S.7505/A.9505 – Governor’s FY21 Public Protection & Good Government Article VII Legislation, Part UU
Date: February 20, 2020
Our organizations oppose Part UU because sections 1 and 5 would unwisely and unconstitutionally violate the longstanding confidentiality of donors to tax exempt charities, section 1-a would impose a redundant reporting requirement on certain tax exempt charities, and section 2 would tinker with a law that has already been ruled unconstitutional and would remain unconstitutional despite the amendments. We explain each of these problems below.
The State Should Not Require Public Disclosure of Nonprofits’ Donors
Sections 1 and 5 of Pa t UU would abrogate the longstanding confidentiality of donors to tax exempt charities. Section 1 would require all tax exempt nonprofits that solicit charitable funds in New York State and have gross revenue exceeding $250,000 to file an annual financial report, including the entire IRS 990 filed by such organization, with the State Department of Taxation and Finance (“State Tax Department”). Such organizations already file this information with the Attorney General’s Charities Bureau. See Exec. Law § 172-b; 13 NYCRR § 91.5(c)(3). However, Part UU § 5 would require the State Tax Department to make the entire filing public on its website. This is a startling change from current practice. While most of the IRS 990 is already publicly available on the websites of the IRS and Charities Bureau, the Internal Revenue Service and Charities Bureau strictly maintain the confidentiality of the identities of the nonprofits’ largest donors, which information is reported on IRS 990 Schedule B. See 13 N.Y.C.R.R. § 96.2; 26 U.S.C. § 6104(d)(3)(A).
This wholesale publication of the identities of the largest donors to tax exempt public charities is bad public policy. It would discourage charitable giving by potential donors who prefer to remain anonymous, whether out of modesty, a religious imperative, a wish for privacy, or fear of retaliation or ostracism. It could also place donors at risk if their donations to controversial or unpopular causes become public.
Disclosing donor identities would also infringe on the First Amendment speech, association and privacy rights of both donors and their nonprofit recipients. Notably, when the U.S. Court of Appeals for the Second Circuit recently upheld the right of the Charities Bureau to require the nonpublic filing of donor information, it stressed that the court “would be dealing with a more difficult question if these disclosures went beyond the officials in the Attorney General's office charged with enforcing New York's charity regulations. Certainly if that office were to publicize donor lists, it would raise the stakes....” Citizens United v. Schneiderman, 882 F.3d 374 (2018). Part UU would do just that, and as a result is likely unconstitutional.
The State Should Not Impose Redundant Reporting Requirements on Nonprofits
Section 1-a of Part UU would require certain 501(c)(3) nonprofit organizations to file an entirely redundant “funding disclosure report” with the State Tax Department if the nonprofit contributes
$10,000 or more to certain 501(c)(4) nonprofit organizations. On the report, the 501(c)(3) would have to list: the name and address of the covered 501(c)(3) donor and of the 501(c)(4) recipient; the names of any persons exerting operational or managerial control over the covered 501(c)(3) donor, the date of the donation, and a detailed description of the donation, including the charitable purpose advanced and any restrictions on the use of the donation.
Charitable nonprofit organizations already report this information on the IRS 990 in Part VI (Governance, Management and Disclosure), Part IX (Statement of Functional Expenses), and Schedule I (Grants and Other Assistance to Organizations, Governments, and Individuals in the United States). As discussed above, these sections of the annual Form 990 are publicly available, including on the websites of the IRS and NYS Charities Bureau. Section 1-a thus generates no new public information while imposing an unnecessary administrative burden on nonprofit organizations.
Enforcement of Exec. Law 172-f Would Violate a Court Order
Section 2 of Part UU purports to amend Executive Law § 172-f, which was ruled unconstitutional and has been permanently enjoined by a federal district court. See Citizens Union v. Attorney General of the State of N.Y., 408 F.Supp.3d 478 (SDNY 2019). Section 2 would require a 501(c)(4) nonprofit organization to disclose donors who make a restricted donation in support of a communication that “refers to and advocates for or against a clearly identified elected official or the position of any elected official or administrative or legislative body relating to the outcome of any vote or substance of any legislation, potential legislation, pending legislation, rule, regulation, hearing, or decision by any legislative, executive or administrative body.” In September 2019, the court ruled that this provision was too broad and vague to trigger a donor disclosure obligation, stating, “Given that any matter of public importance could become the subject of legislation and given the range of positions taken by all elected officials, § 172-f reaches a far broader swath of communications than did the lobbying- and election-related [donor disclosure] statutes that the Supreme Court and Second Circuit have upheld.” Id. at 507. The court has issued a final order permanently enjoining enforcement of § 172-f. While section 2 of Part UU makes certain changes to § 172-f, it does not amend the unconstitutionally broad definition of a covered communication. The State should not bother amending this statute, because it remains unconstitutional.
