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

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

Many issues important to public charities are addressed in the platforms adopted by the political parties. As Republican, Democratic, and Libertarian parties wrap up their conventions and the Green Party meets this week, charities are asking how they can talk about the issues raised in the platforms. Charities can advance their position on the issues

tax forms and notesA substantial number of organizations exempt under Internal Revenue Code (Code) § 501(c)(4), and their individual officers and directors, may be subject to financial penalties if they do not file a Form 8976, Notice of Intent to Operate Under Section 501(c)(4), with the Internal Revenue Service (Service or IRS) on or before September 6, 2016.

On July 8, 2016 the IRS released a revenue procedure for implementing new statutory requirements for certain organizations that operate under section 501(c)(4) of the Internal Revenue Code. This requirement comes on the heels of the December 2015 enactment of the Protecting Americans from Tax Hikes (PATH) Act of 2015.

The recently released Revenue Procedure 2016-41 contains temporary regulations implementing the 501(c)(4) provisions of the PATH Act and describes the new Form 8976 and the related rules for filing it.


Continue Reading New Mandatory IRS Notification Process for 501(c)(4) Nonprofit Organizations Finally Announced

On November 26, the Department of Treasury released proposed regulations billed as “more definitive rules” for when the IRS will treat certain activities by section 501(c)(4) organization as political activity. It is hard to argue that the proposal provides some clarity, but only by classifying a wide variety of activities as candidate-related and therefore not