Two NC Senate bills would create limits on the disclosure of donors to nonprofits.
One bill (S.636) would prohibit nonprofits from disclosing donors’ identities without board approval and would bar state officials from providing Schedule B of nonprofits’ Forms 990 or 990-EZ (that is the attachment that includes donor information) in public records requests. As drafted, the board approval requirement could create problems for some nonprofits, since it would apply to a nonprofit's disclosure of any contributor - including businesses, foundations, or individuals who make grants to an organization or who sponsor an organization's events or programs. For example, if this provision were enacted, a nonprofit would need to get board approval to acknowledge the sponsors of its conferences or webinars.
A second bill (S.685) would prohibit state agencies from adopting rules, regulations, or policies that:
- Require individuals to disclose their donations to nonprofits;
- Require nonprofits to disclose the identities of their donors or members; or
- Require lists of nonprofit volunteers, donors, supporters, or members.
These limits would not apply to requirements of federal or state law (such as IRS filings or charitable solicitation reports) or to criminal investigations, court orders, or income tax investigations. However, this billl, if enacted, could limit other legiitimate state functions, like ethics investigations. As drafted, the bill appears to be overbroad, since it applies to all dislosures of donor information (including government agencies sharing information with one another confidentially), not just public disclosures of donor information.
While both bills appear to provide privacy protections for nonprofit donors, volunteers, and members, the Center is researching potential unintended consequences of these proposals before taking a position on either of them.
It is likely that both bills were filed in response to a pair of pending U.S. Supreme Court cases that could impact the law and operations of charitable nonprofits for decades to come. At issue in the Supreme Court cases is the requirement by California and other states that charitable organizations file a copy of the Schedule B (or its equivalent) of their IRS Form 990 on a confidential, non-public basis when filing their charitable solicitation registration forms. State Attorneys General use Schedule B to deter and detect fraud and misuse of charitable assets. The plaintiffs in the case refused to file their Schedule B in California, claiming that the First Amendment’s right of freedom of association allowed them to shield the identity of their major donors from state law enforcement officials – even on a confidential, non-public basis. The National Council of Nonprofits has filed an amicus curiae brief in support of the California law. The brief informs the Court about critical concerns of charitable nonprofits and urges the justices to be very careful when writing the opinion to avoid harming the work of the vast majority of charitable nonprofits. The National Council of Nonprofits has provided a helpful blog post explaining the reasoning behind its brief.