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Must charities disclose names of donors?

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Must charities disclose names of donors?

Every year our church has an annual business meeting, where the new board is elected, the assembly sees a financial report, the budget is discussed with the assembly, and the assembly votes to approve or disapprove.  I am concerned that the last pages of the financial report list all of the contributors and the amounts of their contributions. Some members have said they don't want their contributions to be disclosed. However, the Pastor says that we are required by law to disclose the donors' names and the amounts to anyone who wants to see this information. It is my understanding that every charity has to disclose its Form 990 but donors have a right to remain anonymous. How do I prove to my Pastor and the board members that this disclosure is not legally required?

You are correct that public charities, including churches, — as opposed to private foundations — are not required to disclose the names of donors under federal tax law.  Schedule B to the Form 990 makes clear that the names of significant donors do not have to be disclosed to the general public by public charities. The amount of such gifts, generally gifts of more than $5000, have to be disclosed, but the identity of the donor may be redacted when Schedule B is given to the public.

It is true that California has required charities seeking to register to solicit charitable contributions to file a complete and unredacted Schedule B with their registration forms (although the state has lost a couple of cases requiring such information in specific situations), but the state is supposed to keep that information protected against public disclosure.

As a church, of course, you are not required either to file a Form 990 or to register for charitable solicitation. The ability to keep contributions to public charities confidential is one of the big reasons donor advised funds are more attractive for some donors than setting up their own private foundations (See Ready Reference Page: “Donor Advised Funds Still Compare Well with Private Foundations”) and one of the major reasons donors give to 501(c)(4) “social welfare organizations” that engage in political activity. (See Ready Reference Page; “IRS Proposes New Regulations for 501(c)(4) Social Welfare Organizations”

It is possible that your church is a nonprofit corporation that is required under state law to give members access to the financial books and records of the corporation. But those statutes are not absolute and the information that is made available must usually be used for legitimate corporate purposes. The statutes don’t require disclosure at the annual meeting of all of the information that might be obtained by a member seeking specific information. If members do not want their contributions disclosed, the corporation could certainly put the onus on seeking the information on the members who want it and can show a reason to obtain it.  It could also list the names of donors without amounts, and could list “anonymous” for donors who don’t want their names revealed.  The type of general disclosure, if any, would be a matter of church policy for determination.

Tuesday, January 9, 2018

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