3 States Suspend Demanding Schedule B Of Form 990

State charity regulators in New York, New Jersey and California, who typically require major donor documents to be included with annual fundraising registration, have stopped collecting Schedule B after last month’s U.S. Supreme Court ruling.

The New York State Attorney General’s Office suspended collection of Schedule B of the Internal Revenue Service (IRS) Form 990 while it “reviews any amendments that might be necessary to policies, procedures and forms” to comply with the U.S. Supreme Court’s decision in Americans for Prosperity Foundation v. Bonta.

“Effective immediately,” charities’ annual filings will no longer require disclosure information that identifies donors. “Any notices that charities have received regarding any deficiency due to missing or incomplete Schedule Bs are no longer operative as to such deficiency, and annual filings will no longer be considered deficient in such regard,” according to a statement posted on https://www.charitiesnys.com/

It’s unclear when the measure took effect specifically or how long the review of policies and procedures might take. Messages to the state’s Charities Bureau did not provide any more specific detail beyond the statement.

“As I read this, they are reserving an indefinite amount of time” to review, Robert Tigner, general counsel for The NonProfit Alliance (TNPA), said. “In the meanwhile, and perhaps forever, they are halting collection of Schedules B. Maybe they’ll make a subsequent announcement, maybe they won’t — ever.”

By a 6-3 decision, the U.S. Supreme Court in July struck down a California regulation that required nonprofits fundraising in that state to submit Schedule B donor information to the Attorney General’s Office. The Americans For Prosperity Foundation began its legal challenge to the AG’s Office winning a permanent injunction in 2016 before the U.S. Court of Appeals for the Ninth Circuit ruled in 2018 that the donor reporting requirement does not violate the First Amendment. That led to AFPF’s petition last year asking the U.S. Supreme Court to hear the case.

TNPA was among the organizations that collectively filed 35 amicus briefs, which were signed by some 275 nonprofits, in support of AFP Foundation and the Thomas More Law Center in their Supreme Court case.

The California AG’s Office began requiring that organizations registered to raise funds in the state submit Schedule B in confidence as part of the state’s charitable fundraising registration. Schedule B lists donors who contribute more than $5,000, or 2% of total gifts, to an organization.

Effective July 1, California’s Registry of Charitable Trusts no longer required the filing of Schedule B as part of registration and annual reporting requirements.

The Charities Registration Section of the New Jersey Division of Consumer Affairs posted a statement on its website that the requirement for charities to submit Schedule B “upfront as part of their initial and yearly registrations can no longer be enforced.”

The IRS requires that tax-exempt entities file a Schedule B, identifying its major donors, with their annual Form 990 but specific donor information is redacted from the publicly available document. State charity regulators can still request or subpoena the documents in the course of an investigation but can’t collect it as a matter of routine.