Nonprofits, Donor Privacy and Political Engagement

On September 13, 2023, Philanthropy Roundtable published a new policy brief addressing the extent to which foreign donations are influencing U.S. political activities through 501(c)(3) and 501(c)(4) organizations. While recent media reports have raised concern about the interference of foreign nationals in American politics, this research shows that claims of pervasive political advocacy within the nonprofit sector lack support from both available data and empirical literature. In fact, the rise in scrutiny appears to be fueled by a small number of bad actors who should be investigated and prosecuted, rather than a systemic abuse of the laws and regulations underlying the nonprofit sector.  

While the debate around the political engagements of 501(c)(3) and 501(c)(4) organizations persists, our nuanced examination reveals that such activities are not as pervasive or uniform as often portrayed. The existing legal framework provides a barrier against undue foreign influence in American politics, rendering broad disclosure requirements redundant. Where legislative gaps exist, a cautious and targeted approach to reform is recommended to prevent unintended consequences arising from disclosure-based policy solutions that threaten to harm the charitable community. 

Philanthropy Roundtable champions the fundamental right to donor privacy and freedom of association—a cornerstone of American civil society. Last week, the Roundtable responded to a request for information from the House Ways and Means Committee, submitting a comment letter that highlighted the potential consequences of increased donor disclosure proposals on charitable donors and the communities they support.  

This right to privacy, deeply embedded in the Constitution, provides the scaffolding for a diverse web of charitable entities and individual contributors. From poverty-alleviation initiatives and cultural establishments to faith-based communities and business groups, this mosaic of formal and informal entities collectively uplifts a wide spectrum of causes, often addressing issues that lie beyond the realm of governmental intervention. 

Importantly, the significance of this principle transcends political boundaries. A prime illustration is the Supreme Court case Americans for Prosperity Foundation (AFPF) v. Bonta. In California, where donor details were mandated to be disclosed, AFPF donors faced serious threats to their personal safety. This compelled the organization to challenge the state’s requirement in court. As the case eventually reached the high court, an unexpected alliance formed: left-leaning groups, including the American Civil Liberties Union, the NAACP and the Human Rights Campaign, joined their right-leaning counterparts in submitting amicus briefs in support of AFPF. 

The nonprofit sector remains a dynamic force for societal progress, embodying collaboration and serving as a platform for a multitude of causes. The protection of donor privacy stands as a critical pillar of this philanthropic ecosystem, rising above political affiliations. While concerns about foreign influence are valid, the evidence suggests the nonprofit sector’s activities are far from a monolithic platform for political advocacy. Therefore, a balanced and informed perspective, rather than heavy-handed policies that threaten to chill the generosity of charitable donors, is crucial in shaping policies that uphold the integrity of nonprofits while respecting the nuances of their engagement.