In 2022, Arizona voters passed the so-called “Voters’ Right to Know Act,” which compels nonprofits engaged in public policy issues to not only disclose their donors, but their donors’ donors. Philanthropy Roundtable and our coalition partners have strongly opposed Arizona’s new law and what it might foreshadow for donor privacy.
To be clear, Arizona’s law doesn’t simply impact individual donors and organizations that engage in public policy discussions. It threatens all nonprofits—even indirect involvement can trigger these new disclosure requirements.
For example, if nonprofit A donates to nonprofit B and nonprofit B is engaged in public policy communications, under Arizona’s new law, nonprofit A is required to disclose all donors above a certain threshold, even if donors to nonprofit A had no knowledge of nonprofit B’s activities. The sweeping implications are a major concern for those in the nonprofit sector. Unsurprisingly, the constitutionality of Arizona’s new law is being litigated. But in the meantime, other states may follow Arizona’s lead.
OREGON
Lawmakers in Oregon, for instance, passed a bill this month that awaits Gov. Tina Kotek’s signature. If House Bill 4024 is signed into law, it will limit campaign contributions from individuals and groups and establish a new system for forcing disclosure of “independent expenditures.” A communication by a person, which includes a nonprofit, who supports or opposes a candidate or ballot measure would fall under the independent expenditure definition.
For example, if a nonprofit food pantry wants voters to know about a ballot measure that could impact their community and they send an email out with information about it, that would be considered a communication. Additionally, if an entity spends an aggregate of $50,000 on independent expenditures, disclosure of donors who contributed $5,000 or more is required, along with identifying the original source of those funds.
While not as specific as Arizona’s new disclosure law, it does echo some of the disclosure mandates and is sure to chill giving to charitable organizations. For instance, the examples provided in the preceding paragraph have the same intent and enforcement mechanism as the Grand Canyon State. Both states are expanding the independent expenditure definition. But Arizona’s law goes further and broadly targets public communications, whereas Oregon keeps it a little narrower. That’s why the Roundtable submitted comments during the debate.
OKLAHOMA
Symptoms of the Arizona law have popped up in Oklahoma as well. Earlier this year, a Sooner State legislator asked the Oklahoma Ethics Commission to consider a proposed rule that largely mirrors Arizona’s disclosure rules for nonprofits.
Faced with public opposition, the Ethics Commission tabled the discussion, likely stalling any new rules for now. However, the threat of legislative action remains. Oklahoma’s governor has signaled interested in donor disclosure before, openly calling for disclosure in his 2023 State of the State address.
What’s at Stake for Nonprofits?
Arizona’s disclosure law is a threat to the nonprofit sector and the work they do to uplift communities and support causes important to Americans. Its passage set off a worrisome chain reaction in states across the country. These laws go beyond disclosing a nonprofit’s donors – they compel disclosure of donors to those donors. The result of these new laws will be to chill giving. In fact, we already know of nonprofits that are considering shuttering their organizations in Arizona. The risk of unwarranted disclosure is simply too great.
Increasing regulatory burdens on nonprofit organizations that often operate with limited resources and scaring away donors with harmful disclosure measures will ultimately impact the vulnerable individuals and communities nonprofits serve.
Resources:
“What Social Science Tells Us About Forced Donor Disclosure,” by professor of political science and business administration at the University of Rochester David Primo, assesses donor disclosure from a social scientific perspective, using the lens of cost-benefit analysis.
“Donor Disclosure Means Less for Charities and Those They Serve,” by Philanthropy Roundtable Director of Policy Research Jack Salmon, explores the complexities underlying the broader discourse on nonprofit activities, donor privacy and the delicate balance between political transparency and American’s constitutional right to private, voluntary association.
“People United for Privacy Warns of Threats to Nonprofits in 31 States” discusses recent findings by People United for Privacy on upcoming legislative threats across 31 states, including threats to donor privacy, that would chill charitable giving.
