Should Nonprofits Have To Tell The Government Who Donated To Them?

Several cases of conservative organizations are fighting government attempts to find out who their funders are–and liberal nonprofits are supporting them.

Should Nonprofits Have To Tell The Government Who Donated To Them?
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One of the longest held rules in charity is that nonprofits don’t have to publicly disclose who has given them money. It’s a First Amendment issue, since the Supreme Court intervened during the Civil Rights era when state governments in the South tried to make the NAACP publicize its donor lists. Knowing a donor’s association with a controversial cause might lead to them or their group being threatened, limiting their chance for free expression. But that concept is now being challenged by two major court cases that have had the odd effect of uniting nonprofits on far sides of the political spectrum.


“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 perhaps more importantly given the current political climate: “I don’t think it’s out of the realm of possibility that some people 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 two 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 donor lists, 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 devoted to research and advance libertarian causes, is arguing that if a group issues only policy-influencing ads (instead of candidate-supporting ads) during a campaign election period, they should be exempt from federal election laws that require sharing political donations. (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 v. Alabama, in which that state attorney general’s attempt to force the civil rights group to share its 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 today the participants look different: Americans for Prosperity is a conservative political action group funded by the Koch brothers, and the Independence Institute has also received Koch funding. Both encourage strong free-market views that challenge the effectiveness of the Affordable Care Act and corporate regulations on climate change, among other issues. Still, the NAACP filed a 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 new rules were first introduced by state and federal offices. On the flip side, many liberals who may have been unsympathetic now suddenly 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–and so they may want to keep those donations private.

The same argument has recently also hit 501c4s, the tax exempt nonprofits that spend money on direct political lobbying (some of which are SuperPACs, the opaque political entities that have poured money into presidential campaigns). Their arguments have had success, and less bipartisan support. A federal judge recently dismissed a lawsuit against Citizens United, a conservative political action group that generates propaganda against opposing candidates, and the group that won a lawsuit that allows corporations and unions unlimited spending in elections. When New York’s attorney general attempted to force the organization to disclose its donor list, Citizen United argued that it deserved the same donor-list protection as nonprofits in New York to shield 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 the 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 telemarketer’s dream and–in the case of especially sensitive topics–a 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.