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Arguments in favor of disclosing nonprofit donor information to the public

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Donor privacy and disclosure policy
Taxonomy of arguments
• Disclosure of nonprofit donor information to governments
• Disclosure of nonprofit donor information to the public
• Disclosure and political polarization
Donor privacy and disclosure policy by state

This article is one of 10 that described arguments about donor privacy and disclosure policy between 2019 and 2023. This article may not reflect subsequent developments in arguments about donor privacy and disclosure policy. For more on Ballotpedia's past donor privacy and disclosure policy coverage, click here.

Advocates of donor disclosure policies argue that increased disclosure minimizes the potential for fraud, establishes public accountability, prevents foreign influence in politics and elections, and limits the political influence of major donors who might seek to advance their private interests.

Click on the arguments below to see statements from advocates of disclosing nonprofit donor information to governments:


Argument: Donor disclosure requirements do not constrain constitutional rights to free speech and free association

  • In the Ninth Circuit Court opinion in Americans for Prosperity v. Becerra (2018), the court determined that the plaintiff did not produce evidence of actual suppression of free speech. In California, the Attorney General had required the filing of the Schedule B donor information since 2001, but the records were required to remain confidential. The appeals court determined the plaintiffs did not adequately argue a connection between the filing of confidential information and freedom of speech. “As we have held, compelled nonpublic disclosure of Schedule B forms to the Attorney General is not itself First Amendment injury. . . [the plaintiffs] failed to demonstrate any actual burden on First Amendment rights.”[1]
  • An additional claim in the category of freedom of speech is that the donor disclosure value exceeds the cost or concern about donors' perceived loss in freedom of speech. In one 2019 summary of Americans for Prosperity v. Becerra, the Ninth Circuit Court of Appeals determined that the value of donor disclosure “far outweighed [Americans for Prosperity Foundation’s] speculative fear about chilling its donors' First Amendment rights.”[2]

Argument: Disclosure ensures accountability and prevents fraud and corruption

  • Jan Masaoka, CEO of the California Association of Nonprofits, which describes itself as "a statewide membership organization that brings nonprofits together to advocate for the communities we serve," supported the California Secretary of State’s disclosure regulations and said in an interview with NPR: "All of us--nonprofits and donors--we want to have that confidence that the rules are being enforced, and we need the [state] attorney general to do that."[3]
  • The Ninth Circuit Court of Appeals' opinion in Americans For Prosperity v. Becerra, issued in 2018, cited court testimony in the Citizens United case: “The court [in Citizens United v Schneiderman] agreed with the state that knowing the source and amount of large donations can reveal whether a charity is doing business with an entity associated with a major donor. The information in a Schedule B also permits detection of schemes such as the intentional overstatement of the value of noncash donations in order to justify excessive salaries or perquisites for its own executives. Collecting donor information on a regular basis from all organizations facilitates investigative efficiency, and can help the Charities Bureau to obtain a complete picture of the charities' operations and flag suspicious activity simply by using information already available to the IRS. Because fraud is often revealed not by a single smoking gun but by a pattern of suspicious behavior, disclosure of the Schedule B can be essential to New York’s interest in detecting fraud.”[4]
  • In Center for Competitive Politics v. Harris (2015), Assistant Attorney General Belinda Johns, who oversaw the California Charitable Trusts Section, said: “[I]f we subpoenaed it or sent a letter to the charity, that would tip them off to our investigation, which would allow them potentially to dissipate more assets or hide assets or destroy documents, which certainly happened several times; or it just allows more damage to be done to [the] charity if we don’t have the whole document at the outset.” Rather than having “to wait extra days,” she wanted to “take the action that needs to be taken as quickly as possible.”[4]

Argument: Disclosure limits the influence of major donors using nonprofits to advance private interests

