Fact Check: Does NC's Donor Privacy Bill Let Nonprofits Hide Donors?
In this week's Fact Check, we turn our attention to the North Carolina legislature and what’s known as the donor privacy bill. The Republican legislation would offer donors to North Carolina nonprofits additional protection from their names being made public. It recently passed the Senate in a party-line vote.
In a tweet criticizing the measure, Democratic state Sen. Natasha Marcus of Mecklenburg County wrote it would “allow politically active 501(c)(4) organizations to hide major donors while using their money to support or oppose candidates and political issues.”
WRAL’s Paul Specht joins us to assess that claim.
Marshall Terry: First, Paul, explain a little bit more about what this bill would do.
Paul Specht: The biggest thing it does is allows people who donate to nonprofits the ability to tell that nonprofit, "Keep my name hidden" or, "Keep my donation anonymous." This would only apply in instances when the nonprofit planned to release their information voluntarily. It does not apply to cases where the nonprofit has to file taxes with the government... Anything the government requests, they still have to turn over. It also says nonprofit boards must approve any instance where they release their donor list publicly. And it also introduces a new punishment for government officials who abuse their access to nonprofit donor lists. They could face a Class 1 misdemeanor, which could lead up to 120 days in jail.
Terry: And why are Republicans pushing this bill right now?
Specht: There's a lot of speculation about this, and that's because there's a case currently before the Supreme Court that deals with donor lists and how they're treated in California. If we back up even further, Republicans say that they're concerned about "cancel culture." They're worried that if someone gets their hands on a list to any nonprofit, they could use that to try to cancel, for lack of a better word, someone for their donation. So in real life, what this might look like is, let's say someone donates to the NRA, that's a 501(c)4, the type that Sen. Marcus mentioned. That person donates to the NRA, the list gets leaked, and then activists or whoever go on social media to call that donor's employer and say, "Hey, did you know that they donate to the NRA?" That's what they're afraid of.
Terry: What about 501(c)(3) organizations, which include the United Way, Foundation for the Carolinas and even WFAE? Are they included in the bill, too?
Specht: While Marcus mentioned 501(c)(4) specifically, the bill notes all types of nonprofits. It does not make any distinction, so it applies to all of them. But the ones that Marcus is concerned about are the 501(c)(4) nonprofits, which tend to be NRA and Planned Parenthood and others like that that are somewhat politically engaged.
Today I spoke against SB636, an ALEC-inspired bill to encourage more dark money in politics. This bill would allow politically active 501(c)(4) organizations to hide major donors while using their money to support or oppose candidates and political issues. #ncpol pic.twitter.com/U2CQlq9NdN— Senator Natasha Marcus (@NatashaMarcusNC) May 6, 2021
Terry: Was Marcus correct when she said this bill would allow those organizations to hide who their major donors are?
Specht: No, she's not — at least broadly speaking, she's not. That's what drew us to this tweet is conservatives on social media pointed out that her tweet gave the impression that something would be changing. However, we could not find any evidence that this would change anything about what nonprofits give to the government or anything about what they give to our state elections board, because there are rules for transparency when it comes to campaign finance and how these nonprofits operate, just politically speaking, and how they have to disclose their spending. The big takeaway here is she said that this would allow 501(c)(4)s to hide their donors. They are mostly hidden already. In fact, their donor lists are not considered public. In 2018, the Trump administration made it so that 501(c)(4)s don't even have to send their donor list to the IRS. As I mentioned, this wouldn't change anything with the elections board either. So, that's the big takeaway: There's not much change in here.
Terry: What did Marcus mean by what she wrote then?
Specht: She told us in a lengthy email that she's concerned that this would complicate election investigations. And, you know, there are tons of rules for elections, for what campaigns and for what nonprofits can and can't do. She worried that if this bill passes, a donor could say, "Hey, don't allow the elections board to investigate my giving because that's against the law, and I signed a waiver saying that you can't release my identity." We reached out to the elections board, and they don't expect this to affect their powers. They cited state law and said, "Hey, we have subpoena power here whenever we choose to investigate a potential violation."
Terry: So, how did you rate this claim by Sen. Natasha Marcus?
Specht: We rated this mostly false. And that's because what this bill does is it gives a nonprofit donor the ability to tell the nonprofit, "Do not release my identity to the public." And at this present moment, unless disclosed voluntarily, 501(c) donors and their lists are already not publicized by the IRS or the state of North Carolina anywhere publicly. So, in that sense, most of these donors' information is already hidden. And Natasha Marcus' tweet gives the impression that this is removing something from the public eye, when in fact that's not happening. Her tweet contains an element of truth, but it obviously ignores critical facts that would give people, especially on Twitter who saw her tweet, a different impression.
Terry: All right, Paul, thank you.