Ashleigh A. Allione

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New York recently adopted regulations impacting charitable organizations that are registered and required to file annual financial reports (the CHAR 500) with the New York Attorney General’s Charities Bureau.[1] These regulations, which became effective March 16, 2022, clarify that the names and street addresses of donors to public charities are no longer required to be disclosed to the Charities Bureau with the CHAR 500.

The regulations were proposed in response to the U.S. Supreme Court’s 2021 decision in Americans for Prosperity Foundation v. Bonta, which found California’s donor disclosure law requiring charities to submit an unredacted copy of IRS Form 990 Schedule B to be unconstitutional under the First Amendment. Following the Court’s decision, California, New York, and New Jersey suspended collection of Schedule B donor information, which is typically filed on a confidential basis with the IRS as part of the otherwise public Form 990. Six months later, the New York Attorney General’s Office proposed regulations to eliminate the requirement that charitable organizations provide the state with the names and addresses of donors on Schedule B. The final regulations remain unchanged from those proposed by the AG’s Office.[2]Continue Reading New York Adopts Regulations Amending Its Donor Disclosure Rules

On July 1, the U.S. Supreme Court decided the consolidated case Americans for Prosperity Foundation v. Bonta in favor of the nonprofit organizations that brought the suits, holding California’s donor disclosure law to be unconstitutional because it violates the First Amendment protection of freedom of association. The immediate effect of the Court’s ruling is that the Court invalidated California’s rule requiring charities registered to fundraise in the state to file with the state Attorney General an unredacted copy of IRS Form 990 Schedule B, which discloses the names and addresses of their major donors.

As we previously wrote when the Court decided to hear the case and later heard oral arguments, the case focused on two main issues: (1) the standard of review that must be applied to laws involving compelled disclosure that are challenged on First Amendment grounds, and (2) whether the law should be held unconstitutional only as applied to the two nonprofits that brought the cases, or if the law should be struck down on its face.Continue Reading U.S. Supreme Court Finds California Donor Disclosure Law Unconstitutional

On April 26, 2021, the Supreme Court heard oral arguments in the consolidated case Americans for Prosperity Foundation v. Bonta,1 which argues that California’s donor disclosure law is unconstitutional under the First Amendment because it will discourage donors from contributing due to the fear that their names and addresses will be publicly disclosed. As we previously wrote, California requires nonprofit organizations registered to fundraise in the state to annually disclose to the California Attorney General’s Office their Schedule B donor information, which is typically filed on a confidential basis with the IRS as part of the otherwise public Form 990.

This is one of the rare cases where the Supreme Court has reviewed a case about charitable speech or charitable association. In the cases of Buckley v. Valeo and Doe v. Reed, the Supreme Court found that the standard of exacting scrutiny applies when assessing compelled disclosure in the electoral context. The Court’s questions to the parties during oral arguments probed whether California’s disclosure law would be properly reviewed under exacting scrutiny, how the standard of review should be applied, and whether the law can withstand such scrutiny facially (that is, as applied to everyone) or at least as applied to the two nonprofits that brought the cases. The case is considered by many to be vitally important, not only as it relates to disclosure of charitable donors, but as a potential “back door” into challenging rules requiring disclosure of donors under campaign finance laws.Continue Reading U.S. Supreme Court Hears Oral Arguments on California Donor Disclosure Cases

Charitable and social welfare organizations that file annual financial reports with the New York Attorney General’s Charities Bureau now must file those reports—and potentially two other reports—with the New York Department of State. These requirements are a result of changes to the New York Executive Law, effective January 1, 2021. The following are key deadlines:

  • May 15: Annual financial reports (the CHAR 500) are due to the Charities Bureau and the Department of State by the fifteenth day of the fifth month after the close of the filing organization’s fiscal year. For organizations operating on a calendar year fiscal year, this means the CHAR 500 is due on May 15. Extensions are available for up to 180 days (mirroring the filing schedule for the IRS Form 990).
  • July 31 and January 31: New reports for 501(c)(3) and 501(c)(4) organizations related to certain advocacy activities in New York, if applicable, will be due to the Department of State before July 31 and January 31.

Continue Reading New Nonprofit Filing Requirements in New York

The U.S. Supreme Court has agreed to review two similar constitutional challenges to California’s law requiring that charitable organizations registered to fundraise in the state disclose the names and addresses of their major donors: Americans for Prosperity Foundation v. Becerra (No. 19-251) and Thomas More Law Center v. Becerra (No. 19-255).

Dozens of nonprofits nationwide have filed briefs opposing the California law, emphasizing concerns about the privacy of their donors and the risk of public disclosure of the organizations’ Schedule B donor information, which is typically filed on a confidential basis with the IRS as part of the otherwise public Form 990. The briefs represent diverse sectors of the nonprofit industry, such as public policy, research, and educational foundations; professional membership associations; and social welfare organizations.

The key issue in the case is whether California’s law has a chilling effect on First Amendment association rights, as donors to controversial causes may fear the fallout if their identity were to be made public. The petitioners argue that California has not shown a sufficient state interest to justify these First Amendment implications.Continue Reading Nonprofits Weigh in on California Donor Disclosure Cases Before U.S. Supreme Court

After a great deal of whipsawing as the rules flipped back and forth, politically-active nonprofits now have certainty from the IRS: section 501(c)(4) and 501(c)(6) organizations will not have to disclose the identity of their donors on their annual Form 990 filing with the IRS. However, some states are already beginning to require this information…

On October 2, 2019, a federal judge blocked the State of New Jersey from implementing and enforcing new campaign finance reporting and donor disclosure rules for 501(c)(4) and 527 organizations, which were enacted earlier this year as part of a sweeping and controversial campaign finance bill, S. 150. In its ruling, the Court found…

A federal judge this week struck down on First Amendment grounds two provisions of New York’s lobbying law that would have required nonprofits to disclose their donors.

In 2016, New York state legislators passed legislation changing the state’s lobbying and campaign finance laws. Two important provisions dramatically expanded donor disclosure requirements for 501(c)(3) and 501(c)(4) organizations engaged in issue advocacy and lobbying in New York:

501(c)(4) Rules: The law required 501(c)(4) organizations to disclose all of their donors in public filings with the state when they spend over $10,000 in a calendar year on communications to at least 500 members of the public concerning the position of any elected official on potential or pending legislation.

501(c)(3) Rules: The law also required 501(c)(3) charitable organizations to disclose donors of $2,500 or more if the charitable organization made an in-kind donation of more than $2,500 to a Section 501(c)(4) organization engaged in lobbying in New York.Continue Reading New York Nonprofit Donor Disclosure Rules Struck Down