Until 1990, the NEA had identified only very broad categories for arts funding, including “giving emphasis to…creativity and cultural diversity,” “professional excellence,” and encouragement of “public…education…and appreciation of the arts.” In 1990, following the controversial exhibitions of NEA-funded photographs by Mapplethorpe and Serrano, Congress amended the NEA’s mandate to ensure that “artistic excellence and artistic merit are the criteria by which [grant] applicants are judged, taking into consideration general standards of decency and respect for the diverse beliefs and values of the American public.” Finley and three other performance artists challenged the amendment. Each artist had been recommended for an NEA grant prior to the passage of the amendment, but was subsequently denied funding. The National Association of Artists’ Organizations joined the artists, challenging the provision as impermissibly viewpoint based and void for vagueness.

Because the artists were challenging the amended statute on its face, they had to demonstrate a substantial risk that application of the provision would lead to the suppression of speech. The Court found that the amendment was simply advisory language, and had Congress intended to prohibit the funding of a particular class of speech, it would have done so in no uncertain terms, as it has with its prohibition on the funding of obscenity. The “decency and respect” provision was described as a political compromise aimed at reforming funding procedures without severely constraining the NEA, not aimed at precluding speech based on viewpoint. Because individual views differ on what “decency and respect” entail, the standards on their face would not preclude or punish the expression of particular views.

The Court did not agree with the argument that the criteria in the statute was sufficiently vague to allow the NEA to engage in viewpoint discrimination, instead stating that the provision was unlikely to make the funding selection any more subjective than it was prior to the amendment. The Court found that in the context of selective subsidies, it is not always feasible for Congress to legislate with clarity, giving examples of federally funded scholarships based on criteria such as “excellence.”

The Court noted that any content-based considerations taken into account in the funding process were a consequence of the nature of arts funding: The NEA has limited resources, which require it to deny the majority of grant applications it receives using a wide variety of reasons for doing so. The Court also noted that the government could allocate competitive funding based on criteria that would be impermissible were direct regulation of speech at stake. Unless and until the Court confronted a situation in which the NEA had used its subjective criteria as leverage to penalize disfavored viewpoints, it would uphold the statute as constitutional.

Justice Scalia, joined by Justice Thomas, agreed with the majority’s outcome – that the statute was constitutional – but disagreed with its reasoning. His reading of the statute was that the “decency and respect” criteria were not simply advisory but were required considerations. This would lead to viewpoint discrimination, as those applications that violate general standards of decency or respect were unlikely to be funded. However, for Scalia this viewpoint discrimination does not make the statute unconstitutional. The denial of funding does not abridge speech, as those who which to create indecent and disrespectful art are as unconstrained now as they were before the enactment of this statute. They simply do not have taxpayers’ money with which to pay for it. There are other sources for funding, and the government, through the NEA, may fund projects it deems to be in the public interest without abridging speech.

Justice Souter strongly dissented from the ruling, finding that the provision mandated viewpoint-based decisions in the disbursement of subsidies in violation of the rule that viewpoint discrimination in the exercise of public authority over expressive activity is unconstitutional. He noted that indecency is often inseparable from the ideas and viewpoints conveyed in art. He found that the provision at issue disfavors any art expressing a viewpoint that disrespects the opinions of a significant segment of the American public. Justice Souter disagreed with the government’s contention that here it acted in its role as government-as-speaker and government-as-buyer, in which roles the government can engage in viewpoint discrimination. He found that in this context, the government was not a speaker or buyer; rather, it was regulating private speech through its subsidies. He noted that the Court had ruled previously that Congress may not discriminate in its subsidies in such as way as to aim at the suppression of ideas, which he saw happening here. Further, he noted that the Court also had ruled previously that when the government acts as patron, subsidizing the views of others, it may not prefer one lawfully stated view over another.