Late last year the New York legislature took an important step in defending the privacy of donors.
Gov. Kathy Hochul signed Senate Bill 4817A into law, which prohibits the attorney general from releasing nonprofit donor lists and exempts those lists from public records requests. This is a small victory in the Empire State, where the current administration has increasingly pushed for stricter donor disclosure under the guise of “transparency”.
Senate Bill 4817A partially fixes legislation from 2016 that required 501(c)(4)s and some 501(c)(3)s to submit unredacted Schedule Bs (a tax form on which a nonprofit organization submits information to federal and state agencies about their contributors who contributed more than 2% of their revenue). A 501(c)(4) must also disclose any donor who gives a minimum of $1,000 if the organization spends more than $10,000 per year on issue advocacy. Additionally, if a 501(c)(4) receives an in-kind donation of $2,500 or more from a 501(c)(3) within six months, then the (c)(3) must reveal its donors.
The fight for free speech and donor disclosure has also been taken to court in New York. In 2018, Philanthropy Roundtable, along with the Institute for Free Speech and Alliance for Justice, filed an amicus brief in Citizens Union v. New York. Led by Citizens Union of the city of New York, the attorney general was taken to court for violating the First Amendment rights of nonprofit and charitable corporations. We argued the law in general was overbroad and the term “covered communications” was too vague.
For example, covered communications was defined in the law as any published statement about the elected official or administrative or legislative body regarding potential legislation conveyed to 500 or more members of the general public audience. By this definition alone, it’s nearly impossible to tell what is meant by “potential legislation.” It was argued this law would harm nonprofit and charitable corporations by tying their hands – either they would have to stop their advocacy work or they would have to let donors know they can’t guarantee their privacy.
Forced donor disclosure discourages charitable giving and sets the stage for potential harassment if opponents deem the recipient organizations “too controversial.” Disclosure also stifles free speech, since many nonprofit organizations may choose to avoid engaging on important issues to protect the anonymity of their donors. In 2019, a federal district court agreed with Citizens Union (and the themes in our amicus brief) and ruled that the 2016 legislation was overbroad and violated the First Amendment rights of nonprofit organizations.
In 2020, New York passed a budget provision expanding nonprofit oversight under the Department of State and rolled back some of the requirements from the 2016 donor disclosure bill. In one example under the 2020 provision, 501(c)(4) organizations must report donors who restrict their funds to the regulated communications defined in the provision, but they’re not required to disclose all donors. The budget provision also added to the burdensome and unnecessary paperwork process for nonprofits, requiring both (c)3s and (c)4s to submit copies of their Schedule Bs to the Department of State.
Prior to the passage of Senate Bill 4817A, nonprofit organizations had to file annual reports with the Attorney General’s Charities Bureau and the Secretary of State. Senate Bill 4817A helps eliminate the redundancy of filing the same paperwork with two agencies by removing the Secretary of State’s office from the equation. The bill also enacts protections for donors by requiring the attorney general to keep their personal information, such as name, address, phone, etc. confidential.
While New York still has a long way to go in protecting the privacy of donors, Senate Bill 4817A is a step in the right direction of preserving that free speech. Every New Yorker should have the right to choose which organizations they give to while having the option to keep their identity anonymous.
