The Ninth Circuit Upholds Arizona’s Bright Light On “Dark Money”

In November 2022, Arizona voters resoundingly approved Proposition 211, known as the Voters’ Right to Know Act (“Proposition 211” or the “Act”).¹Proposition 211 was designed to require additional public disclosures for individuals and groups behind campaign communications in the state. The proposition continued a growing trend of jurisdictions targeting “dark money” in elections. Last month, the United States Court of Appeals for the Ninth Circuit rejected a constitutional challenge to Proposition 211’s disclosure requirements and upheld the law.²While Supreme Court review seems likely, the disclosure requirements remain in effect through next month’s midterm elections—meaning donors should fully understand whether their donations will be made public before they give.

Disclosure Requirements Under Proposition 211

Proposition 211 is triggered when a “covered person” (an individual or entity) pays more than $50,000 in a statewide campaign or $25,000 in any other campaign for “campaign media spending.”³“Campaign media spending” encompasses traditional political advertising supporting or opposing candidates, political parties, or referenda. The Act requires covered persons to file disclosure reports identifying each donor who directly or indirectly contributed more than $5,000 of original monies used for campaign media spending (i.e., the “original sources” of the campaign communication funding). “Original monies” are funds traced to business income for a business entity or personal funds for an individual. Businesses or individuals that spend their own funds on campaign advertising are not “covered persons” subject to the Act’s disclosure requirements.

The Act targets non-profit 501(c)(4) organizations that are increasingly used as vehicles for campaign spending and not required to disclose their donors under federal tax law. For example, Proposition 211 requires a 501(c)(4) that spends more than $50,000 on campaign media spending supporting an Arizona gubernatorial candidate to disclose all donors underwriting the advertisement(s). If that 501(c)(4) instead contributed to another organization, such as a super PAC, that paid for the same advertisements, the super PAC would disclose contributions from the 501(c)(4) and the “original sources” who donated to the 501(c)(4). The Act therefore prompts disclosure of both intermediary and original source donors. To facilitate these disclosures, it requires intermediaries and covered persons to maintain “transfer records” of anyone who gave more than $2,500 toward campaign media spending. Proposition 211 also requires that campaign media spending include disclaimers identifying the largest three donors to the group that paid for communications.

Notably, the Act provides an opt-out provision for donors who do not want their identities to be publicly disclosed. A covered person must notify donors in writing that their funds will be used for campaign media spending and that they have a right to opt out. Opting out requires the recipient to use or transfer the funds for purposes other than campaign media spending. We have seen some political organizations in Arizona refuse to accept funds if the donor elects to opt out.

Constitutional Challenge and Ninth Circuit Decision

Americans for Prosperity, a prominent 501(c)(4) organization, challenged Proposition 211 on constitutional grounds, arguing that it violates the First Amendment by chilling speech and undermining free association. In its decision upholding the Act, the Court explained that it serves a “vital” interest of informing the voting public by “disclosing the sources of campaign media expenditures, including funding from indirect sources.” The Court also characterized the Act’s disclosure burdens as “modest” and noted that the law’s “scope is in proportion to the interest served” and its provisions are “narrowly tailored” to the state’s informational interests. The panel found Supreme Court precedent, such as Citizens United and recently decided NRSC v. FEC, to support the constitutionality of disclosure requirements under exacting scrutiny (which is less than strict scrutiny). If the Supreme Court does not overturn the Ninth Circuit’s decision, its holding could provide a framework for other federal courts to uphold similar state and local attempts to publicly identify donors to politically active 501(c)(4)s.

Compliance Considerations

With the midterms quickly approaching, prospective donors in Arizona state and local elections should carefully consider how Proposition 211 applies to their political activity. Donors to politically active 501(c)(4) organizations may be surprised to learn that donations once exempt from public disclosure will now become public. First, donors should conduct due diligence to determine whether their funds are being donated directly to a covered person or, if not, whether they could be transferred to a covered person to fund campaign media spending. Second, donors may consider whether to utilize the Act’s opt-out provision and provide funds for non-campaign media spending purposes, provided the recipient organization accepts funds for alternative purposes. Finally, donors should carefully review the laws in jurisdictions where they contribute funds in the final weeks of the midterm campaign to avoid surprise disclosures.

The Akin Political Law and Tax-Exempt Organizations teams continue to monitor developments surrounding Proposition 211 and similar laws and are available to provide legal counsel and advise clients on compliance protocols. Please do not hesitate to contact us with any questions.

Footnotes

1. See A.R.S. § 16-971 et seq.

2. See Americans for Prosperity v. Meyer, No. 24-2933, 2026 U.S. App. LEXIS 29932 (9th Cir. Sept. 30, 2026).

3. See A.R.S. §§ 16-971(2), (7).