OCTOBER TERM, 2002
Syllabus
ILLINOIS EX REL. MADIGAN, ATTORNEY GENERAL OF ILLINOIS
v.
TELEMARKETING ASSOCIATES, INC., ET AL.
CERTIORARI TO THE SUPREME COURT OF ILLINOIS No. 01-1806. Argued
March 3, 2003-Decided May 5, 2003
Respondents, Illinois for-profit fundraising corporations and
their owner (collectively Telemarketers), were retained by VietNow
National Headquarters, a charitable nonprofit corporation, to
solicit donations to aid Vietnam veterans. The contracts between
those parties provided, among other things, that Telemarketers
would retain 85 percent of the gross receipts from Illinois donors,
leaving 15 percent for VietNow. The Illinois Attorney General filed
a complaint in state court, alleging,
inter alia, that
Telemarketers represented to donors that a significant amount of
each dollar donated would be paid over to VietNow for specifically
identified charitable endeavors, and that such representations were
knowingly deceptive and materially false, constituted a fraud, and
were made for Telemarketers' private pecuniary benefit. The trial
court granted Telemarketers' motion to dismiss the fraud claims on
First Amendment grounds. In affirming, the Illinois Appellate and
Supreme Courts placed heavy weight on
Schaumburg v.
Citizens for a Better Environment, 444 U. S. 620,
Secretary of State of Md. v.
Joseph H. Munson Co.,
467 U. S. 947,
and
Riley v.
National Federation of Blind of N. C.,
Inc.,
487 U. S.
781. Those decisions held that certain regulations of
charitable solicitation barring fees in excess of a prescribed
level effectively imposed prior restraints on fundraising, and were
therefore incompatible with the First Amendment. The state high
court acknowledged that this case involved no such prophylactic
proscription of high-fee charitable solicitation. Instead, the
court noted, the Attorney General sought to enforce the State's
generally applicable antifraud laws against Telemarketers for
specific instances of deliberate deception. However, the Illinois
Supreme Court said, Telemarketers' solicitation statements were
alleged to be false only because Telemarketers contracted for 85
percent of the gross receipts and failed to disclose this
information to donors. The court concluded that the Attorney
General's complaint 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 rejected
in
Schaumburg, Munson, and
Riley.
601
Held: Consistent with this Court's precedent and the
First Amendment, States may maintain fraud actions when fundraisers
make false or misleading representations designed to deceive donors
about how their donations will be used. The Illinois Attorney
General's allegations against Telemarketers therefore state a claim
for relief that can survive a motion to dismiss. Pp. 611-624.
(a) The First Amendment protects the right to engage in
charitable solicitation, see,
e. g., Schaumburg, 444 U. S.,
at 632, but does not shield fraud, see,
e. g., Donaldson v.
Read Magazine, Inc., 333 U. S. 178, 190. Like
other forms of public deception, fraudulent charitable solicitation
is unprotected speech. See,
e. g., Schneider v.
State
(Town of Irvington), 308 U. S. 147, 164. This
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 held unconstitutional prophylactic
laws designed to combat fraud by imposing prior restraints on
solicitation when fundraising fees exceeded a specified reasonable
level. Pp. 611-617.
(b) In those cases,
Schaumburg, Munson, and
Riley,
the Court took care to leave a corridor open for fraud actions to
guard the public against false or misleading charitable
solicitations. See,
e. g., Schaumburg, 444 U. S., at 637. As
those decisions recognized, there are differences critical to First
Amendment concerns between fraud actions trained on representations
made in individual cases and statutes that categorically ban
solicitations when fundraising costs run high. Simply labeling an
action one for "fraud," of course, will not carry the day. Had the
State Attorney General's complaint charged fraud based solely on
the percentage of donations the fundraisers would retain, or their
failure to alert donors to fee arrangements at the start of each
call,
Riley would support swift dismissal. Portions of the
Attorney General's complaint against Telemarketers were of this
genre. But the complaint and annexed affidavits, in large part,
alleged not simply what Telemarketers failed to convey. They also
described what Telemarketers misleadingly represented. Taking into
account the affidavits, and reading the complaint in the light most
favorable to the Attorney General, that pleading described
misrepresentations this Court's precedent does not place under the
First Amendment's cover. First, the complaint asserted that
Telemarketers affirmatively represented that a significant amount
of each dollar donated would be paid over to VietNow to be used for
specific charitable purposes while in fact Telemarketers knew that
15 cents or less of each dollar would be available for those
purposes. Second, the complaint essentially alleged that the
charitable solicitation was a fa\;ade: Although Telemarketers
represented that donated funds would go to VietNow's charitable
purposes, the amount of funds paid over to
602
Syllabus
the charity was merely incidental to the fundraising effort,
which was made for Telemarketers' private pecuniary benefit. Fraud
actions so tailored, targeting misleading affirmative
representations about how donations would be used, are unlike the
prophylactic 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, fraud actions need not
impermissibly chill protected speech. Pp. 617-619.
