Tuesday, December 18, 2018

Michigan Senate Bill 1176, "Personal Privacy Protection Act," Seeks to Shore Up Donor Privacy


My father used to say, "things ain't like they used to be . . . and never were!"  In the less partisan, relatively more innocent days of nonprofit organizations, everyone agreed that donor privacy was always a good thing.  And NAACP v. Alabama was always seen as a case upholding a bedrock American right indispensable to a just society -- the right to associate, primarily through collective donor supported speech, with a legal cause without fear of majoritarian or government retaliation.  But in the world since Citizens United, concerns regarding "donor disclosure vs. donor privacy" are increasingly about who is influencing political electives in potentially nefarious ways.  The so called "dark money" threat evokes suspicion; perhaps its the world we live in, a world where everyone has the right to fund speech and voters have the right to not ask questions  -- to be intellectually lazy and maintain ignorance!  So today, when 501(c)(3) organizations talk about protecting donor privacy, they are usually concerned with a donor's legitimate, sometimes purely altruistic desire to make anonymous gifts for nonpolitical charitable causes -- and perhaps not being hounded by other groups seeking donations or simply not wanting to disclose their personal wealth.  When (c)(4) organizations talk about donor privacy, its a safe bet that their concerns are entirely different.  We recently posted about "Donors, Disclosures, and Politics," shortly after Revenue Procedure 2018-38.   Linda Sugin has a really good article on donor disclosure vs. donor privacy in a relatively recent issue of the Chicago-Kent Law Review.  In her article, Sugin notes that at the state level, California and New York came down on the side of disclosure, particularly for organizations engaged in political activity.  Last month, though,a bill introduced in the Michigan Legislature, SB 1176, takes the opposite view in favor of donor privacy.  The bill would completely exempt donor identification from the state's public records law and prevent state agencies from requiring the release of those names.  Whenever I see a bill like this, I tend to believe there is a lobbying group behind that is advocating adoption of the legislation in as many states as possible.  Of course, there is nothing wrong with that.  I just can't help noticing the irony in right leaning groups suddenly supporting what has traditionally been viewed as a favorite cause of the left, or vice versa for that matter.  Politics does indeed make for strange bedfellows.  I should mention, though, that there are some who can rightly be described as "purists," and whose opinions are consistent regardless of who it is arguing for donor privacy.  Sean Parnell, VP of Public Policy for the Philanthropy Roundtable (and the author of the first linked article in this post) has always advocated for donor privacy, even while acknowledging the "dark money" concerns that, in his view, threaten donor privacy for those with nonpolitical motives.  His op/ed piece in Sunday's Detroit News explains:

Anonymous donations to charities and other nonprofits are a deeply ingrained part of our nation’s culture of giving, stemming from reasons as varied as religious obligation, a sense of humility, a desire to avoid future solicitations, limiting family strife, and countless others.   Over the next few weeks of the Christmas season residents of Michigan and around the nation can expect to hear news reports of anonymous donors dropping gold Krugerrands into the iconic red kettles of the Salvation Army, as has happened every year at this time for decades.

Unfortunately not everyone respects the longstanding norm of privacy for nonprofit givers, in particular politicians and activists seeking to target those who disagree with them. In response to this threat, Michigan’s Legislature should take the lead in protecting nonprofit donors by passing Senate Bill 1176, the Personal Privacy Protection Act.  The bill would do nothing to roll back Michigan’s laws mandating disclosure of campaign contributions or inhibit investigations of fraudulent practices by nonprofits. The only thing the Personal Privacy Protection Act does is prevent state and local officials from abusing their power by demanding the donor lists of charities and other nonprofits, as well as prohibit disclosure of personal information connected to a nonprofit that may come into government possession.To see how important the protections offered by the Personal Privacy Protection Act are, imagine a nonprofit that is working for criminal justice reform by educating the public, holding rallies, and conducting original research on the issue. While many might applaud this group and want to give to it, it’s also bound to find itself in conflict with those who either support the status quo or have harshly different views on the topic.

The Personal Privacy Protection Act would ensure that politicians couldn’t impede the group by, for example, demanding to know its donors before it allows the organization’s experts to testify at legislative hearings, or deny government contracts to the group’s financial supporters. The law would also prevent a state officer from releasing donor names to the public in an effort to encourage intimidation and other forms of retribution against a nonprofit’s supporters.

There is a long history of people using donor information to have people fired, their businesses boycotted, and worse. This was why the Supreme Court in 1958 ruled in a landmark First Amendment case that the state of Alabama could not require the NAACP turn over its membership lists. Given the current political climate it should hardly come as a surprise that many donors will hesitate to give to a group that others see as controversial if their donation will be made public – and it seems everything is controversial to someone these days.

Michiganians are no stranger to anonymous giving, whether it’s the tens of millions of dollars given to support the Kalamazoo Promise or the numerous small anonymous gifts made through sites like GoFundMe.com. The Personal Privacy Protection Act ensures these and countless other acts of kindness can remain private if the giver wishes, while doing nothing to undermine Michigan’s laws regarding disclosure of campaign donations or punishing fraud by nonprofits. If Michigan wants to continue to encourage philanthropic giving, passage of this bill should be a priority.




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