Donor confidentiality? Nonprofit disclosure bill nears law 2023

A proposed bill would prevent Indiana state and local governments from requiring or disclosing nonprofit donor data.

It safeguards donor privacy, which can help secure gifts, lawmakers and charitable groups say. Transparency organizations believe it might hide huge contributors’ political and other influence.

Business leagues, agricultural cooperatives, social clubs, political groups, and churches can all become tax-exempt nonprofits.

House Bill 1212 would prohibit all Hoosier governments from requiring organizations to provide “personal information”—data identifying nonprofit members, supporters, volunteers, and funders. It would also forbid disclosure.

It would also prohibit federal agencies from seeking or forcing contractors or grantees to name NGOs they’ve supported financially.

The measure protects sensitive information from public records demands. However, existing campaign money and lobbying registrations top a long list of exclusions.

The bill’s Senate sponsor, Sen. Liz Brown, R-Fort Wayne, told the Capital Chronicle, “If we want to make changes, that’s a legislative decision.” To prevent an agency from making those judgments.

Facilitating donations

Nonprofit advocates aim to reassure donors by promising anonymity.

“Speaking with our members, it’s clear that donor privacy is one of the basic things that they’re asked when consulting with donors,” said Indiana Philanthropy Alliance president and CEO Claudia Cummings.

The bill’s main proponent represents several charity foundations. Political action is prohibited for 501(c)3 organizations.

Cummings suggested contributors seek anonymity for privacy or humility. They may wish to avoid harassment, retribution, or solicitation.

“Donors get to choose how they spend their money—these are their private dollars,” she said. They can save, spend, or give it. What if those donors stopped funding the social sector?

Cummings and other House Bill 1212 proponents want to make anti-disclosure state law.

Some states have passed contributor disclosure legislation notwithstanding the U.S. Supreme Court’s repeated First Amendment rulings.

National Association for the Advancement of Colored People v. Alabama dates back to Jim Crow. The supreme court found that disclosing the civil rights organization’s members would expose them to retaliation.

In 2021, the justices decided Americans for Prosperity v. Bonta, a case involving conservative advocacy groups and a California law requiring top donor disclosure. Another split court overturned that statute.

To know

Some fear Indiana’s law will diminish openness since it includes charities like 501(c)4 Americans for Prosperity that can engage in politics.

“These kinds of bills… make it harder to get information about who is trying to influence our government officials or our elected officials,” said Aaron McKean, legal counsel for pro-transparency group Campaign Legal Center. “And that’s information that voters need to assess whether the government is actually working on their behalf or if government is working for those wealthy special interests who are lining their pockets.”

McKean said such laws might let elected officials conceal donor or politically active nonprofit conflicts of interest.

“When you get involved in politics, you step into the public sphere,” said Pete Quist, deputy research director at OpenSecrets, a nonpartisan group that analyzes campaign spending and lobbying.”… The public should know who funds politicians. That outweighs donor privacy for us.”

Bill sponsor Brown cited Planned Parenthood and anti-abortion pregnancy resource centers as examples of her belief in privacy regardless of political party.

“Whether they’re 501(c)3 or 501(c)4, I think that’s a protection that we all seem to agree is important, and I think we should continue that,” Brown said. “I hope—I didn’t feel we were doing this just for political advocacy protection.”

“I think we’re doing it because I’ve donated in my area. “I’ve raised money for Boys and Girls Clubs and other organizations,” she said. I can tell you that people occasionally want to contribute anonymously.

Many exceptions

The bill isn’t arbitrary. Instead, it balances extensive donor and charity protections with a 12-part exclusions list.

Campaign financing and lobbying disclosure rules are first.

Warrants, discovery requests, court evidence, voluntary release to an agency, other secretary of state reports, State Board of Accounts examinations, attorney general investigation requests, payment-related state auditor efforts, licensing, and hospitals follow.

Many exceptions are conditional.

McKean said he hadn’t examined Indiana’s plan, but comparable bills in other states had “little tweaks” that “riddled” the law with exclusions.

McKean added, “It’s not clear why you’d push so hard for a bill that is going to end up being riddled with all these exceptions, especially when you don’t need it.

Mixed reviews nationally

New Hampshire and Virginia passed identical laws. More tried.

Missouri lawmakers are adding exemptions. Republican Gov. Mike Parson’s administration and the state’s budget, contracts, and public safety agencies say the bipartisan law hinders their operations.

The Missouri Independent stated that Parson’s administration has denied public records requests citing the statute.

In 2021 and 2018, North Carolina Democrat Gov. Roy Cooper and Michigan Republican former Gov. Rick Snyder vetoed comparable plans.

Senate Senators sent Indiana’s House Bill 1212 to conference committee. They’ll reconcile before forwarding it to Gov. Eric Holcomb.

Another Brown-authored nonprofit measure awaits his signature. Senate Bill 302 prohibits state agencies and officials from imposing tougher nonprofit registration and reporting requirements than state or federal law.

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