As we all know, we operate in a sector that warrants some levels of transparency. Nonprofits exist as public entities where people could make financial contributions for the greater good. Of course, that’s a good thing. Moreover, depending on the gift level and how individuals prepare their taxes (e.g., itemizing), the donations could be tax-deductible. Ultimately the nonprofit sector exists for the improvement of the lives of people and social causes. However, increasingly there’s a push for more transparency, which rubs against donor privacy.

In the information age, one of the most critical topics of public discussion is transparency. We’re told by the corporate powers, especially around social media, that we have to be transparent and put as much information out there for review. Of course, as individuals, we also have to understand that what’s really at the core is the idea that we are the commodity to sell for social media and tech companies. By harvesting the information, what we give away for free gets monetized by Big Tech in advertising.

For nonprofit organizations, which operate for public interest and trust, we have to carefully look at transparency and donor privacy. For example, yes, nonprofits should ensure they publish their financials and leadership. Because of most nonprofits’ tax-exemption, the public does have the right to know as much as possible. That said, a line has to get drawn related to donor privacy, and let’s explore why.

The Founding of the United States

To understand why donor privacy matters, we have to go back to the founding of our nation. In short, we have to remember that the U.S. was an idea that came out of the experience of people who felt they did not have human rights and freedoms under a monarch. If you reflect for a moment, you understand that Americans have firm values around individual liberties. For example, Americans value the right to bear arms.

In addition to that right, deep in the American psyche is each person’s right to be free. In fact, the idea of freedom is the foundation for almost everything in our society. Meaning, the concept of freedom is what allows Americans to own as many guns as they want. Also, freedom is why we experienced a lively debate about the need to wear a mask during a pandemic or not. However, most important for Americans is the right and freedom to say what they want (free speech), think what they want, and support what they want.

Freedom of Speech and Donor Privacy

Some of the most valued freedoms of Americans are freedom of speech and association. In short, Americans could say practically anything they want, and they have a right to say it—even if it offends someone else. Also, they could associate with whomever they please. However, there are limits in our country. For example, Courts ruled that you can’t yell fire in a theater because of safety risk. Free speech and the right to express and associate with whatever lies at the heart of donor privacy. When people donate to any cause, they exercise their right to free speech, expression, and association.

However, that idea is under threat in our country, almost continuously. As Benjamin Franklin is said to have quipped, we have a democratic “republic, if you could keep it.” In other words, as a nation, we must continually work to maintain our democratic freedoms, including free speech, expression, and whom we support. Throughout history, Americans have defended and exercised those freedoms, including during the Civil Rights Movement, Black Lives Matter, and Me Too.

Balancing Donor Giving And Transparency

In the current era, we again face ourselves coming to a crossroads. Governments and the public want to push for more transparency as it relates to nonprofits. The idea of it is understandable, especially since nonprofits benefit from tax-exempt status. And it also makes sense from the standpoint that they operate from a position that depends on public trust. However, as a sector, we have to consider the adverse effects of legislating full donor transparency.

Let’s consider some nonprofit organizations that are contentious for one side of the political aisle or another. Two groups come to mind quickly. The first is the National Rifle Association, and the second is Planned Parenthood of America. If we don’t protect donor privacy, those organizations could suffer harm with the stem of donations. Now, I understand that’s the aim of some legislatures and the public who want to see either organization shut its doors, depending on values.

However, my question for you is who has the right to decide what a “good” organization is for the U.S.? In other words, between the NRA and Planned Parenthood, who gets to determine whether or not it’s an organization worthy of support? Nonprofit executives and leaders should think about it carefully before answering. You see, if we as a country allow for freedom of speech and expression to get diluted, we run a significant risk of destroying the freedoms we so value as Americans.

Donor Privacy and Smaller Grassroots Nonprofits

As we know, many of the 1.5 million nonprofits have budgets below $100,000. Add regulatory hurdles around donor privacy filings and increased costs, which would only harm small groups. However, the most significant reason we have to defend donor privacy in the nonprofit sector is that demanding it will depress fundraising. When organizations have to disclose donors’ information, fundraising decreases, especially for contentious missions.

For instance, think of the small substance abuse groups that won’t get funding. As we know, there’s great disparity concerning women’s health and groups that have anything to do with reproductive rights (not just abortion) and men’s health. Finally, consider domestic violence shelters, environmental groups, and even educational groups. In short, if we don’t protect donor privacy as a sector, we could see all of these types of groups adversely affected. In other words, all we will accomplish is fully politicizing the nonprofit industry by not being vigilant on freedom of speech, expression, and association.

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