Facts
- Maryland regulated charitable solicitation by barring charitable organizations from paying or incurring fundraising expenses exceeding 25% of funds raised for a campaign.
- The statute allowed the Secretary of State to waive the cap if it would effectively prevent the organization from raising contributions.
- Joseph H. Munson Company, Inc., a professional fundraising firm, contracted with charitable organizations for campaigns in which fees could exceed the statutory cap.
- A charitable client was reluctant to continue using Munson because of the cap, and the Secretary of State warned Munson that noncompliance could result in prosecution.
- Munson sought declaratory and injunctive relief, bringing a facial First Amendment overbreadth challenge.
- Maryland trial and intermediate appellate courts upheld the statute; the state’s highest court reversed, finding standing and holding the statute unconstitutional.
Issues
- Whether a professional fundraiser has standing to assert a facial First Amendment overbreadth challenge based on the rights of its charitable clients.
- Whether Maryland’s 25% fundraising-expense cap, even with a discretionary waiver, is facially overbroad because it unconstitutionally restricts protected charitable solicitation.
Decision
- The Supreme Court affirmed the judgment invalidating the statute.
- Munson had Article III standing because the statute caused threatened and actual injury, including the risk of enforcement and harm to business relationships.
- Prudential limits on third-party standing did not bar the suit because charitable solicitation is central to Munson’s work and its interests aligned with the charities’ speech interests.
- The 25% cap was facially unconstitutional under the First Amendment, and the waiver provision did not cure the defect.
Legal Principles
- Charitable solicitation is protected by the First Amendment because it is intertwined with informational and persuasive expression.
- In First Amendment overbreadth cases, courts may relax prudential standing limits to permit litigants to raise the rights of others when a law’s existence may deter protected expression.
- A fixed percentage cap on fundraising costs is constitutionally suspect when it treats fundraising “efficiency” as a proxy for fraud and restricts solicitation on that basis.
- The state must pursue anti-fraud and donor-protection interests through measures that are more closely fitted to those interests, such as disclosure, recordkeeping, and targeted prohibitions on misrepresentation.
- A discretionary waiver does not save a speech-burdening percentage limit where the core restriction is invalid and the waiver process itself risks deterrence of protected solicitation.
Conclusion
The Court held that a professional fundraiser could bring a facial overbreadth challenge and invalidated Maryland’s 25% fundraising-expense cap because it broadly restricted protected charitable solicitation based on fundraising ratios rather than narrowly targeting fraud, and the waiver mechanism did not remedy the constitutional defect.