(c) The prohibitions invalidated in
Schaumburg, Munson,
and
Riley turned solely on whether high percentages of
donated funds were spent on fundraising. Their application did not
depend on whether the fundraiser made fraudulent representations to
potential donors. In contrast to the prior restraints inspected in
those cases, a properly tailored fraud action targeting specific
fraudulent representations employs no "'[b]road prophylactic
rul[e],'"
Schaumburg, 444 U. S., at 637 (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 "between regulation
aimed at fraud and regulation aimed at something else in the hope
that it would sweep fraud in during the process."
Munson,
467 U. S., at 969-970. The Attorney General's complaint has a solid
core in allegations that home in on Telemarketers' affirmative
statements designed to mislead donors regarding the use of their
contributions. Of prime importance, to prove a defendant liable for
fraud under Illinois case law, the State must show by clear and
convincing evidence that the defendant knowingly made a false
representation of a material fact, that such representation was
made with the intent to mislead the listener, and that the
representation succeeded in doing so. In contrast to a prior
restraint on solicitation, or a regulation that imposes on
fundraisers an uphill burden to prove their conduct lawful, the
State bears the full burden of proof in an individualized fraud
action. Exacting proof requirements of this order, in other
contexts, have been held to provide sufficient breathing room for
protected speech. See,
e. g., New York Times Co. v.
Sullivan, 376
U. S. 254, 279-280. As an additional safeguard responsive to
First Amendment concerns, an appellate court could independently
review the trial court's findings. Cf.
Bose Corp. v.
Consumers Union of United States, Inc., 466 U. S. 485, 498-511.
What the First Amendment and this Court's case law emphatically do
not require, however, is a blanket exemption from fraud liability
for a fundraiser who intentionally misleads in calls for donations.
While 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,
Munson, 467 U. S., at 967, n.
16, the gravamen of the fraud action in this case is not high costs
or fees,
603
but particular representations made with intent to mislead. The
Illinois Attorney General has not suggested that a charity must
desist from using donations for legitimate purposes such as
information dissemination, advocacy, and the like. Rather, the
Attorney General has alleged that Telemarketers attracted donations
by misleading potential donors into believing that a substantial
portion of their contributions would fund specific programs or
services, knowing full well that was not the case. Such
representations remain false or misleading, however legitimate the
other purposes for which the funds are in fact used. The Court does
not agree with Telemarketers that the 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. 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 account in assessing whether
particular affirmative representations designedly deceive the
public. Pp. 619-623.
(d) Given this Court's repeated approval of government efforts
to enable donors to make informed choices about their charitable
contributions, see,
e. g., Schaumburg, 444 U. S., at 638,
almost all States and many localities require charities and
professional fundraisers to register and file regular reports on
their activities, particularly their fundraising costs. These
reports are generally available to the public and are often placed
on the Internet. Telemarketers do not object on First Amendment
grounds to these disclosure requirements. Just as government may
seek to inform the public and prevent fraud through such
requirements, so it may vigorously enforce antifraud laws to
prohibit professional fundraisers from obtaining money on false
pretenses or by making false statements.
Riley, 487 U. S.,
at 800. High fundraising costs, without more, do not establish
fraud, see
id., at 793, and mere failure to volunteer the
fundraiser's fee when contacting a potential donee, without more,
is insufficient to state a claim for fraud,
id., at 795-801.
