Republican Sens. Todd Young of Indiana and James Lankford of Oklahoma will introduce a bill Tuesday that would increase penalties for revealing anonymous donor information from no more than $5,000 to at least $10,000 and up to $250,000. The move comes as House Ways and Means Republicans seek to increase scrutiny of foreign donations to tax-exempt nonprofits.
“Anonymous giving has long been a way for Americans to support philanthropic organizations that rely on generous charitable contributions. In recent years, donor privacy has been threatened on too many occasions,” Young said in a statement. “This legislation will address the disclosure of donor data to better protect both charitable organizations and their donors.”
The legislation also would allow the leak to be prosecuted in the jurisdiction where the affected donor lives.
“Nonprofits and their donors are an essential safety net for our communities — providing food, housing, and care to those who need it most. Oklahomans shouldn’t worry about their identities being made public after they provide a donation to a charitable organization,” Lankford said in a statement.
The Philanthropy Roundtable and Indiana Philanthropy Alliance — whose members were on Capitol Hill meeting with the state’s delegation on Tuesday — and Americans for Prosperity are backing the bill.
The legislation follows high-profile leaks of wealthy taxpayer information by IRS officials to news outlets that have spooked parts of the nonprofit sector, who fear their donors could be targeted.
The New York attorney general’s office last year admitted to “inadvertently” making public the donors of a “small number” of charitable organizations. Former South Carolina Gov. Nikki Haley, who previously sought the Republican nomination for president, sued the New York attorney general for allegedly leaking the donor list for her nonprofit, Stand for America.
Americans for Prosperity, a libertarian advocacy group with ties to billionaire activist Charles Koch and his late brother David, successfully led a challenge to a California law that would require nonprofits to disclose their donors to the state’s attorney general. The Supreme Court struck down the state law in 2021 in response to the group’s lawsuit.
The identity of donors to tax-exempt nonprofits has faced increased scrutiny following the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission to allow unlimited, independent political spending by corporations and individuals. Since the decision, nonprofits not required to disclose their donors publicly have become a source of anonymous election spending, or so-called dark money.
Democrats have sought to force disclosure of donors to tax-exempt organizations that spend money on elections, but have fallen short of the support needed to pass legislation amid opposition from Republicans.
Previously, nonprofits disclosed the identities of top donors to the IRS, but a 2020 rule exempted 501(c)(4) organizations, which are allowed to engage in some political activity, from disclosing more than the donation amounts. Charitable groups organized under the 501(c)(3) tax exemption must still disclose donors to the IRS. Democrats have urged the IRS to reverse the rule.
House Republicans have also pushed for greater scrutiny of the nonprofit sector, amid concerns that foreign donations to tax-exempt groups could be used to influence policy and elections. The Ways and Means Committee plans to mark up several bills Wednesday targeting rules for tax-exempt organizations.
Ways and Means member David Schweikert, R-Ariz., introduced a measure as part of the suite of bills that would require nonprofits to disclose if they accept donations from foreign nationals. The bill would not require the organizations to disclose the identity of those, or American, donors.
Another bill, introduced Rep. Nicole Malliotakis, R-N.Y., would bar a tax-exempt organization from donating to political committees for eight years following its acceptance of a donation by a foreign national.
Last year, a group of Republicans in both chambers introduced Americans for Prosperity-backed legislation that would codify a Trump-era rulemaking to provide additional exemptions from donor disclosure rules, including by raising the gross receipts threshold from $5,000 to $50,000 and expanding the types of organizations that are exempt.
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