Legislation is now regularly introduced in states to force nonprofit organizations to disclose the names of some or even all of their donors. Most often, the intent is to expose contributors to organizations that directly advocate for or against candidates for office, but the legislation is drafted in such a way that it unintentionally sweeps in other speech unrelated to elections. There have been three noteworthy attempts to curb donor privacy over the past two years:
- In 2019, Idaho Republican legislators introduced a bill (S. 1114) that would have required a nonprofit that merely mentioned a candidate by name in one of its communications, such as a newsletter or blog, to disclose its donors—even if the mention simply noted that an incumbent had introduced legislation of interest to the group. A broad coalition of organizations testified against the bill, including pro-life and pro-Second Amendment groups, the ACLU of Idaho, the Idaho Nonprofit Center, and Planned Parenthood. As a result, the bill did not make it out of committee, and it did not return in 2020.
- Perhaps the broadest donor-disclosure bill in recent years was Maine’s LD 1423 in 2019. Acting on behalf of a constituent, a Republican legislator introduced a bill that would have required each nonprofit incorporated in the state to list every donor in its publicly available annual report. The original intent of the bill may have been to uncover improper influence by donors on nonprofits that receive government funding, but the constituent did not show up at the hearing to explain its purpose. At the start of the committee hearing, the chair remarked that it was unusual to see the state’s Chamber of Commerce, the Maine Policy Institute (a free-market think tank), and the ACLU of Maine all on the same side; committee members’ subsequent comments made clear they had no interest in requiring charitable organizations or other nonprofits to reveal their donors. The committee voted unanimously against the bill. Like the Idaho bill, Maine’s proposed legislation was poorly crafted and unwittingly intrusive regarding charitable and civic donor privacy. Much of the legislation donor-privacy advocates faced in 2020 was no different.
- More challenging are cases like the introduction of Section UU of A. 9505 / S. 7505, in the New York Legislature in 2020. Part of a broader budget bill, Section UU would have mandated that “[a]ny registered charitable organization” with revenue greater than $250,000 annually submit its unredacted Schedule B (part of the Form 990 tax return that nonprofits file with the IRS, which includes major donors’ names, addresses, and amounts) to the Department of Taxation and Finance, which would then publish the information on its website. This provision appears to be part of a long-running battle between Governor Andrew Cuomo and several nonprofit organizations that have opposed many of his policies. In 2019, a federal court struck down previous legislation that similarly threatened donor privacy (see below); Section UU is simply the governor’s most recent attempt to pry open the donor lists of organizations he does not like. Fortunately, the section was removed from the budget bill at the urging of a number of New York charities, including several local Habitat for Humanity and YMCA organizations, as well as groups from the state’s artistic and cultural community.
To date in 2020, 15 states have considered 29 donor-disclosure bills that would have threatened donor privacy for 501(c)3 organizations. At press time, just four of these bills remained active, with the rest failing to advance in the legislative process.
On the other side, seven states advanced donor-privacy legislation this year—six of them using the “Personal Privacy Protection Act,” which prevents state and local officials from demanding nonprofit donor information without a subpoena, or nonprofits from disclosing any information they might possess. Similar legislation originally passed the Michigan Legislature in late 2018, though it was vetoed by the outgoing governor, and Mississippi passed the Personal Privacy Protection Act in 2019. Four of the states where it was introduced in 2020 passed it: Louisiana, Oklahoma, Utah, and West Virginia. In each, it was supported by broad bipartisan majorities and coalitions of organizations spanning the ideological spectrum, including state chapters of the American Civil Liberties Union and Americans for Prosperity. Thanks to this legislation, nonprofit donors in these states are protected from intentional or inadvertent disclosure and the retribution they could face from overly zealous activists of all stripes.