Does your 501(c)(4) have to disclose its donors on Schedule B of its 990? Not anymore…
More than a decade ago, the IRS (as a result of a Congressional directive) began requiring 501(c)(3) public charities to disclose some donor information on Schedule B of their annual 990 returns. This reporting requirement was later extended to all other types of tax-exempt groups, including 501(c)(4) social welfare organizations and 501(c)(5) labor organizations. While Schedule B donor information was not required to be made publicly available, it provided the IRS with information about the largest contributors to nonprofit groups. Since that time, nonprofit organizations have disclosed the name, address, and donation amount for any donor contributing $5000 or more (in money or property) on Schedule B of the organization’s 990.
But many are not required to do so anymore.
In a surprise development earlier this week, the Treasury Department and the IRS announced that certain tax-exempt organizations will no longer be required to identify their biggest contributors on Schedule B. While 501(c)(3) public charities and 527 political organizations continue to be bound by all Schedule B requirements, all other types of 501(c) organizations are now exempted from having to list the names and addresses of their donors. This means that 501(c)(4)s are free to engage in extensive issue advocacy and some support or opposition of candidates without having to disclose to the IRS who is keeping the organization financially afloat.
In implementing these changes to nonprofit reporting requirements, the Treasury and IRS cited several factors influencing the decision including the fact that the IRS accidentally released confidential Schedule B information in the past. They also alleged a disparate impact on conservative nonprofits by improper analysis of Schedule B by the previous administration, and they asserted their belief that these changes will increase public trust and reinforce donor confidentiality.
These changes to Schedule B reporting requirements mark a significant departure from the reporting rules that we in the nonprofit sector have become accustomed to over the last several years, and they allow many organizations to secure their donors’ anonymity even more stringently than before. If you have any questions regarding your organization’s obligations under the newly announced reforms, please reach out to us on our FREE technical assistance hotline.