Donor Privacy

Introduction

The free and unfettered flow of competing ideas is essential to the operation of our republican system of government and to the survival of our free and open society. That is why the First Amendment to the U.S. Constitution protects multiple forms of free expression: not just freedom of speech and freedom of the press, but also the right to assemble and the right to petition the government.

For most of us, the most effective and efficient way to exercise our expressive rights is to join with others in support of nonprofit organizations that speak and publish and advocate on our behalf. Laws and administrative orders that impose donor disclosure requirements on nonprofit organizations can make people afraid to exercise their expressive rights in that way which is precisely why entrenched political interests, regardless of party, often favor such requirements.

State governments have a disturbing record of using donor disclosure to intimidate and silence those with heterodox views. In the 1950s, the political establishment in many southern states used donor disclosure to intimidate and silence those who opposed racial segregation. More recently, the political establishments in New York and California used donor disclosure to intimidate and silence their opponents. Fortunately, the U.S. Supreme Court shut down both of those donor disclosure regimes as impermissible infringements on First Amendment rights.

Given the almost irresistible appeal of donor disclosure, it is inevitable that politicians will continue to try to find ways around those decisions. To prevent that from happening, many states have enacted donor privacy statutes. North Carolina would do well to follow their example.

Key Facts

• In the mid-1950s, the Democratic political establishment across the South launched a coordinated effort to put the NAACP out of business by forcing it to disclose the names of its supporters. The risk of reprisals from segregationists scared many supporters away, and between 1955 and 1957, the civil rights organization’s southern membership declined by more than 50%.
• The NAACP’s Alabama affiliate challenged the disclosure requirement in federal court, and in a unanimous decision handed down in 1958, the U.S. Supreme Court declared that the requirement violated the First Amendment.
• In 2013, New York State’s Democratic Attorney General Eric Schneiderman revived the seemingly discredited approach and began demanding the names of donors to all nonprofits operating within his state. California’s Democratic Attorney General Kamala Harris followed suit the following year.
• In 2021, in Americans for Prosperity v. Bonta, the U.S. Supreme Court struck down this new attack on donor privacy. While this decision was good news, it would be a mistake to assume that it put a permanent end to the pernicious practice of using donor disclosure to suppress expressive rights.
• The Democrats in the U. S. House of Representatives knew full well what the Supreme Court was likely to decide in AFP v. Bonta. Nevertheless, shortly before the decision was handed down, they approved a bill that would have made donor disclosure a national requirement under federal law.
• In August 2023, Republicans on the House Ways and Means Committee issued a request for information in which it complained about the fact that tax-exempt organizations “have not been required to publicly disclose the identities of their donors” and solicited suggestions about what to do about it.
• These ominous developments, together with the recent revelations regarding government involvement in suppressing unwanted speech about everything from Hunter Biden’s laptop and the origins and political response to Covid, show that politicians’ appetite for speech suppression is as strong as ever.
• Since 2018, seventeen states have enacted statutes to protect donor privacy, which shows that state-level donor privacy protection is politically feasible.
• Donor privacy protection legislation was introduced in the North Carolina Senate in 2021, but unfortunately it died in committee.

Recommendation

1. The North Carolina General Assembly should enact a donor privacy protection statute similar to the statutes that have been enacted in other states. Ideally, such a statute would:

• Forbid the state from requiring nonprofit organizations to disclose information that could reveal the identity of their donors, volunteers, supporters, members, or otherwise affiliated persons.
• Forbid the state from requiring individuals to provide information that could reveal their own or anyone else’s status as a donor, volunteer, supporter, member, or person otherwise affiliated with a nonprofit organization.
• Forbid the state from requesting or requiring current or prospective contractors or grantees to provide the names of non-profit organizations to which they have directed financial or other non-financial support.
• Forbid the state from releasing, publicizing, or otherwise publicly disclosing any confidential information pertaining to nonprofit donors and supporters that comes into its possession.
• Provide that a person alleging a violation of the statute may bring a civil action for appropriate injunctive relief and damages, including treble damages if the violation is found to be intentional and, at the discretion of the court, the costs of litigation, including reasonable attorney’s fees.
• Stipulate that the statute does not apply to disclosures required by court order or criminal investigation or to political campaign contributions that are required to be reported under existing campaign finance laws.