a variation of the argument rejected in Schaumburg and Munson that this provision is simply an economic regulation with no First Amendment implication, and therefore must be tested only for rationality. We again reject that argument; this regulation burdens speech, and must be considered accordingly. There is no reason to believe that charities have been thwarted in their attempts to speak or that they consider the contracts in which they enter to be anything less than equitable.6 Even if such a showing could be made, the State's solution stands in sharp conflict with the First Amendment's command that government regulation of speech must be measured in minimums, not maximums.
The State's remaining justification - the paternalistic premise that charities' speech must be regulated for their own benefit - is equally unsound. The First Amendment mandates [487 U.S. 781, 791] that we presume that speakers, not the government, know best both what they want to say and how to say it. See Tashjian v. Republican Party of Connecticut, 479 U.S. 208, 224 (1987) (criticizing State's asserted interest in protecting "the Republican party from undertaking a course of conduct destructive of its own interests," and reiterating that government "`may not interfere [with expressions of First Amendment freedoms] on the ground that [it] view[s] a particular expression as unwise or irrational'") (quoting Democratic Party of United States v. Wisconsin ex rel. La Follette, 450 U.S. 107, 124 (1981)); cf. First National Bank of Boston v. Bellotti, 435 U.S. 765, 791-792, and n. 31 (1978) (criticizing State's paternalistic interest in protecting the political process by restricting speech by corporations); Linmark Associates, Inc. v. Willingboro, 431 U.S. 85, 97 (1977) (criticizing, in the commercial speech context, the State's paternalistic interest in maintaining the quality of neighborhoods by restricting speech to residents). "The very purpose of the First Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion." Thomas v. Collins, 323 U.S. 516, 545 (1945) (Jackson, J., concurring). To this end, the government, even with the purest of motives, may not substitute its judgment as to how best to speak for that of speakers and listeners; free and robust debate cannot thrive if directed by the government. We perceive no reason to engraft an exception to this settled rule for charities.
The foregoing discussion demonstrates that the State's additional interest cannot justify the regulation. But, alternatively, there are several legitimate reasons why a charity might reject the State's overarching measure of a fundraising drive's legitimacy - the percentage of gross receipts remitted to the charity. For example, a charity might choose a particular type of fundraising drive, or a particular solicitor, expecting to receive a large sum as measured by total dollars [487 U.S. 781, 792] rather than the percentage of dollars remitted. Or, a solicitation may be designed to sacrifice short-term gains in order to achieve long-term, collateral, or noncash benefits. To illustrate, a charity may choose to engage in the advocacy or dissemination of information during a solicitation, or may seek the introduction of the charity's officers to the philanthropic community during a special event (e. g., an awards dinner). Consequently, even if the State had a valid interest in protecting charities from their own naivete or economic weakness, the Act would not be narrowly tailored to achieve it.
The second distinguishing feature the State offers is the flexibility it has built into its Act. The State describes the second of its three-tiered definition of "unreasonable" and "excessive" as imposing no presumption one way or the other as to the reasonableness of the fee, although unreasonableness may be demonstrated by a showing that the solicitation does not involve the advocacy or dissemination of information on the charity's behalf and at the charity's direction. The State points out that even the third tier's presumption of unreasonableness may be rebutted.
It is important to clarify, though, what we mean by "reasonableness" at this juncture. As we have just demonstrated, supra, at 790-791 and this page, the State's generalized interest in unilaterally imposing its notions of fairness on the fundraising contract is both constitutionally invalid and insufficiently related to a percentage-based test. Consequently, what remains is the more particularized interest in guaranteeing that the fundraiser's fee be "reasonable" in the sense that it not be fraudulent. The interest in protecting charities (and the public) from fraud is, of course, a sufficiently substantial interest to justify a narrowly tailored regulation. The question, then, is whether the added flexibility of this regulation is sufficient to tailor the law to this remaining interest. We conclude that it is not. [487 U.S. 781, 793]
Despite our clear holding in Munson that there is no nexus between the percentage of funds retained by the fundraiser and the likelihood that the solicitation is fraudulent, the State defines, prima facie, an "unreasonable" and "excessive" fee according to the percentage of total revenues collected. Indeed, the State's test is even more attenuated than the one held invalid in Munson, which at least excluded costs and expenses of solicitation from the fee definition. 467 U.S., at 950, n.
2. Permitting rebuttal cannot supply the missing nexus between the percentages and the State's interest.7
But this statute suffers from a more fundamental flaw. 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. Under the Act, once a prima facie showing of unreasonableness is made, the fundraiser must rebut the showing. Proof that the solicitation involved the advocacy or dissemination of information is not alone sufficient; it is merely a factor that is added to the calculus submitted to the factfinder, who may still decide that the costs incurred or the fundraiser's profit were excessive. Similarly, the Act is impermissibly insensitive to the realities faced by small or unpopular charities, which must often pay more than 35% of the gross receipts collected to the fundraiser due to the difficulty of attracting donors. See Munson, 467 U.S., at 967. Again, the burden is placed on the fundraiser in such cases to rebut the presumption of unreasonableness.