But these limitations do not disarm States from assuring that their
residents are positioned to make informed choices about their
charitable giving. Pp. 623-624.
198 Ill. 2d 345, 763 N. E. 2d 289, reversed and remanded.
GINSBURG, J., delivered the opinion for a unanimous Court.
SCALIA, J., filed a concurring opinion, in which THOMAS, J.,
joined,
post, p. 624.
Richard S.
Huszagh, Assistant Attorney General of
Illinois, argued the cause for petitioner. With him on the
briefs
604
Counsel
were
Lisa Madigan, Attorney General,
James E.
Ryan, former Attorney General,
Joel D. Bertocchi,
Solicitor General,
Barry B. Gross, Chief Deputy Attorney
General, and
Jerald S.
Post, Floyd D. Perkins, and
Matthew D. Shapiro, Assistant Attorneys General.
Deputy Solicitor General Clement argued the cause for the United
States et al. as amici curiae urging reversal. With him on the
brief were Solicitor General Olson, Assistant Attorney General
McCallum, Matthew D. Roberts, Jacob M. Lewis, and Catherine
Hancock.
Errol Copilevitz argued the cause for respondents. With him on
the brief were William E. Raney, Mackenzie Canter III, and Mark
Diskin.*
*Briefs of
amici curiae urging reversal were filed for
the State of Florida et al. by
Richard E. Doran, Attorney
General of Florida,
Thomas E. Warner, Solicitor General,
Louis F.
Hubener and
Matthew J.
Conigliaro, Deputy Solicitors General,
Jonathan A.
Glogau, Arabella W Teal, Corporation Counsel of the District of
Columbia,
Thomas R. Keller, Acting Attorney General of
Hawaii, and
Anabelle Rodriguez, Attorney General of Puerto
Rico, and by the Attorneys General for their respective States as
follows:
William H. Pryor, Jr., of Alabama,
Gregg D.
Renkes of Alaska,
Mark Lunsford Pryor of Arkansas,
Bill Lockyer of California,
Ken Salazar of Colorado,
Richard Blumenthal of Connecticut,
M. Jane Brady of
Delaware,
Thurbert E. Baker of Georgia,
Alan G.
Lance of Idaho,
Steve Carter of Indiana,
Thomas J. Miller of Iowa,
Carla
J. Stovall of Kansas,
Albert B. Chandler III
of Kentucky,
Richard P. Ieyoub of Louisiana, G.
Steven
Rowe of Maine,
J. Joseph Curran, Jr., of
Maryland,
Thomas F.
Reilly of Massachusetts,
Jennifer M. Granholm of Michigan,
Mike Hatch of
Minnesota,
Mike Moore of Mississippi,
Jeremiah W (Jay)
Nixon of Missouri,
Mike McGrath of Montana,
Don
Stenberg of Nebraska,
Frankie Sue Del Papa of Nevada,
Phillip P. McLaughlin of New Hampshire,
David Samson
of New Jersey,
Patricia A. Madrid of New Mexico,
Eliot
Spitzer of New York,
Wayne Stenehjem of North Dakota,
Betty D. Montgomery of Ohio,
Hardy Myers of Oregon,
Mike Fisher of Pennsylvania,
Sheldon Whitehouse of
Rhode Island,
Charles Condon of South Carolina,
Mark
Barnett of South Dakota,
Paul G.
Summers of
Tennessee,
Greg Abbott of Texas,
Mark L. Shurtleff of
Utah,
William H. Sorrell of Vermont,
605
JUSTICE GINSBURG 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
Jerry W Kilgore of Virginia,
Christine O.
Gregoire of Washington,
Darrell V. McGraw, Jr., of
West Virginia, and
Hoke MacMillan of Wyoming; and for the
Council of Better Business Bureaus, Inc., et al. by
Steven
J. Cole and
Richard Woods.
Briefs of
amici curiae urging affirmance were filed for
the American Teleservices Association by
Robert Corn-Revere;
for the Association of Fundraising Professionals et al. by
Geoffrey W Peters and
Walter J.
Sczudlo; for Disabled American Veterans by
Christopher J. Clay and
John L. Moore,
Jr.; for the Free Speech Defense and Education Fund, Inc., et
al. by
William J. Olson, John S.
