The [XYZ] Foundation doesn't list donor names on their tax return available for public review. Is this illegal? If so, what can the public do to have them disclose the donors?
This is another example of how the terminology in the nonprofit sector can be confusing. The term “foundation” can be used in the name of a public charity, a private foundation, or a non-exempt for-profit corporation. The word does not help in determining the legal requirements that apply to the organization. (See Ready Reference Page: “What Do We Mean When We Say “Nonprofit’?)
The organization you ask about happens to be a public charity that files a Form 990 annual tax information return. As a 501(c)(3) public charity, it has to disclose the names of significant donors to the IRS on Schedule B, but those names are confidential and need not be disclosed to the public. (The same non-disclosure rule applies to 501(c)(4) social welfare organizations, which is why there is such an issue over the exempt status of the new organizations engaging in massive political advertising in election campaigns. If they were exempt as 527 political organizations, they would have to disclose their donors publicly. (See Ready Reference Page: “IRS Proposes New Regulations for 501(c)(4) Social Welfare Organizations”)
If this foundation were a 501(c)(3) private foundation, it would have to file a Form 990-PF and would be required to disclose its donors. But it is a public charity and not a private foundation. Therefore, what this “foundation” is doing is not illegal, and you have no way to force it to disclose its donors if it won’t reveal them voluntarily. Many public charities, of course, proudly list their donors in an annual report made widely available to their constituents, but the public can’t force them to do so.
Tuesday, August 19, 2014
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I am confused. I make donations to a church (tithe, donations for missions, contributions for different ministries). Every year we have 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. My concern is that the last pages of the financial report has the list of all the contributors and the amounts that each member has contributed financially. Some members have discussed the concerns that 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 donated to anyone that wants to see this information. It is my understanding that "every tax-exempt has to share a Form 990 with anyone requesting it. However, donors have a right to remain anonymous. If a donor makes this request, his name should not be disclosed to anyone outside the senior staff and the board, and that the list of donors that is attached to Form 990 is not part of the public disclosure". So, how do I prove to my Pastor and the Board Members of the church that this practice is not "legal"?
Great question. Thanks for the submission. We've answered this question in a new post. To read more, see - https://www.nonprofitissues.com/to-the-point/must-charities-disclose-names-donors
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