NJ Supreme Court Decision Chips Away at Nonprofit Confidentiality

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August 23, 2011; Source: Newark Star-Ledger | The New Jersey Supreme Court unanimously declared Tuesday that the nonprofit New Jersey League of Municipalities is subject to the same open-record disclosure standards as the municipal governments it represents. The decision means that the League is no longer able to use its nonprofit status to deny access to records that it and other nonprofits have typically thought of as protected from public disclosure.

The case arose in 2008, when the nonprofit Fair Share Housing Center sued the League calling for disclosure of documents such as e-mail messages, letters and reports related to the municipalities’ clash with housing advocates over a “fair-share housing” requirement.

The court determined that the “public” nature of the League was due to its membership of more than 13,000 elected and appointed officials, its employees’ membership in the state’s Public Employees’ Retirement System, and the 16 percent of its budget attributable to taxpayer dollars in the form of dues.

It’s not just the housing-related documents and communications that the Fair Share Housing Center wants. An attorney for the center told the Newark Star-Ledger that he was interested in “seeing how the League spends taxpayer money.”

The practical significance of this decision by the New Jersey Supreme Court cannot be overstated. This decision exposes a chink in the 501(c)(4) secrecy armor, and if the court’s decision stands after appeal, it could become a powerful precedent.—Rick Cohen

  • Howard Levy

    While it adds a slight administrative burden to nonprofits,
    it’s difficult to make the argument that greater transparency of the nonprofit sector is a bad thing, especially when it comes to seeing how organizations spend tax dollars.