  • In a 2021 amicus brief filed in the Americans for Prosperity v. Becerra case, a group of Democratic members of the United States Senate commented on the legal challenges to California's mandatory disclosure law: "This appeal is just the latest move in the steady and methodical campaign pursued by powerful interests to both cement and obscure their influence over the public sphere since this Court’s decision in Citizens United v. Fed. Elec. Comm'n. The effect of these efforts has been to deprive the citizenry of information and make our democracy less representative.”[5][6]

Argument: Disclosure and donor visibility benefits nonprofits as an endorsement of their mission

Proponents of nonprofit donor disclosure (even if the data is reported only to government entities and remains confidential) argue it is in the interests of both America's nonprofit sector and the public to have well-run, trustworthy nonprofit organizations. Further, they argue that donor disclosure requirements, such as the IRS Form Schedule B, are necessary to maintain the nonprofit sector’s trustworthiness.

  • The California Association of Nonprofits, which describes itself as "a statewide membership organization that brings nonprofits together to advocate for the communities we serve," argued in 2021 in support of the State of California in Americans for Prosperity Foundation v. Rodriquez that by requiring the filing of donor information, Attorneys General fulfill the important role of ensuring the continued trustworthiness of America’s nonprofit organizations. “The [California Association of Nonprofits] points out that the Attorney General may be the sole actor with the ability to prevent charities from misusing donor funds. . .the Association argues that since society as a whole relies on nonprofits and that nonprofits rely on society to enable them to further their missions, it is vital that the state—through its Attorney General—maintains that trust.”[7][8]
  • In the 2021 Supreme Court opinion in Americans for Prosperity v. Bonta, justices writing for the minority said: “The average donor is probably at most agnostic about having their information confidentially reported to California’s attorney general. A significant number of the charities registered in California engage in uncontroversial pursuits. They include hospitals and clinics; educational institutions; orchestras, operas, choirs, and theatrical groups; museums and art exhibition spaces; food banks and other organizations providing services to the needy, the elderly, and the disabled; animal shelters; and organizations that help maintain parks and gardens. [. . .] It is somewhat hard to fathom that donors to the Anderson Elementary School PTA, the Loomis-Eureka Lakeside Little League, or the Santa Barbara County Horticultural Society (‘[c]elebrating plants since 1880’) are less likely to give because their donations are confidentially reported to California’s Charitable Trusts Section.”[9]
  • Writing in support of the California nonprofit donor disclosure regulations, the California Association of Nonprofits argued that "Schedule B is a powerful deterrent, similar to 'speed limits enforced by aircraft.' Schedule B discourages 'bad actors' from using nonprofit legal entities for private benefit or fraud, knowing that they could be caught through Schedule B. Each fraud case disproportionately erodes public confidence in nonprofits and results in fewer donations and lower usage by people in need. Nonprofits support the investigation and prosecution, if needed, of people who misuse nonprofit legal frameworks for non-charitable purposes, including for fraud or embezzlement."[10]

Argument: Donor disclosure does not inhibit charitable giving

  • In its 2018 decision in Americans for Prosperity v. Becerra, the Ninth Circuit Court of Appeals said that the “evidence shows at most a modest impact on contributions.” According to court testimony in the appeals court case, “on average, the [Americans for Prosperity Foundation] combined lose roughly three donors a year due to concern that they will be disclosed and threats.”[11]
  • In the Ninth Circuit Court opinion in Americans for Prosperity v. Becerra, the majority wrote: “[T]hat one or two persons refused to make contributions because of the possibility of disclosure will not establish a significant First Amendment burden. . .Nor will a showing that people may 'think twice' about contributing. [. . .] Although there may be a small group of contributors who are comfortable with disclosure to the IRS, but who would not be comfortable with disclosure to the Attorney General, the evidence does not show that this group exists or, if it does, its magnitude.”[4]

Argument: Disclosure is part of donors' responsibility to stand behind their positions

Justice Antonin Scalia expressed views on the importance of transparency and public disclosure outside the context of nonprofit donor disclosure in connection with the public’s right to know information on who is sponsoring and organizing petitions.

