Opposition to Proposed Donor Disclosure Requirements for Certain Non-Profits: Report

SUMMARY

The Non-Profit Organizations Committee drafted a report in opposition to Part UU of Governor Andrew Cuomo’s Public Protection and General Government Budget for the upcoming fiscal year. Part UU requires certain charitable organizations to file reports with the NYS Department of Taxation and Finance (DTF), including the names and addresses of the organization’s largest donors, and requires DTF to publish such donor information on its website. Publicly disclosing the identity of donors to charitable organizations is a drastic change in current practice at both the federal and state level, and it would impinge on well-established First Amendment rights and likely discourage charitable giving. The New York City Bar Association joins a chorus of voices condemning Part UU of the Executive Budget, as outlined in Exhibit A of the report.

REPORT

REPORT ON LEGISLATION BY
THE NON-PROFIT ORGANIZATIONS COMMITTEE

A.9505/S.7505
Public Protection and General Government Budget
Article VII – Part UU 

Amends the executive law and the tax law in relation to disclosure requirements for certain nonprofits

THIS PROVISION IS OPPOSED

The Non-Profit Organizations Committee of the New York City Bar Association (the “Committee” or the “NPOC”) hereby expresses opposition to Part UU of the Governor’s FY21 Public Protection and General Government Article VII Legislation and urges that Part UU be deleted from the bill.  Notably, Part UU requires certain charitable organizations to file reports with the NYS Department of Taxation and Finance (“DTF”), including the names and addresses of the organizations’ largest donors, and requires DTF to publish such donor information on its website.  Publicly disclosing the identity of donors to charitable organizations is a drastic change in current practice at both the federal and state level, and it would impinge on well-established First Amendment rights and likely discourage charitable giving.

The Committee agrees with the analysis presented in the separate opposition endorsed by a wide cross section of New York nonprofits (attached hereto as Exhibit A).  As described in the separate opposition:

• The additional report required by Section 1-a of Part UU is redundant because covered charities already report this information in their public Form 990 filings with the IRS and the NYS Charities Bureau.

• The IRS and the Charities Bureau publish these Form 990s on their respective websites, except for Schedule B thereto (Schedule of Contributors), which they do not publish in order to keep donors’ identities confidential. Sections 1 and 5 of Part UU require DTF to publish these 990s—including Schedule B and the donor-identifying information therein—on DTF’s website.  Recent decisions by New York courts highlight the longstanding First Amendment concerns attaching to compelled public disclosure of donor information to charitable organizations.[1]  In addition, disclosing the identity of donors would likely discourage charitable giving and, in some cases, could place donors at risk.

• A federal district court ruled that Executive Law 172-f was unconstitutional and permanently enjoined its enforcement.[2] Section 2 of Part UU attempts to amend Executive Law 172-f but does not address the section of the law that the court ruled was unconstitutional.  Executive Law 172-f thus remains unconstitutional.

The NPOC is a diverse committee of the New York City Bar Association with approximately 50 members.  Some NPOC members are law firm attorneys representing nonprofits, some are in house counsel for charitable organizations, and a few are academics.  The Committee’s members represent multi-million dollar institutions, as well as small charities, operating across the nonprofit sector.  Some of these institutions have been serving New York for more than a century; others are in their infancy, taking their first steps to launch their charitable missions.

For the reasons described herein and in the separate opposition attached hereto as Exhibit A, we respectfully urge that Part UU be deleted from this bill.

March 2020

Non-Profit Organizations Committee
Jackie Ewenstein, Co-Chair
Amarah Sedreddine, Co-Chair
Jeremy Steckel, Secretary