Mandatory Donor Disclosures: Less Than Appealing

What do the California Attorney General, charitable donors, and the First Amendment have in common?  They have been tangled up in litigation over California’s new mandatory disclosures of confidential donor identification information.  On November 9, 2015, the U.S. Supreme Court declined to address whether compelled disclosure of donor information – by itself – constitutes a First Amendment injury compelling enough to foreclose such governmental intrusion, in Center for Competitive Politics v. Harris.  The case of Americans for Prosperity Foundation v. Harris now waits in the wings, on the related question of whether such compelled disclosure violates the First Amendment, if shown to actually chill speech and result in harassment of donors.  These cases are important for both nonprofits engaged in charitable solicitations and our country more broadly, given the serious free speech and freedom of association constitutional rights at stake. 

From AG Annual Reports to the Courtroom

Both cases began when the organizations challenged the California Attorney General (AG)’s demand to submit their IRS Form 990 Schedule B as part of their annual AG reports, in connection with their charitable solicitation activity in California.  The AG’s demand resulted from a 2013 change in its policy; consistent with most other states, the California AG’s office had never before required such disclosures.  Form 990’s Schedule B requires nonprofits to list major donors’ names, addresses, and amounts given.  The IRS collects this information but is legally required to keep it confidential.  Both civil and criminal sanctions are available for improper disclosure of such information, and nonprofits may legally redact such information in their publicly available Form 990s. 

In contrast, California law provides no such protections against donor disclosure.  Instead, under California law, nonprofits that fail to comply with such disclosure requirements face serious consequences:  their state income tax exemption is invalidated; late fees are imposed, for which directors and officers are personally liable; and the noncompliant organizations may not engage in fundraising within California.  The incentive for nonprofits to disclose otherwise confidential donor information is thus quite compelling.

Why Donors Give: Motivations for Their Gifts

The following article is provided courtesy of Robert Russell, President and founder of RR&A.Since 1976, RR&A has provided consulting services in marketing, management, and fundraising to businesses and charitable organizations.  RR&A works with organizations to define their challenges and design effective strategies for long-term growth and impact.

Over the past forty years, our business has had the good fortune to conduct more than 200 numerically sampled donor constituency surveys.These constituencies included hundreds of philanthropists who support higher education, home schooling, special education, health care, rehabilitative health care and services, public policy institutions and think tanks, arts centers and academies, libraries, and others.

Each survey probed the constituent’s philanthropic goals and ideals.  Relative to the sponsoring organization, we asked the donor’s sense of American institutions generally and the sponsor organization.  The surveys also requested demographic information, including age, gender, education levels, marital and family status, community involvement, religion and political preferences, and specific affiliations with the institutions he or she supports.

Tax Time: Top Tips for Reporting Charitable Deductions

With April 15 fast approaching, now is the time to make the most of charitable tax deductions.  Many people give significant amounts to charities, schools, religious institutions, and other nonprofit organizations, with an accompanying expectation of tax deductibility.  Through such giving, donors not only help worthy causes but also can reduce their personal tax liability through itemized deductions.  Here are some top tips for maximizing the charitable tax deduction.

1)         Use the right tax forms.