  • Writing in a concurring opinion in Doe v. Reed (2010), a case addressing the Petition Clause of the First Amendment, Justice Scalia contended: “And it may even be a bad idea to keep petition signatures secret. There are laws against threats and intimidation; and harsh criticism, short of unlawful action, is a price our people have traditionally been willing to pay for self-governance. Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed. For my part, I do not look forward to a society which, thanks to the Supreme Court, campaigns anonymously (McIntyre) and even exercises the direct democracy of initiative and referendum hidden from public scrutiny and protected from the accountability of criticism. This does not resemble the Home of the Brave.”[12]

Argument: Donor disclosure provides the public with information about who is attempting to influence public debate

As co-signers of an amicus brief in Americans for Prosperity v. Becerra, League of Women Voters of California, The Campaign Legal Center (CLC), and Citizens for Responsibility and Ethics in Washington (CREW) make an argument on the broader implications of Americans for Prosperity v. Becerra on donor secrecy: "Financial disclosure rules are essential to ensure accountability for political influence, and this case has dangerous implications for campaign finance. The wealthiest political donors should not be able to influence our politics in secret. This case is just another example of wealthy special interests trying to chip away at transparency in politics.”[13]

Overview of arguments taxonomy

See also: Taxonomy of arguments about donor disclosure and privacy

Ballotpedia broke down the debate over donor disclosure and privacy according to the following three subject areas that each had supporting and opposing arguments:

Arguments about disclosure of nonprofit donor information to governments

Arguments about disclosure of nonprofit donor information to the public

Arguments about donor disclosure and political polarization

See also

External links

Footnotes

  1. ↑ U.S Supreme Court, "Americans for Prosperity v. Harris," December 29, 2021
  2. ↑ Reuters, "Koch-founded charity asks for Supreme Court help to keep donor list secret," August 28, 2019
  3. ↑ NPR, "Supreme Court Eyes Rich Activists, Their Anonymous Donations And Tax Breaks," April 26, 2021
  4. ↑ 4.0 4.1 4.2 U.S. Courts, "Americans For Prosperity v. Becerra," accessed October 21, 2021
  5. ↑ U.S. Supreme Court, "Brief of U.S. Senators as Amici Curiae in Support of Respondent," March 31, 2021
  6. ↑ Amici Curiae in the case included: Sheldon Whitehouse (D-Rhode Island), Patrick Leahy (D- Vermont), Ron Wyden (D-Oregon), Richard J. Durbin (D-Illinois), Amy Klobuchar (D-Minnesota), Jeffrey A. Merkley (D-Oregon), Christopher A. Coons (D-Delaware), Richard Blumenthal (D-Connecticut), Tammy Baldwin (D-Wisconsin), Mazie K. Hirono (D-Hawaii), Elizabeth Warren (D-Massachusetts), Edward J. Markey (D-Massachusetts), Cory Booker (D-New Jersey), Chris Van Hollen (D-Maryland), and Tammy Duckworth (D-Illinois)
  7. ↑ California Association of Nonprofits, "About Us," accessed October 21, 2021
  8. ↑ Cornell University, "Americans for Prosperity Foundation v. Rodriquez," accessed October 21, 2021
  9. ↑ U.S. Supreme Court, "Americans for Prosperity v. Bonta," accessed October 21, 2021
  10. ↑ California Association of Nonprofits, "Nonprofit case at U.S. Supreme Court has misleading opponents and potentially huge impact," accessed October 21, 2021
  11. ↑ The Nonprofit Times, "Nonprofits Lose Donor Confidentiality Decision - The NonProfit Times," September 12, 2018
  12. ↑ U.S. Supreme Court, "Doe v. Reed," April 28, 2010
  13. ↑ League of Women Voters, “Common Cause, LWV of California and Partners Urge the Supreme Court to Reject Challenge to California’s Charitable Reporting Law,” April 1, 2021
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