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AR Bill Tightens Rules on Nonprofits' Donor Disclosure

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A 2012 investigation by ProPublica found some tax-exempt groups underreported their political activities to the Internal Revenue Service. (Wikimedia Commons)
A 2012 investigation by ProPublica found some tax-exempt groups underreported their political activities to the Internal Revenue Service. (Wikimedia Commons)
 By Nadia Ramlagan - Producer, Contact
May 7, 2021

LITTLE ROCK, Ark. - A new bill signed into law in Arkansas strengthens privacy rules for people who donate to charitable causes.

Critics of so-called "donor-disclosure" laws say they're important for nonprofit groups, especially those taking political stands, to maintain a level of transparency about their donors.

Jerrick Adams, a staff writer who tracks this type of legislation for the website Ballotpedia, said those who advocate for expanded donor-disclosure rules say they minimize the potential for fraud and establish accountability.

"They would argue that if you donate to a nonprofit that is heavily involved in politics," said Adams, "and your donations to that nonprofit are not disclosed, you have sort of disproportionate influence without any of the accompanying accountability that comes with making a donation to candidate, or speaking on behalf of a candidate in a public forum."

The bill bars state agencies and officials in Arkansas from implementing disclosure requirements for nonprofits that are "more stringent, restrictive or expansive" than those already in force.

It also prohibits state and local public agencies from requesting or disclosing information about a nonprofit's donors.

Opponents of the measure say it allows nonprofits involved in politics to funnel so-called "dark money" into campaigns, to support or oppose candidates through organizing and advertising, while remaining anonymous.

Adams said another point sometimes made is that revealing information about donors could violate privacy rights and can even decrease charitable activity.

"So, many nonprofits feel like this is an existential threat," said Adams, "given what's generally referred to as the chilling effect on donations."

Adams added that the U.S. Supreme Court recently heard oral arguments in a California case about its policy requiring nonprofit groups to submit their Internal Revenue Service tax forms, which include donor information, to state officials.

"The case before the Supreme Court is about whether that policy," said Adams, "whether the policy of states collecting this information for their own purposes - is constitutionally sound."

Under federal law, nonprofits are generally not required to disclose information about their donors to the public. But Adams said lawmakers in handful of states - including Iowa, Nebraska and North Carolina - have considered similar legislation this year.

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