Sunlight for Unaccountable Non-Profits Act: Impact on Schedule B Disclosure Requirement

On January 23, 2023, Senator Jon Tester (D-MT) reintroduced the Sunlight for Unaccountable Non-Profits Act (the “SUN Act”) as a part of his efforts to increase transparency and eliminate certain groups’ influence on politics in the United States.

This bill includes two main objectives: 

1. The bill would require tax-exempt organizations and deferred compensation plans to be made available to the public at no charge, processable with computers and easy to access.
2. The bill would require non-profit organizations that engage in political campaign activities to make their Schedule B, Schedule of Contributors, open to public inspection. 

Senator Tester explained in his press release that this bill would bring back transparency and accountability and eliminate the influence of “dark money” from U.S. elections. Senator Angus King (I-ME) has expressed his support for the bill and noted that political donations lack transparency and openness in his press release. He added that “secretive special interest groups” should not be allowed to influence the democratic process. 

Schedule B, Schedule of Contributors, is a part of the Form 990 series in which non-profit organizations are required to disclose contributor information. This includes donors’ names and addresses, the type and description of the contributions and the amounts donated. As noted in one of our previous posts on Donor Information Disclosure Requirements, this requirement is intended for tax-exempt organizations that receive contributions and meet certain thresholds. However, this form is only required to be provided to the Internal Revenue Service and is not open to public inspection.   

Schedule B and the disclosure of this personal information have often been contentious. Legislation similar to the SUN Act has previously been introduced going back to 2014. A non-profit organization based in Ohio filed a lawsuit claiming that reporting names and addresses of contributors to the IRS is unconstitutional. David L. Thompson, Vice President of Public Policy for the National Council of Nonprofits, doubts that the requirement will be repealed by Congress. However, there is a movement to limit access to donors’ information, not only to the public but also to law enforcement. Mr. Thompson added that there’s a possibility of aggressive questioning on the matter in an upcoming House oversight hearing and that litigation might make its way to Supreme Court in 2023.  

The disclosure of this information has also been debated at the state level. In July 2021, the U.S. Supreme Court ruled that public inspection of Schedule B is unconstitutional, as it “violates the right to free association protected by the First Amendment to the U.S. Constitution.” The Supreme Court granted a review of the case after the State of California required non-profit organizations to include the full copy of Form 990, Schedule B, as a part of their state annual report.

Schneider Downs continues to monitor this proposed legislation and related court cases and will continue to provide updates as information changes.

About Schneider Downs Not-for-Profit Services 

Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  

To learn more, visit our Not-for-Profit Industry Group page.