Miles,
Herbert W Titus, Mark Weinberg, and
Mark Fitzgibbons;
for Independent Sector et al. by
Robert A. Boisture, Albert
G.
Lauber, and
Lloyd H. Mayer; and for Public
Citizen, Inc., et al. by
Bonnie I. Robin- Vergeer and
Alan B. Morrison.
Briefs of
amici curiae were filed for AARP by
Deborah
M. Zuckerman, Stacy J. Canan, and
Michael R.
Schuster; for Hudson Bay Co. of Illinois, Inc., by
Thomas H.
Goodman and
Anthony J. Gleekel; and for
Thirty-two Commercial Fundraisers et al. by
Charles H.
Nave.
606
raising effort," which was conducted primarily "for the private
pecuniary benefit of" the fundraisers,
id., at 9, ~ 35.
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 fundraising, 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 defendantrespondent
Richard Troia. 198 Ill. 2d, at 347-348, 763
607
N. E. 2d, at 291. Telemarketing Associates and Armet were
retained by VietNow National Headquarters, a charitable nonprofit
corporation, to solicit donations to aid Vietnam veterans.
Id., at 348, 763 N. E. 2d, at 291. In this opinion, we
generally refer to respondents, collectively, as "Telemarketers.
"
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 Viet Now.
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 VietNow 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.1
In 1991, the Illinois Attorney General filed a complaint against
Telemarketers in state court.
Id., at 348-350, 763 N. E. 2d,
at 291-292.2 The complaint asserted common-law and statutory claims
for fraud and breach of fiduciary duty.
Ibid. It alleged,
inter alia, that the 85 percent fee for which Telemarketers
contracted was "excessive" and "not justified
1 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://167.1O.5.131/Ct060C0700/ 0652/1M11INDV.PDF (as visited
Apr. 10, 2003) (available in Clerk of Court's case file).
2 References to the complaint in this opinion include all
amendments to that pleading.
608
by expenses [they] paid." App. 103, ~ 72. Dominantly, however,
the complaint concerned misrepresentation.
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).3 Written materials Telemarketers
sent to each donor
3 Under Illinois law, exhibits attached to a complaint and
referred to in a pleading become part of the pleading "for all
purposes." Ill. Compo 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
609
represented that contributions would "be used to help and assist
Viet[N]ow's charitable purposes."
Id., at 8, ~ 30.4
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,5 and the dismissal order was affirmed, in turn, by the
Illinois Appellate Court and the Illinois Supreme Court. The
Illinois courts placed heavy weight on three decisions of this
Court:
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.
expenses." See App. 111, 169 (capitalization omitted). In any
event, the sentence fragment counsel identified falls short of
showing, in the face of established Illinois case law, that the
court "found" the affidavits annexed by the Illinois Attorney
General
dehors the complaint. Counsel's contention is
further clouded by the Illinois Supreme Court's explicit notation
that "the Attorney General ha[d] attached to his complaint the
affidavits of 44 VietNow donors." 198 Ill. 2d, at 352, 763 N. E.
2d, at 293.
4 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. Compo Stat., ch. 225, §460/17(a)
(2001).
5 The parties subsequently stipulated to the dismissal of all
remaining claims. App. to Pet. for Cert. 30-31.
610
947 (1984); and
Riley v.
National Federation of Blind
of N. c.,
Inc., 487 U. S. 781 (1988).
Each of the three decisions invalidated state or local laws that
categorically restrained solicitation by charities or professional
fundraisers if a high percentage of the funds raised would be used
to cover administrative or fundraising costs.
Schaumburg,
444 U. S., at
620; Munson, 467 U. S., at 947; and
Riley, 487 U. S., at 781; see 198 Ill. 2d, at 359, 763 N. E.
2d, at 297.
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 percentagerate 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
611
would 'promote goodwill' on behalf of VietNow."
Id., at
361, 763 N. E. 2d, at 298. Taking these factors into account, the
court concluded that it would be "incorrect to presume ... [any]
nexus between high solicitation costs and fraud."
Id., at
360, 763 N. E. 2d, at 298.
