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Why Donor Privacy Deserves To Be Protected

One of the longest held rules in charity is that privately given nonprofit donations don’t have to be publicly disclosed (other than to the IRS, of course). It’s a First Amendment issue: knowing someone’s association with a controversial cause might lead to someone trying to silence them or their group’s chance for free-expression. But that concept is now being challenged by two major court cases that have united left and right wing organizations.

One of the longest held rules in charity is that privately given nonprofit donations don’t have to be publicly disclosed (other than to the IRS, of course). It’s a First Amendment issue: knowing someone’s association with a controversial cause might lead to someone trying to silence them or their group’s chance for free-expression. But that concept is now being challenged by two major court cases that have united left and right wing organizations.

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“One of the biggest problems is just the fact there are a lot of people who, for a variety of reasons, just don’t like having their gifts publicized. They like to do it anonymously,” says Sean Parnell, vice president of public policy at the Philanthropy Roundtable, which has filed supportive briefs in both cases. There are two major reasons for that. First, “There are people who don’t want to have more people coming to them asking for more gifts,” he says. And second, and perhaps more importantly given the current political climate: “I don’t think it’s out of the realm possibility that some people are looking are looking to build an enemies list. And finding out who the donors are to controversial causes is a pretty good place to start.”

Perhaps most surprisingly, while left-leaning groups created the precedent, it’s now right wing organizations that are paying to defend it. The cases in question are Americans for Prosperity Foundation v. Becerra, in which the group, which organizes grassroots support of conservative political action, has challenged the California attorney general’s request that all tax-exempt nonprofits submit non-redacted 990s, ostensibly to give the state more oversight into organizational scams or group corruption. And Independence Institute v. Federal Election Commission, where the organization, a think tank to research and advance libertarian causes, is arguing that if a group issues policy-influencing ads during a campaign election period, they should be exempt from sharing who funded that because the message is issue as opposed to candidate-based. (You can read the Philanthropy Roundtable’s logic here and here. The group has also joined a coalition against President Trump’s tax plan because it may hurt charitable giving.)

The current standard dates back to the 1958 Supreme Court case NAACP vs. Alabama, in which that state attorney general’s attempt to force the civil rights group to share it’s funding sources was thrown out because it could suppress advocacy and lead to persecutions. A similar standard was maintained to protect socialist party organizers in Ohio in the early ‘80s. But Americans for Prosperity is a conservative political action group funded by the Koch brothers, and the Independence Institute is a libertarian think tank. (It has also received Koch funding.) Both hold encourage strong free-market views that challenge the effectiveness of the Affordable Care Act and corporate regulations on global warming, among other issues. Still, the NAACP filed brief in support of Americans for Prosperity’s stance in California.

“Historically both the left and right have resisted this donor stuff,” adds Parnell. “It just seems like on the right there is more focused and organized commitment to push back on these things at the moment.” That may have a lot to do with who is backing them; the Koch brothers have deep pockets. And their interests ran opposite to the political party in power at the time when these rules were first introduced by state and federal offices. On the flip side, many liberals now find themselves in the same position. They’re giving heavily to gay rights, pro-refugee, and pro-choice groups, which may oppose the current administration’s future policies. Yet all donor lists and group tactics would be afforded the same protection.

To be clear: The historical precedent and, at times, allied support extends only to traditional nonprofits (dubbed 501c3 groups), which do cause work. The same argument has been made to protect tax exempt nonprofits that spend money on direct political lobbying (they’re called 501c4s) but with less success, especially when extremely large donors are directly backing candidates for election. There’s a sliding scale or reasonability that apples here, too. A federal judge recently dismissed a lawsuit in which Citizens United, a conservative political action group that generates propaganda against opposing candidates (the group also won a lawsuit that allows corporations and unions unlimited spending in elections), recently argued that it deserved the same donor-list protection as nonprofits in New York to protect its own contributors from public aggression. As Reuters reported, the group could not substantiate claims that donors would “reasonably fear public backlash, financial harm, and worse” if their identities were discovered.

That could be because many Citizens United donors may already be most powerful members of society. And their mission doesn’t directly protect–it may, in fact, hurt–basic democratic ideals. But imagine if everyone who anonymously gave $5 to a GoFundMe campaign were to have their name pop up on a list somewhere linked to what causes they support. It’d be both a telemarketers dream and—in the case of especially sensitive topics—privacy nightmare. “If you start to strip away donor anonymity and reduce the expectation that people have, then people are going to reduce their giving, or they may prefer to find alternative ways to do things,” Parnell says. “One of the biggest ramifications is that you will lose money for the charitable sector if and when donor privacy is not being respected.”

About the author

Ben Paynter is a senior writer at Fast Company covering social impact, the future of philanthropy, and innovative food companies. His work has appeared in Wired, Bloomberg Businessweek, and the New York Times, among other places.

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