Protecting Donor Privacy Philanthropic Freedom, Anonymity and the First Amendment www.PhilanthropyRoundtable.org www.ACReform.org Contents 1 Executive Summary 3 Introduction 3 A Rich Tradition and History of Anonymous Giving 7 A Constitutionally Protected Right 9 Activists and Attorneys General Threaten Donor Privacy 13 Legislators Seek to Undermine Anonymous Giving 14 Is Anonymity Still Needed? 16 Confusing Politics, Government, and Charity 18 Ideology and Donor Privacy 20 Donor Anonymity is Worth Protecting 22 Endnotes Executive Summary among them for supporters of unpopular causes or organizations is the reality that exposure will lead to harassment or threat The right of charitable donors to remain of retribution. anonymous has long been a hallmark of American philanthropy for donors both large Among the more prominent examples is the and small. Donor privacy allows charitable harassment of brothers Charles and David givers to follow their religious teachings, Koch, who have helped fund a broad range insulate themselves from retribution, avoid of nonprofit organizations ranging from unwanted solicitations, and duck unwelcome Memorial Sloan Kettering Cancer Center publicity. It also upholds and protects important to the libertarian-oriented Cato Institute, as First Amendment rights of free speech and well as organizations that engage in political association. However, recent actions by activity. As a result of their giving, the Koch elected officials, activists, and organizations brothers and their companies routinely face are challenging this right and threatening death threats, cyber-attacks from the hacker to undermine private philanthropy’s ability group “Anonymous,” and boycotts aimed at to effectively address some of society’s most the many consumer products their companies challenging issues. make. Because of this attention, the brothers have to hire armed security to keep them, as Several court cases have established donor well as their families, employees, and business privacy as a constitutionally protected right. operations, safe. The Supreme Court ruled unanimously in NAACP v. Alabama in 1958 that “freedom to Despite the Supreme Court’s unanimous engage in association for the advancement ruling in NAACP v. Alabama, a growing of beliefs and ideas is an inseparable aspect number of political leaders and law of the ‘liberty’ assured by the Due Process enforcement officials are calling for donor Clause of the Fourteenth Amendment.” In information, such as the information listed a landmark judgment written by Justice on the Schedule B of the 990 tax form, to John Marshall Harlan II, the Court held that be made public. In 2006, New York Attorney the State of Alabama could not compel the General Eric Schneiderman demanded that NAACP to reveal the names and addresses of the annual reports of state-registered charities its members because doing so would expose include the names, addresses, and total its supporters “to economic reprisal, loss of contributions of their major donors. Former employment, threat of physical coercion, and California Attorney General (and now U.S. other manifestations of public hostility” and Senator) Kamala Harris began in 2010 to thereby restrain “their right to freedom of demand unredacted Schedule Bs as part of association.” In Buckley v. Valeo in 1976, the the annual reporting requirement for charities Court upheld a disclosure requirement for that solicit contributions in that state. donors to political campaigns, political parties, In 2016, The Philanthropy Roundtable filed and political action committees, but noted two amicus briefs in support of groups that are this was a narrow exception to the principles fighting to keep their donors private. In both upheld in NAACP v. Alabama. Americans for Prosperity Foundation v. Becerra and While the reasons many philanthropists wish Independence Institute v. FEC, the Roundtable to remain anonymous are numerous, chief argued that the reckless disclosure of donor Protecting Donor Privacy 1 While the reasons many philanthropists wish to remain anonymous are numerous, chief among them for supporters of unpopular causes or organizations is the reality that exposure will lead to harassment or threat of retribution. information to the government or the public free speech. The Center for Competitive raises serious constitutional concerns, while Politics, whose work is mainly in the realm also undermining philanthropic freedom. of political campaign spending, has taken on the issue of disclosure of charitable donors There is certainly a place in philanthropy and represented a think tank, Independence for accountability and transparency. Because Institute, in its fight regarding improperly donors are able to deduct charitable applied campaign finance disclosure laws. contributions for tax purposes, safeguards are Other groups that have become active on the in place to ensure the money being given issue include the Foundation for Government away isn’t secretly being used to the benefit Accountability, the Goldwater Institute, and of a donor, such as attempting to avoid tax of course, The Philanthropy Roundtable. obligations. Private foundations must also disclose their donations to the public to ensure Though some today would diminish or that funds are not being used for the personal eliminate the right of charitable donors to benefit of those who give to foundations. remain anonymous, the arguments offered However, aside from these modest safeguards generally range from simple curiosity about to ensure charitable funds are used for who is giving to the desire by some to build charitable purposes, there is little legitimate what amounts to an “enemies list,” allowing reason to violate donor privacy principles. them to know whom to target for harassment, whom to boycott, and whom to ostracize from Many groups are taking a leading role polite society. Neither of these arguments, in defending donor privacy. State Policy nor anything lying between them, such as Network, an association of state-based free- misapplied notions of “accountability” or market think tanks and other organizations “transparency,” justifies eliminating the right favoring limited government, has launched an of philanthropists to keep their giving private. initiative called “People United for Privacy,” Only in the most compelling circumstances, providing information and resources for such as an active criminal investigation citizens to understand the importance of into a specific charity or donor, should this protecting donor privacy. The American important right be open to curtailment. Legislative Exchange Council, an organization of conservative lawmakers, is also active on this issue as part of its larger effort to defend 2 The Philanthropy Roundtable Introduction Like many philanthropists he may not have wanted his support to overshadow the good work of the charities he supported, which at The end of 2016 saw the passing of, among least one recipient of his generosity reported many other notable individuals, pop music to be the case. Perhaps, living in the spotlight icon George Michael. Early media coverage for so many years, he simply wanted to keep of his death focused on his early stardom his giving private because it was one of the as a member of the band Wham!, his two few things he had the ability to keep private. GRAMMYs, and his activism on behalf of gay rights and AIDS prevention, among other Though George Michael’s fame was unusual items. But within a few days, media coverage for a philanthropist, the desire to keep much began to reveal another side to George of his charitable giving private is a common Michael of which only a select few were one among many who share their wealth with previously aware — his incredible generosity organizations devoted to the public’s benefit. through charitable giving, much of which he did anonymously and out of the public eye. Unfortunately this desire, which has generally been respected and protected throughout His anonymous donations included millions our nation’s history, is being challenged and to Childline, a U.K. philanthropy that gives eroded by a number of elected officials, abused children a telephone hotline to call activists, and organizations. But for a variety for help, and Macmillan Cancer Support also of reasons, including religious, cultural, acknowledged after his death the singer’s historical, and practical, these efforts should be generous funding for their programs.1 He also resisted when it comes to charities organized volunteered regularly at a homeless shelter, as 501c3 entities specifically prohibited from under the strict condition that his work there campaign intervention, and instead the long be kept secret.2 tradition of allowing philanthropists to decide for themselves whether to give publicly or It’s difficult to pin down exactly why George privately should be preserved. Michael chose to keep private the charitable side of his life. He was no stranger to the public eye, nor was he afraid of taking a controversial stand, and there were certainly occasions when he could have used some A Rich Tradition and sympathetic publicity when his personal life History of Anonymous led to lurid headlines. Giving In a 1993 MTV interview, he explained that the public had become aggravated “listening For some charitable donors, religious to celebrities patting each other on the back convictions drive their decision to give saying how generous they are being. And they anonymously. For example, Jewish donors may 3 are right