According to the State, we need not worry over this burden, as standards for determining "[r]easonable fundraising fees will be judicially defined over the years." Reply Brief for Appellants 6. Speakers, however, cannot be made to [487 U.S. 781, 794] wait for "years" before being able to speak with a measure of security. In the interim, fundraisers will be faced with the knowledge that every campaign incurring fees in excess of 35%, and many campaigns with fees between 20% and 35%, will subject them to potential litigation over the "reasonableness" of the fee. And, of course, in every such case the fundraiser must bear the costs of litigation and the risk of a mistaken adverse finding by the factfinder, even if the fundraiser and the charity believe that the fee was in fact fair. This scheme must necessarily chill speech in direct contravention of the First Amendment's dictates. See Munson, supra, at 969; New York Times Co. v. Sullivan, 376 U.S. 254, 279 (1964).8
This chill and uncertainty might well drive professional fundraisers out of North Carolina, or at least encourage them to cease engaging in certain types of fundraising (such as solicitations combined with the advocacy and dissemination of information) or representing certain charities (primarily small or unpopular ones), all of which will ultimately "reduc[e] the quantity of expression." Buckley v. Valeo, 424 U.S. 1, 19, 39 (1976). Whether one views this as a restriction of the charities' ability to speak, Munson, supra, at 967, and n. 16, or a restriction of the professional fundraisers' ability to speak, Munson, supra, at 955, n. 6, the restriction is undoubtedly one on speech, and cannot be countenanced here. [487 U.S. 781, 795]
In striking down this portion of the Act, we do not suggest that States must sit idly by and allow their citizens to be defrauded. North Carolina has an antifraud law, and we presume that law enforcement officers are ready and able to enforce it. Further North Carolina may constitutionally require fundraisers to disclose certain financial information to the State, as it has since 1981. Munson, supra, at 967, n. 16. If this is not the most efficient means of preventing fraud, we reaffirm simply and emphatically that the First Amendment does not permit the State to sacrifice speech for efficiency. Schaumburg, 444 U.S., at 639; Schneider v. State, 308 U.S. 147, 164 (1939).
We turn next to the requirement that professional fundraisers disclose to potential donors, before an appeal for funds, the percentage of charitable contributions collected during the previous 12 months that were actually turned over to charity. Mandating speech that a speaker would not otherwise make necessarily alters the content of the speech. We therefore consider the Act as a content-based regulation of speech. See Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 256 (1974) (statute compelling newspaper to print an editorial reply "exacts a penalty on the basis of the content of a newspaper").
The State argues that even if charitable solicitations generally are fully protected, this portion of the Act regulates only commercial speech because it relates only to the professional fundraiser's profit from the solicited contribution. Therefore, the State asks us to apply our more deferential commercial speech principles here. See generally Virginia Pharmacy Bd. v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976).
It is not clear that a professional's speech is necessarily commercial whenever it relates to that person's financial motivation for speaking. Cf. Bigelow v. Virginia, 421 U.S. 809, [487 U.S. 781, 796] 826 (1975) (state labels cannot be dispositive of degree of First Amendment protection). But even assuming, without deciding, that such speech in the abstract is indeed merely "commercial," we do not believe that the speech retains its commercial character when it is inextricably intertwined with otherwise fully protected speech. Our lodestars in deciding what level of scrutiny to apply to a compelled statement must be the nature of the speech taken as a whole and the effect of the compelled statement thereon. This is the teaching of Schaumburg and Munson, in which we refused to separate the component parts of charitable solicitations from the fully protected whole. Regulation of a solicitation "must be undertaken with due regard for the reality that solicitation is characteristically intertwined with informative and perhaps persuasive speech , and for the reality that without solicitation the flow of such information and advocacy would likely cease." Schaumburg, supra, at 632, quoted in Munson, 467 U.S., at 959-960. See also Meyer v. Grant, 486 U.S. 414, 422, n. 5 (1988); Thomas v. Collins, 323 U.S., at 540-541. Thus, where, as here, the component parts of a single speech are inextricably intertwined, we cannot parcel out the speech, applying one test to one phrase and another test to another phrase. Such an endeavor would be both artificial and impractical. Therefore, we apply our test for fully protected expression.9
North Carolina asserts that, even so, the First Amendment interest in compelled speech is different than the interest in compelled silence; the State accordingly asks that we apply a deferential test to this part of the Act. There is certainly some difference between compelled speech and compelled silence, but in the context of protected speech, the difference is without constitutional significance, for the First Amendment [487 U.S. 781, 797] guarantees "freedom of speech," a term necessarily comprising the decision of both what to say and what not to say.
The constitutional equivalence of compelled speech and compelled silence in the context of fully protected expression was established in Miami Herald Publishing Co. v. Tornillo, supra. There, the Court considered a Florida statute requiring newspapers to give equal reply space to those they editorially criticize. We unanimously held the law unconstitutional as content regulation of the press, expressly noting the identity between the Florida law and a direct prohibition of speech. "The Florida statute operates as a command in the same sense as a statute or regulation forbidding appellant to publish a specified matter. Governmental restraint on publishing need not fall into familiar or traditional patterns to be subject to constitutional limitations on governmental powers." Id., at 256. That rule did not rely on the fact that Florida restrained the press, and has been applied to cases involving expression generally. For example, in Wooley v. Maynard, 430 U.S. 705, 714 (1977), we held that a person could not be compelled to display the slogan "Live Free or Die." In reaching our conclusion, we relied on the principle that "[t]he right to speak and the right to refrain from speaking are complementary components of the broader concept of `individual freedom of mind,'" as illustrated in Tornillo. 430 U.S., at 714 (quoting West Virginia Board of Education v. Barnette, 319 U.S. 624, 637 (1943)). See also Pacific Gas & Electric Co. v. Public Utilities Comm'n of California, 475 U.S. 1, 9-11 (1986) (plurality opinion of Powell, J.) (characterizing Tornillo in terms of freedom of speech); Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 559 (1985); Abood v. Detroit Board of Edu