Since 1958, when the Supreme Court held that the State of Alabama’s attempt to compel the NAACP to disclose its membership lists infringed on the members’ constitutional rights to freedom of speech and assembly, charities and donors have expected donor information to remain confidential. However, recent developments in New York have thrown that expectation into question.
Most 501(c)(3) public charities annually file IRS Form 990 (or Form 990-EZ), which is a public document. Public charities that receive more than $5,000 from a single donor, if the amount exceeds 2 percent of total contributions for the year, must complete Schedule B, and provide the names, addresses, and total contributions received from all such donors. Unlike the rest of Form 990, Schedule B information is confidential. The Internal Revenue Code prohibits the IRS from disclosing Schedule B, and permits public charities to redact Schedule B.
Within the past few years, the New York Attorney General’s Charities Bureau began enforcing its requirement that public charities that solicit contributions in New York file Schedule B with their annual reports. The Charities Bureau keeps this information confidential, though it is not required by statute to do so. Citizens United and Citizen United Foundation filed suit in the Southern District of New York in 2014, challenging the constitutionality of the requirement, which was dismissed in August 2016.
Late last year, amendments to New York’s Executive law subjecting certain 501(c)(3) and 501(c)(4) organizations to new donor disclosure requirements were enacted along with reforms to the state’s ethics, lobbying, campaign finance, and public officers laws. The requirements apply to 501(c)(3)s that make financial or in-kind donations in excess of $2,500 in a six-month period to a 501(c)(4)s that engages in significant lobbying. 501(c)(3)s meeting these criteria must disclose all donors contributing more than $2,500 during the 6-month period, and its contributions to the 501(c)(4). Unlike Schedule B, the Charities Bureau is required to make these disclosures publicly available, unless public disclosure would harm the donor.
On December 12, 2016, Citizens Union of the City of New York and Citizen Union Foundation filed suit in the Southern District of New York to enjoin enforcement of these donor disclosure requirements. The suit, which is still pending, alleges that the requirements are unconstitutionally broad, and infringe donors’ rights of free speech and association.