Monday, June 18, 2012

Briffault, Brody, and Mayer on Disclosure

Richard Briffault (Columbia), Evelyn Brody (Chicago-Kent), and I have posted or published new papers relating to disclosure by nonprofits.  Here are the abstracts or a portion of the introduction.

Briffault_r_2_68x91Briffault's Updating Disclosure for the New Era of Independent Spending (SSRN) (abstract):

One of the most striking developments in recent elections has been the upsurge in spending by independent committees, particularly Super PACs and 501(c) nonprofit corporations, that are not technically affiliated with specific candidates or parties but that frequently work to promote or oppose specific candidates or parties. In many elections, these committees are de facto surrogates for the candidates they are aiding. Although our disclosure laws are reasonably effective at obtaining the disclosure of the identities of donors to candidates and parties, they fail to provide effective disclosure of the identities of the donors to independent committees. The Citizens United decision indicates that expanding disclosure to address the surge is independent is primarily a technical and political one, not a constitutional one, as the Court has strongly endorsed the disclosure laws and their application to independent committees.

This article lays out a reform agenda for adapting our disclosure laws to this new era of independent spending. It addresses four issues: how to obtain the identities of the donors who contribute to organizations that engage in independent spending; how to define the election-related activity that triggers the duty to disclose; how to obtain the identities of the natural persons behind corporate contributions and expenditures; and how to assure that disclosure is made in a timely fashion.

In earlier work, I have suggested that we require too much disclosure of personal information concerning relatively small donors. However, we currently provide too little information about the donors who are financing the independent committees that loom increasingly large over our elections. Rightsizing disclosure to enable voters to understand the financial forces behind our candidates requires that we both raise the monetary thresholds for disclosure and extend the ambit of disclosure to include the donors who are paying for independent spending.

Brody_Evelyn_250pxBrody's Sunshine and Shadows on Charity Governance: Public Disclosure as a Regulatory Tool (12 Fla. Tax Rev. 183 (2012)) (paragraph from introduction):

Sunlight, of course, creates both clarity and shadows. Knowing that detailed information about charity
structure and practices will be available to the public can—as no doubt intended—influence charity behavior. However, requiring charities to disclose information to the IRS is a separate question from requiring charities to disclose their IRS filings to the public. Since 1987 exempt organizations have operated under a statutory obligation to provide their Forms 990 upon demand. That significant development has long made me wonder about the effect on the nonprofit sector from mandated public disclosure of tax filings.4 In a March 2010 letter, then-ranking member (and former chair) of the Senate Finance Committee, Charles Grassley, praised the 2008 redesign of the Form 990 in declaring: “The best way I know to increase voluntary compliance is to inject transparency.”

MayerMayer's Nonporofits, Politics, and Privacy (62 Case Western Reserve L. Rev. (forthcoming)) (abstract):

With the rapidly increasing flows of money into politics and accompanying calls for greater disclosure of the sources of those funds, the time is ripe for a deeper consideration of the policy concerns that underlie disclosure requirements and the related issue of privacy. One important aspect of this deeper consideration is recognizing that this particular area is at the intersection of three significantly different disclosure regimes. Those three regimes are (1) federal tax law generally, (2) federal tax law as it applies to tax-exempt nonprofit organizations, and (3) federal election law. These regimes are a study in contrasts. Federal tax law strongly protects taxpayer information from public disclosure. Federal tax exemption law strongly favors public disclosure of institutional information, but it is more ambivalent about public disclosure of information relating to individuals. Federal election law strongly favors public disclosure of all relevant financial information, including information relating to individuals. Understanding the reasons for these differences is important when determining whether disclosures at the intersection of the three regimes are appropriate and desirable. The other, related aspect of this deeper consideration is privacy. The concept of privacy is one that is instantly recognizable and yet theoretically, much less legally, hard to define. This difficulty stems in part from the many possible applications of the privacy concept. Fortunately for the purposes of this Article, the context here is fairly clear and narrow: the public disclosure of information relating to nonprofit organizations involved in politics and their supporters. Even in this narrow context, however, there are at least two competing approaches with respect to privacy. One approach takes a cost-benefit approach. It judges disclosure requirements based on their quantifiable costs and benefits, including among those costs the harm to privacy, however measured. The other, less frequently used approach is a right-to-privacy approach that considers privacy a fundamental right that can only be abridged if there is a relatively strong interest for doing so and then only to the extent required to further that interest. 

The first Part of this Article briefly reviews and contrasts the history and current rules governing disclosure and privacy in the federal tax, federal tax exemption, and federal election law contexts. This review reveals that both the cost-benefit approach and the right-to-privacy approach can be found in this history, but to a greater or lesser extent depending on the context. The second Part explores these two different approaches and the extent to which the existing disclosure rules reflect those approaches. This Part shows that the rules are sometimes but not always based both on the cost-benefit approach to disclosure, in which privacy harms are but one possible cost, and on the right-to-privacy approach. The third Part considers recent proposals for disclosure rules relating to nonprofit organizations engaged in political activity using both the cost-benefit approach and the right-to-privacy approach. This consideration reveals that certain proposals, which relate to disclosure of financial information primarily about the organizations themselves, generally are justifiable under either approach. Certain other proposals that would require disclosure of financial information primarily relating to individuals, however, are more difficult to justify under a right-to-privacy approach. I conclude by discussing why this difference exists and what it means for the desirability of disclosure in this area.


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