Giving Compass' Take:
- Tory Martin and Michael Layton explore how donor anonymity has become part of public and philanthropic debate in the charitable giving sector.
- What are the ethical concerns of donor privacy? What are the benefits of charitable regulation?
- Learn more about revealing donor identities.
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There are many reasons why a donor to a charitable organization may wish to remain anonymous — personal humility, religious conviction, or a desire to avoid public or family scrutiny, for example.
Yet what may seem a personal decision to a donor has become a battleground in philanthropy, politics, and the public square. While many of the issues tied up with anonymous charitable giving remain unresolved, debates over the merits, dangers, and even existence of anonymous giving will generate intense debate.
The Political Debate
Nonprofits annually submit a list of their major donors to the federal government through the Schedule B supplement of the IRS Form 990. For Form 990-PF and Section 527 political organization filers, those lists are already required to be publicly accessible (IRS, 2022, p. 5). For all other filers, however, that list has traditionally been considered highly sensitive and confidential.
The U.S. Supreme Court’s 1958 ruling in NAACP v. Alabama (Justia, n.d.) set this precedent. Citing the very real physical, economic, and social dangers NAACP donors and members faced at the time, the case affirmed donors’ constitutional right to privacy through “free association.”
In 2010, the Supreme Court’s ruling on Citizens United v. FEC changed the game (Federal Election Commission). That ruling ushered in an era of mounting concerns about the influence of private individuals, corporations, and labor unions on U.S. elections. State and federal legislators began introducing legislation to make these donations public, arguing for transparency in the interest of fighting fraud, addressing mismanagement in governance (Totenberg, 2021), and rooting out “dark money” and foreign funding (Kennedy, 2023) from politics.
The issue has garnered so much public interest that Balletopedia launched a dedicated email newsletter on the topic, The Disclosure Digest, in February 2019. Five years later, the platform is still active — as is the debate. While aiming to bring transparency to campaign finance, opponents argue these regulations could infringe on donors’ established rights to free speech and association. “When considering disclosure rules,” wrote Elizabeth McGuigan of Philanthropy Roundtable (2021), “clear distinctions must be made between charitable association and political activity” (para. 1).
Advocates of donor privacy believe the question was settled in 2021 with the Supreme Court’s 6-3 ruling in the case of Americans for Prosperity Foundation v. [California Attorney General Rob] Bonta. That ruling determined that California could not force nonprofits to submit lists of their major donors to the state. Despite what might have seemed to be the final word on the subject, Ballotpedia counted 70+ proposed bills in state legislatures calling for greater disclosure in 2022, and more than 50 in 2023 as of October.
An unresolved quandary here is the question of effective regulation of the sector and the enforcement of existing (let alone new) statutes. Without public disclosure and a fulsome understanding of current practices, especially actual versus real malfeasance, regulators and watchdogs will struggle to do their jobs fully. On the other hand, as critics point out, the California regulations struck down in 2015 had failed to uncover any meaningful fraud in more than 10 years of donor list review — calling into question the true necessity of such disclosure (Parnell, 2017).
Read the full article about donor anonymity by Tory Martin and Michael Layton at Dorothy A. Johnson Center .