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What is the best way to donate to charity anonymously?

Your Legal Questions Answered

What is the best way to donate to charity anonymously?

If someone wanted to donate to a charity but was afraid of being persecuted for it (perhaps losing their job) if it were to become known, how might they keep it confidential?  Are charities required to disclose their donors? If not, is it typical for them to do so? If someone donates as “anonymous,” can the donor's identity become known to the public -- perhaps via credit card record or other means?

Charities are required to report most donors who contribute $5000 or more a year on the Schedule B attached to their 990 form tax information returns. But even though the main parts of the forms are public information, the name and address of the donors on Schedule B are not. Theoretically, they are seen only by the IRS and the few states that require submission of a complete Schedule B in order to register for charitable solicitation. (The U.S. Supreme Court will soon consider whether the state requirement is valid.)  Many charities, of course, like to thank their donors by recognition in the charity’s annual report and elsewhere, although they will usually recognize a particular donor’s wish to be anonymous if requested.  I have not heard of donors’ names leaking because of a hack of credit card information.

The question is how secret you want to keep your donation. Do you want the leaders of the charity to know and just not tell anyone who doesn’t have a direct need to know? Are you willing to take the risk of inadvertent disclosure as long as you can be reasonably sure it isn’t published in some public setting?

If you are not willing to take that risk, probably the most popular way to make an anonymous gift these days is to make it through a donor advised fund that doesn’t have your name associated with it.  That’s one of the recognized advantages of a DAF over a private foundation that has to list all of its grants on its 990-PF.  (See Ready Reference Page: “Donor Advised Funds Still Compare Well with Private Foundations”) Even if the sponsor of the DAF is required to report your donation on its own Schedule B and the names on the Schedule should leak, the Schedule will not say to which of its many funds the contribution was made, and it would be almost impossible to trace the gift. You can also ask the DAF sponsor to tell the charity that the gift is from the XYZ Fund without identifying the adviser to that Fund. If the recipient charity reports a gift from the XYZ Fund in its annual report (and you can ask the sponsor to request that the DAF gift remain anonymous), the public will have no way of knowing that you caused the gift to be made.

Tuesday, January 26, 2021

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