Disclosures of Donors: Recent Developments

2018 has seen several developments regarding the required disclosures of donors by nonprofits.

Disclosures of Donors – Charitable Organizations

On September 11, 2018, a three-judge panel of the United States Court of Appeals for the Ninth Circuit upheld the right of the California Attorney General (AG) to require from reporting charities their IRS Form 990, Schedule B Schedule of Contributors. Here are excerpts from the opinion in Americans for Prosperity v. Becerra:

We hold that the California Attorney General’s Schedule B requirement, which obligates charities to submit the very information they already file each year with the IRS, survives exacting scrutiny as applied to the plaintiffs because it is substantially related to an important state interest in policing charitable fraud. Even assuming arguendo that the 

plaintiffs’ contributors would face substantial harassment if Schedule B information became public, the strength of the state’s interest in collecting Schedule B information reflects the actual burden on First Amendment rights because the information is collected solely for nonpublic use, and the risk of inadvertent public disclosure is slight.

Applying exacting scrutiny, we held both that the Schedule B requirement furthers California’s compelling interest in enforcing its laws and that the plaintiff had failed to show the requirement places an actual burden on First Amendment rights. ... We left open the possibility, however, that a future litigant might “show ‘a reasonable probability that the compelled disclosure of its contributors’ names will subject them to threats, harassment, or reprisals from either Government officials or private parties’ that would warrant relief on an as-applied challenge.”

In sum, the record demonstrates that the state has a strong interest in the collection of Schedule B information from regulated charities. We agree with the Second Circuit that the disclosure requirement “clearly further[s]” the state’s “important government interests” in “preventing fraud and self-dealing in charities . . . by making it easier to police for such fraud.”

Here, the plaintiffs contend requiring them to comply with the Attorney General’s Schedule B disclosure requirement will impose a significant First Amendment burden in two related ways. First, they contend requiring them to comply with the Schedule B requirement will deter contributors. Second, they argue disclosure to the Attorney General will subject their contributors to threats, harassment and reprisals.

The mere possibility that some contributors may choose to withhold their support does not establish a substantial burden on First Amendment rights.

Ultimately, we need not decide whether the plaintiffs have demonstrated a reasonable probability that the compelled disclosure of Schedule B information would subject their contributors to a constitutionally significant level of threats, harassment or reprisals if their Schedule B information were to become public. … As we explain next, we are not persuaded that there exists a reasonable probability that the plaintiffs’ Schedule B information will become public as a result of disclosure to the Attorney General. Thus, the plaintiffs have not established a reasonable probability of retaliation from compliance with the Attorney General’s disclosure requirement.

Earlier this year, the United States Court of Appeals for the Second Circuit, in Citizens United v. Schneiderman(1) held that New York State’s requirement that registered charities disclose their donors did not run afoul of the First Amendment, and (2) found that the mere requirement on a tax‐ exempt organization to disclose its donor list to a state’s authority charged with regulating non‐profits does not impermissibly chill speech or assembly rights and does not operate as a prior restraint on non‐profits’ solicitation of donations.

Disclosures of Donors – Other Tax-Exempt Organizations – Tax Law

In Rev. Proc. 2018-38, the IRS announced that tax-exempt organizations described by section 501(c), other than section 501(c)(3) organizations, will no longer required to report the names and addresses of their contributors on Schedule B for tax years ending on or after December 31, 2018. These organizations, however, must continue to collect and keep this information in their books and records and to make it available to the IRS upon request. See Treasury Eliminates Donor Information Disclosures by 501(c)(4) and 501(c)(6) Organizations.

Disclosures of Donors – Other Tax-Exempt Organizations – Political/Election Law

On September 18, 2018, the Supreme Court of the United States denied to stay a ruling of a lower court that required the Federal Elections Commission (FEC) to eliminate a regulation that allows nonprofit organizations to keep their donors secret.

The ruling closes a 40-year-old loophole that let individual donors to aggressive political ad campaigns remain anonymous. This means, according to FEC Chair Caroline Hunter, that for the first time in decades large donors to political campaigns through 501c4s (social welfare nonprofits) and 501c6s (association-based nonprofits) will need to be disclosed.

– SCOTUS Refuses to Stay Order on Campaign Finance Disclosure on Eve of Midterms (The Nonprofit Quarterly)

Nonprofit advocacy groups — which do not have to publicly disclose their donors, as political committees do — will now have to begin reporting the names of contributors who give more than $200 per year toward their independent political campaigns, campaign finance lawyers said.

– Political nonprofits must now name many of their donors under federal court ruling after Supreme Court declines to intervene (Washington Post).

Under the now eliminated regulation, certain nonprofit organizations could easily evade statutory donor disclosure requirements because disclosure was only required where the contribution was earmarked for the particular independent expenditure being reported (e.g., typically related to specific ads or mailers) and not where the contribution was in support of the organization’s broader “political” purposes.

 That allowed them to evade statutory disclosure requirements, Judge Howell wrote. “A donor contributing over $200 during a calendar year to a not-political committee for the express purpose of advocating for or against the election of a candidate for federal office, would nonetheless not be identified,” she wrote, “absent the donor’s express agreement that the funds be used for the specific expenditures reported to the F.E.C., even though the donor may otherwise support and in fact contribute for the purpose of funding those expenditures.”

Supreme Court Won’t Disturb Ruling Unmasking Dark Money Donors (New York Times)

While the timing of the full impact of the lower court’s ruling isn’t completely clear, but it will impact the upcoming election.

The conservative group Crossroads GPS, hoping to avoid having to disclose its donors right before the 2018 midterms, asked the Supreme Court to freeze the lower court’s ruling and leave the old FEC regulation in place through November. But on Tuesday, the high court declined to do so.


The Supreme Court’s decision means groups making independent expenditures to support or oppose candidates running for Congress this fall may have a legal obligation to disclose their donors, even if they could have remained anonymous in past cycles.

– Supreme Court move could spur more dark-money disclosure (Politico)

[E]ffective immediately, anyone making more than $250 in express advocacy ads — ads that tell viewers who to vote for or against — must now disclose the identities of all contributors who gave more than $200 in a year. They must also identify who among those contributors earmarked their contributions for express ads. Because of this decision, the contributors for a major category of dark money spending this fall will have to be disclosed to the public.


“This is a great day for transparency and democracy,” CREW Executive Director Noah Bookbinder said. “Three courts, including the Supreme Court, have now rejected Crossroads’ arguments for a stay, meaning we’re about to know a lot more about who is funding our elections.”

– Citizens for Responsibility and Ethics in Washington (CREW)