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Taxonomy of arguments about donor privacy and disclosure

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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.

Nonprofit groups are organizations that do not distribute surplus revenues as profits or dividends to shareholders. Instead, nonprofits use revenues for self-preservation or expansion. The Internal Revenue Service regulates tax-exempt nonprofits under Section 501 of the Internal Revenue Code. States may subject nonprofits to additional regulations beyond those imposed by the federal government.[1][2]

Under federal law, nonprofits are generally only required to disclose to the public information about donors who contribute funding to campaign expenditures. State laws, however, may require more disclosure. Some say expanded donor disclosure provisions minimize the potential for fraud and establish public accountability. Meanwhile, others say that disclosing information about donors violates privacy rights and can inhibit charitable activity.[3][4]

This article provides a framework for the arguments around the disclosure of donors by nonprofit organizations. Ballotpedia breaks down the debate according to the following three subject areas:


Background on federal and state nonprofit donor disclosure

The Internal Revenue Service requires all nonprofit organizations to file a document each year called Form 990, on which nonprofits provide a list of financial, governance, and operational information.[5] Form 990 includes Schedule B, a separate form for listing all contributions received during the year “totaling $5,000 or more (in money or property) from any one contributor," and those donors’ names and addresses.[6] For most nonprofits, Schedule B information is kept confidential, and the form says that a nonprofit "shouldn't include its Schedule B. . .in the attachments, unless a schedule of contributors is specifically required by the state." The IRS form explains: "States that don't require the information might inadvertently make the schedule available for public inspection along with the rest of the Form 990."

The confidentiality of Schedule B became the focus of a lawsuit filed in 2014 challenging a California state regulation requiring all charitable organizations operating in the state to submit a complete copy of the IRS Form 990 they file with the IRS, including Schedule B.[7]The plaintiffs in the lawsuit—the Americans for Prosperity Foundation—alleged the State of California’s requirement violated their rights to free speech and association. Plaintiffs also cited instances where Schedule B donor information, which state law required the Secretary of State to keep confidential, had been inadvertently made accessible online.

The U.S. Supreme Court heard that case―Americans for Prosperity v. Bonta—on April 26, 2021.[8] In a 6-3 opinion, the Supreme Court reversed a decision from the United States Court of Appeals for the Ninth Circuit's and remanded the case for further proceedings, holding that the district court was correct in entering judgment in favor of the petitioners and permanently enjoining the Attorney General of California from collecting Schedule B forms from nonprofits in the state’s nonprofit registry.[9]

Separately, in 2018 President Donald Trump’s (R) administration changed the law to eliminate donor information on Schedule B filings for most nonprofits (including labor unions, veterans organizations, and issue-advocacy groups), leaving the requirement in place only for 501(c)(3) organizations that receive a tax deduction benefit.[10]

The core of the debate between those advocating nonprofit donor disclosure and those advocating for donor privacy is summed up in the 2018 opinion in Americans for Prosperity Foundation in the Ninth Circuit Court of Appeals:

“

“The [California] Attorney General uses the information solely to prevent charitable fraud, and the information is not to be made public except in very limited circumstances. The plaintiffs argue the state’s disclosure requirement impermissibly burdens their First Amendment right to free association by deterring individuals from making contributions.”[11]

”
—Judge Dale Fischer[12]

​

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. ↑ Investopedia, "Nonprofit Organization," accessed November 5, 2015
  2. ↑ Internal Revenue Service, "Applying for 501(c)(3) Tax-Exempt Status," accessed November 5, 2015
  3. ↑ Guidestar, "Fundraising: What Laws Apply?" accessed February 18, 2015
  4. ↑ London School of Economics, "Campaign finance laws that make small donations public may lead to fewer people contributing and to smaller donations," January 7, 2015
  5. ↑ IRS, "Form 990," accessed October 21, 2021
  6. ↑ IRS, Schedule B," accessed October 21, 2021
  7. ↑ U.S. Courts, "Americans for Prosperity Foundation v Becerra," accessed October 21, 2021
  8. ↑ The case was originally known as Americans for Prosperity v. Becerra. It became Americans for Prosperity v. Bonta when Rob Bonta (D) became the California attorney general.
  9. ↑ U.S. Supreme Court, "AMERICANS FOR PROSPERITY FOUNDATION v. BONTA, ATTORNEY GENERAL OF CALIFORNIA," accessed October 21, 2021
  10. ↑ The Intercept, "FOREIGN-FUNDED DARK-MONEY GROUPS LOBBY IRS TO REPEAL REMAINING REPORTING REQUIREMENTS," February 15, 2020
  11. ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
  12. ↑ U.S. Courts, "AMERICANS FOR PROSPERITY V. BECERRA," accessed October 21, 2021
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