Advocacy Requested Re: Charitable Nonprofits in New York State

March 1, 2020

A bill pending in the NYS legislature would require charitable nonprofits in New York State to identify and make public all donors who provide $5,000 or more, or 2% of the total donations, in a single tax year. The proposed FY21 NY State budget legislation would require the Tax Department to post on its website the donor information, including name, address, and amount donated, each organization lists on its Schedule B.

This new requirement would:

  • Place nonpartisan donors at risk for harassment
  • Place nonprofits at financial risk by decreasing giving,
  • Create a new, costly administrative costly burden
  • Fail to properly address the issue of political “dark money”

This is a startling change from current practice. Consistent with longstanding principles of donor confidentiality, currently both the Charities Bureau and IRS strictly protect the donor information contained in Schedule B of the 990. This proposal will place certain charitable donors at risk of harassment, violate donors’ rights, and discourage charitable giving.   

We strongly encourage all NYS Council members to send a Memo of Opposition regarding this legislation.  Right now your memo should be sent to your local lawmakers and NYS Legislative Leaders.   In a few weeks joint budget committees will begin meeting and we will ask you again at that time for assistance to oppose this legislation.

Legislative Leaders:



Here is boilerplate language for your Memo in Opposition. (We recommend you send to lawmakers with agency logo, etc. at top of Memo.)

2020 Legislative Memorandum in Opposition to Nonpartisan Nonprofit Donor Disclosure Proposal

S.7505/A.9505 – Governor’s FY21 Public Protection & Good Government Article VII Legislation, Part UU

Position: Oppose

Date: March 2, 2020

(NAME OF ORGANIZATION) opposes Part UU because sections 1 and 5 would unwisely and unconstitutionally violate the longstanding confidentiality of donors to tax exempt charities, section 1-a would impose a redundant reporting requirement on certain tax exempt charities, and section 2 would tinker with a law that has already been ruled unconstitutional and would remain unconstitutional despite the amendments. We explain each of these problems below.

The State Should Not Require Public Disclosure of Nonprofits’ Donors

Sections 1 and 5 of Pa t UU would abrogate the longstanding confidentiality of donors to tax exempt charities. Section 1 would require all tax exempt nonprofits that solicit charitable funds in New York State and have gross revenue exceeding $250,000 to file an annual financial report, including the entire IRS 990 filed by such organization, with the State Department of Taxation and Finance (“State Tax Department”). Such organizations already file this information with the Attorney General’s Charities Bureau. See Exec. Law § 172-b; 13 NYCRR § 91.5(c)(3). However, Part UU § 5 would require the State Tax Department to make the entire filing public on its website. This is a startling change from current practice. While most of the IRS 990 is already publicly available on the websites of the IRS and Charities Bureau, the Internal Revenue Service and Charities Bureau strictly maintain the confidentiality of the identities of the nonprofits’ largest donors, which information is reported on IRS 990 Schedule B. See 13 N.Y.C.R.R. § 96.2; 26 U.S.C. § 6104(d)(3)(A).

This wholesale publication of the identities of the largest donors to tax exempt public charities is bad public policy. It would discourage charitable giving by potential donors who prefer to remain anonymous, whether out of modesty, a religious imperative, a wish for privacy, or fear of retaliation or ostracism. It could also place donors at risk if their donations to controversial or unpopular causes become public.

Disclosing donor identities would also infringe on the First Amendment speech, association and privacy rights of both donors and their nonprofit recipients. Notably, when the U.S. Court of Appeals for the Second Circuit recently upheld the right of the Charities Bureau to require the nonpublic filing of donor information, it stressed that the court “would be dealing with a more difficult question if these disclosures went beyond the officials in the Attorney General’s office charged with enforcing New York’s charity regulations. Certainly if that office were to publicize donor lists, it would raise the stakes….” Citizens United v. Schneiderman, 882 F.3d 374 (2018). Part UU would do just that, and as a result is likely unconstitutional.

The State Should Not Impose Redundant Reporting Requirements on Nonprofits

Section 1-a of Part UU would require certain 501(c)(3) nonprofit organizations to file an entirely redundant “funding disclosure report” with the State Tax Department if the nonprofit contributes

$10,000 or more to certain 501(c)(4) nonprofit organizations. On the report, the 501(c)(3) would have to list: the name and address of the covered 501(c)(3) donor and of the 501(c)(4) recipient; the names of any persons exerting operational or managerial control over the covered 501(c)(3) donor, the date of the donation, and a detailed description of the donation, including the charitable purpose advanced and any restrictions on the use of the donation.

Charitable nonprofit organizations already report this information on the IRS 990 in Part VI (Governance, Management and Disclosure), Part IX (Statement of Functional Expenses), and Schedule I (Grants and Other Assistance to Organizations, Governments, and Individuals in the United States). As discussed above, these sections of the annual Form 990 are publicly available, including on the websites of the IRS and NYS Charities Bureau. Section 1-a thus generates no new public information while imposing an unnecessary administrative burden on nonprofit organizations.

Enforcement of Exec. Law 172-f Would Violate a Court Order

Section 2 of Part UU purports to amend Executive Law § 172-f, which was ruled unconstitutional and has been permanently enjoined by a federal district court. See Citizens Union v. Attorney General of the State of N.Y., 408 F.Supp.3d 478 (SDNY 2019). Section 2 would require a 501(c)(4) nonprofit organization to disclose donors who make a restricted donation in support of a communication that “refers to and advocates for or against a clearly identified elected official or the position of any elected official or administrative or legislative body relating to the outcome of any vote or substance of any legislation, potential legislation, pending legislation, rule, regulation, hearing, or decision by any legislative, executive or administrative body.” In September 2019, the court ruled that this provision was too broad and vague to trigger a donor disclosure obligation, stating, “Given that any matter of public importance could become the subject of legislation and given the range of positions taken by all elected officials, § 172-f reaches a far broader swath of communications than did the lobbying- and election-related [donor disclosure] statutes that the Supreme Court and Second Circuit have upheld.” Id. at 507. The court has issued a final order permanently enjoining enforcement of § 172-f. While section 2 of Part UU makes certain changes to § 172-f, it does not amend the unconstitutionally broad definition of a covered communication. The State should not bother amending this statute, because it remains unconstitutional.