The Supreme Court ruled in Secretary of State of Maryland v. Joseph H. Munson Co., Inc., 467 U.S. 947 (1984), that a Maryland statute regulating charitable fundraising violated solicitation protected by the First Amendment.

In Schaumburg v. Citizens for a Better Environment (1980), the Court had held that a law requiring charitable organizations to use at least 75 percent of all funds raised for charitable purposes was unconstitutional. Maryland’s statute similarly prohibited charitable organizations from allocating more than 25 percent of their total fundraising revenue as fundraising expenses. Maryland’s law, unlike the one at issue in Schaumburg, contained an exception exempting organizations for whom that 25 percent limit would “effectively prevent the charitable organization from raising contributions.”

Justice Harry A. Blackmun noted in his opinion for the majority that the statute assumes that high fundraising costs by the charity point to fraudulent behavior. Blackmun argued that fundraising cost is ultimately an organizational policy decision made by the charity and that narrower means, such as requiring financial disclosures, are more likely to detect fraud than would imposing a percentage limit. This defect, Blackmun argued, remained regardless of the statutory exception added by Maryland.

Justice John Paul Stevens, in his concurrence, argued that the case should not have been granted review, but given that it was, he agreed with Blackmun’s opinion. Justice William H. Rehnquist, joined by three of justices, argued in dissent that the potential harms of Maryland’s statute were more than mitigated by the state’s legitimate interest in attempting to protect charities.

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