Protect Donor Privacy Before It’s Too Late
Chapter Leadership Brief 2.25.2021
By Steve Jacobson, AFP-NYC President and CEO, JCA, Inc.
This past Wednesday, the AFP-NYC Chapter signed onto an amicus brief prepared by our friends at the Nonprofit Alliance for two cases now in front of the Supreme Court of the United States (SCOTUS) addressing some states' overreach to obtain donors' private information. New York is one of those states (California and New Jersey are the other two), thanks to requirements tucked into the 2020-21 state budget legislation by Governor Cuomo last spring during the onset of the pandemic and economic crisis.
This legal battle has been brewing for the past five years, going back to California compelling nonprofits to provide the state with donor information on the organization’s Schedule B on the Form 990 tax return. Schedule B requires listing sensitive information, including name, address, and gift amounts for all donors giving $5,000 or more in the reporting year. Three nonprofits sued the state of California, but a federal appellate court ruled against them. These nonprofits then appealed their cases to the SCOTUS, where two of the cases were consolidated before the Court. Oral arguments are scheduled for some time in April.
The concern here is around protecting donors' information and preventing infringement upon the First Amendment right to free speech. With no evidence to support why additional filing and disclosure is necessary, and no protections like what the IRS has to regulate and enforce the confidentiality of our donors' information, this state-by-state requirement has the potential to dramatically impact the health of the nonprofit sector at a time when our services are needed more than ever. And, while the states may argue that this disclosure would help them police self-dealing or determine whether the organization is truly engaged in a charitable purpose, they have many other avenues and tools at their disposal to achieve these purposes.
AFP-NYC strongly believes that such mandatory disclosure singles out our charitable sector for unfair treatment. In fact, the federal government no longer requires advocacy groups (501(c)(4) organizations) to complete the Schedule B because they don’t see any need for the information – and that the information could be misused, as was alleged during the IRS Tea Party scandals. This leaves 501(c)(3) charities as the only entities that would still have to report this donor information.
On a practical level, compelled disclosure of donor information would likely result in fewer donations. Those donors who normally choose to give anonymously may no longer do so. Furthermore, those donors who fund organizations with controversial missions may not want to have their names publicized for fear of retribution. This would play the same way for the Heritage Foundation as it would for Planned Parenthood. In this case, bad policy is just bad policy.
While it may be too late to sign onto the Nonprofit Alliance’s amicus brief, AFP-NYC welcomes your support. If you would like to help us magnify the impact of our advocacy work on behalf of the fundraising profession and nonprofit sector, we hope you'll join us for the upcoming virtual lobby week, April 26-30. You can access our virtual lobby week FAQ here. Please notify our Government Relations Committee Chair, Kerry Watterson at [email protected] before April 2nd if you'd like to join us in our efforts to promote and protect charitable giving.
The time for action is now. Please join us!