The U.S. Supreme Court case Larson v. Valente, 1981, revolved around the constitutionality of a Minnesota law that required religious organizations to register and report their solicitation activities if they received more than half of their total contributions from non-members. The Unification Church challenged this law on grounds that it violated the Establishment Clause of the First Amendment by discriminating among different religious groups based on how they raised funds. The Supreme Court ruled in favor of Valente (the Unification Church), holding that the Minnesota statute did indeed violate the Establishment Clause because its "fifty percent rule" was not neutrally applied to all religions but instead targeted certain ones based on their method of fundraising. The court found no compelling state interest justifying such differential treatment between religions. This ruling affirmed that laws affecting religion must be neutral and generally applicable without targeting or disproportionately impacting specific faiths unless there is a compelling government interest involved.

In the dissenting opinion for Larson v. Valente, Justice William Rehnquist disagreed with the majority's interpretation of the Establishment Clause and its application to Minnesota's charitable solicitations law. He argued that this law did not violate First Amendment rights as it was a neutral regulation aimed at protecting public welfare rather than an attempt to inhibit or advance religion. The statute required only certain religious organizations (those receiving more than half their total contributions from non-members) to register and report before soliciting donations, which he believed was a reasonable way of distinguishing between different types of organizations based on their potential risk factors for fraud or misuse of funds. Furthermore, he contended that there was no evidence showing any discriminatory intent behind this provision nor any disproportionate impact on particular religions. Therefore, in his view, it should have been upheld under both Lemon test prongs: having a secular legislative purpose and not fostering excessive government entanglement with religion.