Advocates for Children of New York
The Afrikan Poetry Theatre, Inc.
Alliance for Progress
Alliance of New York State YMCAs
American Institute for Stuttering Treatment
The American Musical Instrument Society
Asian American Arts Alliance
Asian American Federation
Asian American Legal Defense and Education Fund
Atlantic Legal Foundation
Brooklyn Bridge Park Conservancy
Care for the Homeless
Catskill Community Center
Chenango County Council of the Arts
Chinese-American Planning Council
The Chocolate Factory Theater
Cornell Cooperative Extension Orange County
Council of Agency Executives
The Climate Museum
Common Cause New York
Community Foundations of the Hudson Valley
Council of People’s Organization
Crime Victims Assistance Center, Inc.
David Hochstein Memorial Music School, Inc.
Drug Policy Alliance
Dutchess County Pride Center
East Egg PM, LLC
Finger Lakes Boating Museum
Four Nations, Inc.
The Frances Lear Foundation
Funders for LGBTQ Issues
Garden of Hope
The G4 Alliance
Girl Be Heard
God’s Love We Deliver
Grace Institute of New York
Grand Street Settlement, Inc.
Habitat for Humanity of Otsego County
The Hart Island Project
Henry Street Settlement
The Hochstein School
Human Services Council
Jewish Community Relations Council of New York
The Jewish Federations of North America, Inc.
Kaufman Music Center
The Kisco Foundation
The Knowledge House
The Laundromat Project
Land to Learn (formerly known as Hudson Valley Seed)
Lawyers Alliance for New York
League of Women Voters’ of New York
Lifetime Assistance Inc.
Literacy Assistance Center
Lupus Research Alliance
Make Music New York, Inc.
Marion Carll Farm Preserve Inc.
Mayor's Alliance for NYC's Animals
Meals on Wheels of Syracuse, NY Inc.
The Nature Conservancy in New York
Neighborhood Coalition for Shelter
New York Botanical Garden
New York Community Trust
New York Council Navy League
New York Council of Nonprofits
New York Hemp Industries Association
New York Lawyers for the Public Interest
Nonprofit New York
NYC Outward Bound Schools
The OMNI Ensemble
Options for Community Living, Inc.
Otsego 2000, Inc.
The Paper Bag Players
Parks & Trails New York
Pioneer Library System
Point Chautauqua Historical Preservation Society
Putnam Arts Council, Mahopac
Queens World Film Initiative, Inc.
Quintet of the Americas
The Raoul Wallenberg Committee of the United States
RECESS Activities, Inc.
Regina Opera Company
Remember the Triangle Fire Coalition
Rhinebeck Writers Retreat
The Ricky J. Parisian Memorial Scholarship Foundation
Rochester Spinal Association
Rockland Conservatory of Music
Sakhi for South Asian Women
Sanctuary for Families
Saratoga PLAN (Preserving Land and Nature)
Schoharie Mohawk Initiative for Science and Technology
School Sisters of Notre Dame Educational Centers
Second Chance Foods, Inc
Shake on the Lake, Inc.
Sharon M Combs Executive Coaching
Software Freedom Law Center
The Southlands Foundation
Southwest Brooklyn Industrial Development Corp
Splashes of Hope
STEM From Dance
St. Francis Friends of the Poor
STOKED Mentoring, Inc.
Teens for Food Justice, Inc.
Tompkins County Workers’ Center, Inc.
The Trust for Public Land
UJA Federation of New York
United Neighborhood Houses
United Way of the Greater Capital Region
Violence Intervention Program, Inc.
Weekend of Chamber Music
WESPAC Foundation, Inc.
Wildlife Conservation Society
Working for Women
World Music Institute, Inc.
Xavier Mission Inc