Need to Know
$5,000
— Lowest cumulative annual gift amount that would currently require most California nonprofits to disclose the donor to the IRS
On Monday, the Supreme Court heard arguments in a potentially landmark case involving donor disclosure requirements that could have far-reaching implications for nonprofits nationwide, my colleague Dan Parks reports. The case is focused on a California law that requires charities raising money in that state to disclose the names of major donors to state regulatory officials. The names of donors would not be publicly disclosed.
The justices will issue their decision in June, but on Monday most seemed unconvinced that the law’s disclosure mandate was necessary.
California officials say the disclosures help ensure that tax-exempt organizations are serving a charitable purpose. Opponents say it violates the First Amendment and that it could endanger donors who give to controversial but legitimate charitable causes.
The outcome of the case matters to fundraisers since California is one of at least three states, along with New York and New Jersey, that have sought to require donor disclosure to state officials. If the California law stands, “more states, perhaps many more, can be expected to follow suit,” says the Nonprofit Alliance, an advocacy group that opposes disclosure.
Powerhouse coalitions have lined up on both sides of the case. The Americans for Prosperity Foundation, which was funded by billionaire and conservative activists Charles Koch and his now-deceased brother David Koch, is leading the charge to overturn the California law. Fundraising groups like the Association of Fundraising Professionals and the Council for Advancement and Support of Education oppose the California law, as do big nonprofits including Defenders of Wildlife, Disabled American Veterans, Doctors Without Borders, the National Wildlife Federation, and the Southern Poverty Law Center.
Supporters of the California law include the National Council of Nonprofits, CharityWatch, the California Association of Nonprofits, and Public Citizen.
Michael Nilsen, vice president of marketing, communications, and public policy for AFP, said the IRS already requires nonprofits to publicly disclose plenty of information to ensure public trust.
Nilsen said California hasn’t demonstrated a compelling reason it routinely needs donor information. If there is a concern about fraud in a specific circumstance, there are other ways regulators can get that information that are narrowly targeted, he said.
The fact that the law is targeted at only the biggest donors doesn’t make it any less objectionable, Nilsen said. “I don’t know why that matters. A donor is a donor,” he told Dan, adding that the biggest donors are often those who are most at risk of harassment over the causes they support.
Many academics and tax experts say the concerns cited by opponents of the California law are unfounded.
Cindy Lott, a Columbia University nonprofit scholar who specializes in state nonprofit regulation, said the court could narrowly rule on the California case in a way that sheds little light on the court’s view of whether charity donors have a constitutional right to privacy, or it could reach a sweeping conclusion on that point.
The justices also may be using the California law as an opportunity to clarify its decision in Citizens United v. Federal Election Commission, Lott says.
That ruling is best known for overturning limits on corporate spending in elections. It also established that the government has some authority to require advocacy groups to disclose donors who support political activity, but generic references to “nonprofits” in the ruling created confusion about the extent to which disclosure may be required of donors to 501(c)(3) charities.
Plus:
As the weather warms and more people are fully vaccinated, fundraisers should find safe ways to again meet in person with donors, consultant Rachel Cyrulnik wrote in an advice column for the Chronicle. Donors who have been reluctant to meet during the pandemic may be more open to meeting now ― simply because it feels novel. Grabbing a coffee has never been so exciting. Once officials give an all-clear signal, Cyrulnik advises fundraisers to get back in touch with major donors who chose not to connect virtually during the pandemic.
These meetings present especially valuable opportunities for rich conversations about how views on philanthropy changed during the pandemic, she says. Spark thoughtful discussions by asking open-ended questions like “How do you think about philanthropy in light of the pandemic?” and “What role has philanthropy played in your life over the past year?”
As to be expected, resuming in-person meetings will start slowly, she writes. Take advantage of the spring weather and look for outdoor opportunities to meet. Continue virtual meetings for donors most comfortable with that mode, but maintain regular communications with everyone following each donor’s preference.
- Fundraisers and nonprofit infrastructure groups are keeping a close watch on President Biden’s tax proposals and what they may mean for wealthy donors. Contributor Ben Gose reported on initial reactions back in October. The Chronicle is following developments and their implications for giving. Watch this space.
Mass Vaccine Fundraising Campaign
A new mass fundraising campaign aims to inspire 50 million people around the world to make small donations to Covax, the international effort to push for equitable global distribution of Covid-19 vaccinations. Called Go Give One, the campaign was launched Wednesday by the WHO Foundation.
Go Give One aims to mobilize small-dollar donors around the world to give roughly $10 each toward the cost of Covid-19 vaccines — which are priced at about $5 a shot. The campaign will contribute to the $3 billion in Covax funding needed to vaccinate almost 30 percent of people in 92 low-income countries sometime next year.
The specifics of the campaign are still being ironed out, organizers said. The global campaign will collaborate with public health-care systems and advertise at individual mass vaccination sites. Organizers also plan to involve businesses through workplace giving campaigns and promotions on corporations’ social-media platforms. Facebook has also pledged to host a fundraising campaign for the effort and match as much as $5 million contributed through the platform.
After a year of lockdown, loss, and disconnection, vaccination will be an emotional experience for many people — and they’ll have a 15 minute observation period to sit and drink in that feeling.
“What’s been generated from that moment so far is millions of selfies,” said Anil Soni, chief executive of the WHO Foundation. “We haven’t given people the opportunity — while they’re sitting, waiting, and really basking in this moment of hope — to do something for someone else.” Go Give One aims to change that.