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SCOTUS Ruling on Donor Disclosures Sets off Wave of New State Legislation


501(c)(3) charities are facing relaxed regulations in what they must disclose in tax filings to the IRS. Currently, pursuant to 26 U.S.C. § 6033, a 501(c)(3) organization must annually disclose to the IRS on Form’s 990 Schedule B the total amount of contributions and gifts received by it during the year and the names and addresses of all substantial contributors. A substantial contributor is anyone who bequeathed or devised $5,000 or more (in money or other property), or over 2% of the charity’s contributions during the taxable year.

For years, the IRS has been relaxing regulations on what a charity must disclose about its donors. On May 28, 2020, following years of litigation, the U.S. Treasury released new regulations on donor disclosure requirements that shield many tax-exempt organizations–except 501(c)(3)s and 527 Political Committees–from the requirement to disclose the names of substantial contributors on Form 990’s Schedule B.

Americans for Prosperity Foundation v. Bonta

Following the IRS’s trend, on July 1, 2021 in Americans For Prosperity Foundation v. Bonta, the Supreme Court of the United States (“SCOTUS”) removed the burden on organizations by limiting what states can require tax-exempt organizations to disclose. Bonta began in 2014 when two conservative advocacy groups–the Thomas More Law Center, a Christian public-interest group, and the Americans for Prosperity Foundation, a conservative public interest group–went to federal court to challenge a California law that required charities and nonprofits to automatically include Form 990’s Schedule B in their state tax filings. The challengers argued that California’s compelled disclosure of donors created a chilling effect on donors’ First Amendment rights to free association due to the risk of reprisal against those donors. In response, California’s Attorney General argued that the state has an important government interest in protecting the public from fraud perpetrated by charities, and any chilling effect would be negated because the information disclosed to the state was confidential. While the district and appellate courts sided with California, SCOTUS ultimately reversed the decision and ruled in favor of the challengers, striking down California’s law.

The new legal standard established by Bonta is rather narrow: that states can no longer require tax-exempt organizations to automatically include the 990 disclosures in state filings because it is unconstitutional. While narrow, Bonta has set off a wave of legislative change in many states to change donor disclosure laws, largely along political lines. In republican lead states, legislative bodies move to prevent, and sometimes punish, charities and nonprofits disclosing donor information. In democrat lead states, legislatures are putting more requirements on organizations, tax-exempt and otherwise, to be transparent in where donations and funding come from and where those donations are going.

Anonymity of Money

Post-Bonta, a new issue has been highlighted for republican and democrat lawmakers, anonymity of money. For example, before Bonta, New York and New Jersey were the only other states that had similar laws to California. New York’s law has already been changed in the wake of Bonta to stop donor disclosures by nonprofits to the NY Department of State. While New York has adapted its state law to adhere to Bonta, it is also passing a dozen other bills that require a variety of disclosures; such as A00064 which would require district attorney candidates to disclose the acceptance of campaign contributions, or S03090 which would require identifying information be reported for contributions made by intermediaries to political candidates or committees.

This new wave of legislation falls along red/blue ideological lines. In blue states, such as Rhode Island (S0620), law makers seek to amend state laws to create more visibility for individuals and companies that give to public figures and nonprofits. In no state is the ideological divide more readily apparent than West Virginia. In West Virginia, republicans seek to pass legislation that would prohibit a state agency from imposing additional requirements beyond those currently in statute regarding the registration, reporting, or operation of a charitable organization (HB2932). Simultaneously, West Virginian democrats seek to require an entity making expenditures for political purposes to disclose the name and address of any person who donated more than $250 (SB17).

Where republicans control, you will find strict prohibitions on disclosures coming to fruition. In North Carolina, the General Assembly passed a bill earlier this month that limited nonprofit donor disclosure. In Arkansas (SB535), Iowa (HF309), South Dakota (SB103), and Tennessee (HB0159), conservatives are passing legislation that prohibits all donor disclosures, and in some instances make disclosure of currently held information a misdemeanor.


Many of the above-mentioned bills are still in preliminary stages and will be revised and argued over in the months to come. And while we have a taste of how the newly created bills will progress through the legislative process, the full effect of SCOTUS’s ruling remains to be seen.

The above article is for general information purposes only and should not be relied upon as specific legal advice. This article, or contacting Apex, does not in any way form an attorney-client relationship. If you have any questions or would like to learn more, please contact Coleman Scroggins at

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