News: CJ Exclusives

Donor Privacy approved by N.C. Senate

senate chambers, general assembly, senators
senate chambers, general assembly, senators

A measure that would keep charitable donors’ personal information private was approved in the N.C. Senate Tuesday. The 28-21 vote fell along party lines, with Republicans voting in favor of SB636.

Despite assertions from some Democrats who said it could shield political “dark money” from public disclosure, the bill does not change the reporting requirements of political campaigns, including campaign finance disclosure laws.  Electioneering donations fall under separate rules to ensure a public record of candidates’ financial supporters.

S.B. 636 prevents governments from compelling nonprofits to disclose the private information of their donors. It states that the measure “shall not apply to any disclosure of donor information required by this 21 Article or Article 22M of this Chapter.” That N.C. statute is regarding campaign finance disclosure laws.

The donor privacy bill’s primary sponsors are Sen. Norman Sanderson, R-Carteret, Sen. Bob Steinburg, R-Chowan, and Sen. Joyce Krawiec, R-Forsyth. Most notably, though, Dan Blue, D-Wake, the Senate’s Democratic Party leader, signed on as a co-sponsor, but then voted against the bill. Sen. Natasha Marcus, spoke out against S.B. 636, claiming the bill would create more so-called “dark money” and would allow “politically active 501(c)(4) organizations to hide major donors..”

Senator Jeff Jackson, D-Mecklenburg, was among the Democrats who opposed the bill, alleging it enabled charities to “launder money” for political gain.  Jackson is running for U.S. Senate and has raised nearly $1.3 million since announcing his candidacy earlier this year. All Democrat members followed Jackson’s lead with 21 of them voting against it.

“When the bill and the bill summary expressly state the legislation does not change the duty to report or disclose political donations, it is highly frustrating to have it portrayed as a bill to hide “dark” money,” said Susan Vick an attorney and lobbyist representing People United for Privacy. “Donations of an individual’s time, talent or money to a church, charitable recovery group for addicts or a non-profit for after-school tutoring are not “dark”— but they are often deeply personal and potentially put us at odds with what family members or friends believe is a worthy cause. This bill simply protects donor lists from being required for disclosure under the guise of state action as we’ve seen in other states.”

Bill sponsors say the measure is designed to protect the privacy of smaller-figure donors who make contributions to charity in either money or goods.  The average private donation to charity is around $2,500, but most are less than $500. Those donations go to myriad organizations — from the arts to religious groups, volunteer medical providers, youth programs, and social movements. The impact of nonprofit organizations on North Carolina’s economy is close to $510 billion in revenue.

“The church, school and benevolent 501(c)(3)s that are important to us know they cannot make political expenditures or they lose their tax-exempt status. Any argument otherwise flat out wrong,” said Vick.

Supporters of the donor privacy protection bill say that if nonprofits were forced to reveal their donors publicly it could have a chilling effect on financial support for charity across society. Supporters compare it to requiring an ideological movement to provide the government with a list of attendees at a rally or meeting.

“This is a common-sense measure to keep donors to culturally unpopular groups from being targeted or threatened or face boycotts and retribution. That’s what it’s all about,” said Paul “Skip” Stam, a former N.C. legislator.

Bill supporters worry small donors would be subject to harassment, threats, or worse if their personal opinion on a cause, expressed through donation, was different from that of their employer, church, landlord, teacher, or a political advocacy group targeting donors online.

Here is what the Donor Privacy bill does, and doesn’t do:

Does not:

  • Make political campaign contributions private
  • Apply to court orders directing the release of information

Does:

  • Put in state public-records law that the identity of a person giving money or tangible goods to a nonprofit is confidential unless approved by the charities’ board of directors
  • Forbid state government from including a nonprofit’s Schedule B, 909 state tax information (which lists donor identities) in public records requests
  • Specif(ies) that the confidential treatment of donors to nonprofits does not apply to required campaign finance disclosures, including electioneering communications.
  • Add to the “ethical standards of conduct” rules for state employees and legislators and makes it a Class 1 Misdemeanor for a state employee to reveal confidential donor information that they may have learned while on the job
  • Provide an avenue for a donor to sue if their personal information is revealed without their consent

Donor privacy being tested at the U.S. Supreme Court

The country is seeing this issue play out right now on the national stage. A few weeks ago, the U.S. Supreme Court heard arguments in the case of Americans for Prosperity and Thomas More Law Center against the California attorney general’s office. The case dates back to when current Vice President Kamala Harris was California’s attorney general and tried to force charitable organizations to file an unredacted “Schedule B” in their taxes, which would reveal the identities of any donor giving $5,000 or more to their nonprofit group.

AFP won an injunction against the California attorney general’s office in 2016, but the Ninth U.S. Circuit Court of Appeals ruled that revealing donor identities did not violate the donors’ rights. The ruling forced the case to the U.S. Supreme Court, where 22 amicus briefs from liberal and conservative groups were filed to support the plaintiff’s position.

A ruling on the case is expected in June. Court watchers say they believe the justices will rule against California’s AG and in favor of the nonprofit plaintiffs.

While the case is considered by justices on the high court, the donor privacy bill is going through the N.C. legislature this week with bi-partisan support.

Civil rights movement fuels donor privacy

The debate over donor privacy goes back to at least the 1950s. During the earliest days of the civil rights era, states’ attorneys general wanted the donor list of the National Association for the Advancement of Colored People chapters. As civil rights protests gained steam and donations, some states used new donation disclosure laws to root out financial support for the movement. North Carolina was one of the states to demand that the NAACP reveal its donors.

The NAACP says it lost more than half of its membership between 1955 and 1957. In 1958, the NAACP’s Alabama chapter sued the state over donor privacy in federal court and won.

However, the precedent of that decision has not always protected speech in the form of donations when similar lawsuits followed. In 2016, NAACP Legal Defense Fund filed a brief of support of AFP’s suit in the Ninth Circuit.

Today, with the growing “cancel culture” trend and political vigilantism, the threat to small donors is even more real, according to supporters of the issue.

“Donor privacy is not a partisan issue,” tweeted the Goldwater Institute last week as the Supreme Court justices heard arguments. “No matter which cause you support — from NAACP to the NRA to Planned Parenthood — you have a constitutional right to privacy and anonymity.”

The bill now moves to the N.C. House. It is among the high number of bills the General Assembly is moving this week in order to meet Thursday’s crossover deadline.