Donor Privacy and First Amendment Rights Assailed: Citizens United’s Uphill New York Battle and Pending H.R.5053

Donor privacy and related First Amendment rights are at stake as state charities’ regulators press for disclosure of IRS Form 990 Schedule B donor information from organizations that fundraise in their states.  A recent New York case shows that the fight over whether states may require donor disclosure is very much alive.  In addition, Congress is considering elimination of Schedule B itself. 

Background -  Schedule B, the IRS, and State Charity Regulators 

Charitable organizations must comply with both federal and state reporting requirements.  The key federal filing is IRS Form 990.  Schedule B of Form 990 requires a list of names, addresses, and amounts given for major donors.  This mandatory reporting has long been a mainstay within the IRS context, as a measure for nonprofit accountability and particularly to guard against improper donor control.  While Form 990s are subject to public disclosure, the IRS is legally obligated to keep Schedule B donor information confidential, under the penalty of civil and criminal sanctions for improper disclosure.  Nonprofits thus may legally redact Schedule B donor information on their publicly available Form 990s. 

Nonprofit Financial Reporting: Changes Ahead with FASB ASU 2016-14

Numbers tell a story.  Effective nonprofit leaders understand this concept and produce accurate and up-to-date financial statements for internal board purposes, disclosures to current and prospective donors, and government reporting.  The Financial Accounting Standards Board’s (“FASB”) newly issued standards will affect many nonprofits’ financial statements, particularly regarding asset classification and required financial disclosures.

Fundraising Across State Lines: What Nonprofits Need to Know About Multi-State Charitable Solicitation Registrations

From the legal perspective, nonprofit fundraising typically requires an initial “charitable solicitation registration” (CSR) form filed with the state Attorney General’s office or similar state agency, along with subsequent years’ financial reports, for each state in which a nonprofit is active.  Leaders of nonprofits operating in multiple states may ask:  What, more registrations?!  Aren’t our IRS tax-exemption filings and secretary of state annual reports enough?   Sorry – the answer is no (or at least, probably not).

Each state in which a nonprofit engages in fundraising has its own rules for mandatory CSRs.  Most states require an initial CSR, but with varied threshold financial and charitable activity standards.