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 298.6 Finally,
the court expressed the fear that if the complaint were allowed to
proceed, all fundraisers in Illinois would be saddled with "the
burden of defending the reasonableness of their fees, on a
case-by-case basis, whenever in the Attorney General's judgment the
public was being deceived about the charitable nature of a
fund-raising campaign because the fund-raiser's fee was too high."
Id., at 362, 763 N. E. 2d, at 299. The threatened exposure
to litigation costs and penalties, the court said, "could produce a
substantial chilling effect on protected speech."
Ibid. We
granted certiorari. 537 U. S. 999 (2002).
II
The First Amendment protects the right to engage in 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
6 Contracts for fundraising campaigns in Illinois must be filed
with the State's Attorney General, see Ill. Compo 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.
612
causes-that are within the protection of the First Amendment");
Riley, 487 U. S., at 788-789. But the First Amendment does
not shield fraud. See,
e. g., Donaldson v.
Read Magazine,
Inc., 333 U. S.
178, 190 (1948) (the government's power "to protect people
against fraud" has "always been recognized in this country and is
firmly established");
Gertz v.
Robert Welch, Inc.,
418 U. S. 323,
340 (1974) (the "intentional lie" is "no essential part of any
exposition of ideas" (internal quotation marks omitted)). Like
other forms of public deception, fraudulent charitable solicitation
is unprotected speech. See,
e. g., Schneider v.
State
(Town of Irvington), 308 U. S. 147, 164 (1939)
("Frauds," including "fraudulent appeals ... made in the name of
charity and religion," may be "denounced as offenses and punished
by law.");
Donaldson, 333 U. S., at 192 ("A contention
cannot be seriously considered which assumes that freedom of the
press includes a right to raise money to promote circulation by
deception of the public.").
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-
613
raising, salaries, and overhead," Schaumburg submitted, "is not
a charitable, but a commercial, for-profit enterprise"; "to permit
[such an organization] to represent itself as a charity," the
village urged, "is fraudulent."
Id., at 636.
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 warrant[ed] 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
614
whose high solicitation costs stemmed from the unpopularity of
its cause.
Id., at 967.
"[N]o doubt [there] are organizations that have high fundraising
costs not due to protected First Amendment activity," the Court
recognized; it concluded, however, that Maryland's statute was
incapable of "distinguish[ing] 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 cases 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.
615
Relying on
Schaumburg and
Munson, the Court's
decision in
Riley invalidated North Carolina's endeavor to
rein in charitable solicitors' fees. The Court held, once again,
that fraud may not be inferred simply from the percentage of
charitable donations absorbed by fundraising costs. See 487 U. S.,
at 789 ("solicitation of charitable contributions is protected
speech"; "using percentages to decide the legality of the
fundraiser's fee is not narrowly tailored to the State's interest
in preventing fraud").
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 factfinder [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-
616
frauded." 487 U. S., at 795. We anticipated that North Carolina
law enforcement officers would be "ready and able" to enforce the
State's antifraud law.
Ibid.
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 misperception 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. Compo 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-
617
800. "[M]ore benign and narrowly tailored options" that would
not chill solicitation altogether were available; for example, the
Court suggested, "the State may itself publish the detailed
financial disclosure forms it requires professional fundraisers to
file," and "[it] may vigorously enforce its antifraud laws to
prohibit professional fundraisers from obtaining money on false
pretenses or by making false statements."
Ibid.
III 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, 800.7 As those decisions recognized, and as we further
explain below, there are differences critical to First Amendment
concerns between fraud actions trained on representations made in
individual cases and statutes that categorically ban solicitations
when fundraising costs run high. See Part III-B,
infra.
Simply labeling an action one for "fraud," of course, will not
carry the day. For example, had the complaint against Telemarketers
charged fraud based solely on the percentage of donations the
fundraisers would retain, or their failure to alert potential
donors to their fee arrangements at the start of each telephone
call,
Riley would support swift dismissal.8 A State's
Attorney General surely cannot gain case-by-case ground this Court
has declared off limits to legislators.
7We are therefore unpersuaded by Telemarketers' plea that they
lacked fair notice of their vulnerability to fraud actions. See
Brief for Respondents 46, 49-50.
