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States Considering Non-Profit Disclosure Rules

Several states have passed or are considering laws that further strengthen privacy protections for nonprofit donors after guidance released by the Internal Revenue Service and Treasury Department in late May altered reporting regulations.

Under the new rules, certain tax-exempt groups no longer need to include the names and addresses of their major donors to the IRS each year under section 6033 of the Internal Revenue Code.

Those that no longer need to disclose information about donors who give more than $5,000 include “social welfare” organizations such as the National Rifle Association (NRA) and the American Civil Liberties Union (ACLU), business leagues and labor unions, according to The Hill.

Conservative groups and Republican politicians supported the change, arguing that it protects the First Amendment rights of donors who want to keep their philanthropic activities private to avoid political backlash or because their religious beliefs promote altruistic giving.

Some charities likewise feared that donors would be less likely to give if they knew their names and addresses would be revealed, World Magazine reported.

Democrats argued against the modifications, fearing the new rules would make it easier for foreign governments and organizations to donate “dark money” to influence U.S. political campaigns. 

The right to donate anonymously to nonprofit groups was established as “an inseparable aspect of the ‘liberty’ assured by the Due Process Clause of the 14th Amendment, which embraces freedom of speech,” when the U.S. Supreme Court issued its ruling in 1958’s NAACP v. Alabama afer NAACP donors sought protection from repercussions they felt could result from their support of the group.

On May 22, Oklahoma passed the Personal Privacy Protection Act prohibiting public agencies from disclosing certain personal affiliation information. West Virginia’s Protect Our Right to Unite Act, approved in April, protects an individual’s constitutional right to privately associate with advocacy groups that represent his or her beliefs.

Utah’s Nonprofit Entities Amendments, signed into law in March, prohibits a public entity, with certain exceptions, from disclosing information that identifies a person as affiliated with a tax-exempt entity.

Similar bills are under consideration in Louisiana and Tennessee, according to WORLD. 

Howevercourts and government entities disagree about where to set the bar on donor disclosures.

Michigan governor Rick Snyder vetoed like legislation that was proposed in 2018. 

In 2017, Citizens United v. Schneiderman rejected a challenge to a New York law requiring groups to disclose their donors to the state, and New York Gov. Andrew Cuomo sought in his state budget this year approval to publish the names of major donors to nonprofits and political organizations, City and State New York reported. 

Washington State requires nonprofits that expect to spend at least $25,000 on state election campaigns or ballot initiatives to disclose their top 10 donors who give $10,000 or more annually. 

And Supreme Court appeals are underway for two cases involving California’s disclosure law,Americans for Prosperity Foundation v. BecerraandInstitute for Free Speech v. Becerra 


Anne Stych

Anne Stych is a writer in Charlotte, North Carolina.