990 Schedule B Debate to the Highest Court

On Jan. 8, the U.S. Supreme Court announced it would hear an appeal on a hot topic issue for many nonprofit organizations – requiring the unredacted Schedule B as part of the charitable solicitation registration process.  This appeal involves a California law requiring nonprofits to disclose their donors’ identities to the state’s attorney general.

A little history…

California law requires nonprofits to file copies of their IRS 990 forms to include the unredacted Schedule B with the state Attorney General and the Franchise Tax Board.  The Schedule B includes the names and addresses of all individuals who donated more than $5,000 to the nonprofit in a given tax year. CA does not allow the public access to Schedule B information; however court documents indicate disclosures have occurred.

In 2014, Americans for Prosperity Foundation (AFPF), a 501(c)(3) nonprofit, filed suit in U.S. district court, alleging the California law violated its First Amendment rights. In 2016, the U.S. District Court for the Central District of California found in favor of AFPF and barred the state from collecting the group’s Schedule B information.

In 2015, the Thomas More Law Center (TMLC), also a 501(c)(3) nonprofit, filed a similar suit in the same U.S. district court. In a 2016 ruling, the court found in favor of TMLC and prevented the state from collecting the group’s Schedule B information.

The two suits were combined on appeal. In 2018 a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit unanimously overturned the previous rulings.

California is not alone…

California is not alone in requiring the unredacted Schedule B.  Both New Jersey and New York require the unredacted Schedule B as part of the charity registration process.  Hawaii requests the Schedule B uploaded as a separate document as part of the online charity registration process.  Unlike California, New Jersey, and New York, Hawaii will not reject a filing if the Schedule B is not uploaded.

Your thoughts…

Would love to hear your thoughts on nonprofits being required to provide a copy of the unredacted Schedule B – sarah@clearlycompliant.com