8 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)).
618
Portions of the complaint in fact filed by the Attorney General
are of this genre. See,
e. g., App. 103, ~ 72
(asserting that Telemarketers' charge "is excessive" and "not
justified by expenses [they] paid");
id., at 86, ~~ 67H-67I
(alleging statutory violations based on failure to disclose to
prospective donors Telemarketers' percentage fee). As we earlier
noted, however, see
supra, at 608-609, the complaint and
annexed affidavits, in large part, alleged not simply what
Telemarketers failed to convey; they also described what
Telemarketers misleadingly represented.
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 fa~ade: Although Telemarketers represented that
donated
619
funds would go to VietNow's specific "charitable purposes,"
id., at 8, ~ 29, the "amount of funds being paid over to
charity was merely incidental to the fund raising effort," which
was made "for the private pecuniary benefit of [Telemarketers] and
their agents,"
id., at 9, ~ 35. Cf.,
e. g., Voices for
Freedom, CCH Trade Reg. ~ 23,080 (1993) [1987-1993 Transfer
Binder] (complaint against fundraisers who,
inter alia,
represented that "substantial portions of the funds from [the sale
of commemorative bracelets] would be used to support a message
center for the troops stationed in the Persian Gulf," but "did not
use substantial portions of the bracelet-sales proceeds to support
the message center").
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
620
aimed at something else in the hope that it would sweep fraud in
during the process."
Munson, 467 U. S., at 969970. The
Illinois Attorney General's complaint, in this light, has a solid
core in allegations that home in on affirmative statements
Telemarketers made intentionally misleading donors regarding the
use of their contributions. See
supra, at 608-609.
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).9
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
9 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.
621
official);
Bose Corp. v.
Consumers Union of United
States, Inc., 466
U. S. 485, 502, and n. 19 (1984) (noting "kinship" between
New York Times standard and "motivation that must be proved
to support a common-law action for deceit").lO As an additional
safeguard responsive to First Amendment concerns, an appellate
court could independently review the trial court's findings. Cf.
Bose Corp., 466 U. S., at 498-511
(de novo appellate
review of findings regarding actual malice). What the First
Amendment and our case law emphatically do not require, however, is
a blanket exemption from fraud liability for a fundraiser who
intentionally misleads in calls for donations.
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
10 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.
622
charge. See
Schaumburg, 444 U. S., at 636-637;
Munson, 467 U. S., at 963;
Riley, 487 U. S., at
798-799.11
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,12 and the like. Rather, she has
alleged that Telemarketers attracted donations by misleading
potential donors into believing that a substantial portion of their
contributions would fund specific programs or services, knowing
full well that was not the case. See
supra, at 608-609,
618-619. Such representations remain false or misleading, however
legitimate the other purposes for which the funds are in fact
used.
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
11
Amicus Mothers Against Drunk Driving (MAD D), 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 MAD D's charitable mission would not be fraudulent simply
because MADD devotes a large proportion of its resources to
fundraising calls, for those calls themselves fulfill its
advocacy/information dissemination mission.
12 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.
623
account in assessing whether particular affirmative
representations designedly deceive the public.
C
Our decisions have repeatedly recognized the legitimacy of
government efforts to enable donors to make informed choices about
their charitable contributions. In
Schaumburg, 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
624
SCALIA, J., concurring
"vigorously enforce ... antifraud laws to prohibit professional
fundraisers from obtaining money on false pretenses or by making
false statements."
Riley, 487 U. S., at 800. High
fundraising costs, without more, do not establish fraud. See
id., at 793. And mere failure to volunteer the fundraiser's
fee when contacting a potential donee, without more, is
insufficient to state a claim for fraud.
Id., at 795-80l.
But these limitations do not disarm States from assuring that their
residents are positioned to make informed choices about their
charitable giving. Consistent with our precedent and the First
Amendment, States may maintain fraud actions when fundraisers make
false or misleading representations designed to deceive donors
about how their donations will be used.
***
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.
JUSTICE SCALIA, 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
625
vast majority (in this case 85 percent) of all funds donated"),
the answer to the question would be yes.
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.
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