New Transparency Act Forces Non-Profits to Publish Donor Lists if They Take Federal Cash

The “Putting Trust in Transparency Act” is a piece of legislation that aims to shine a powerful spotlight on the finances of non-profit organizations (NGOs) that receive federal funding. Essentially, if a tax-exempt organization (like a 501(c) group) gets even one dollar from the government, it must now publicly disclose its list of major private donors—names, zip codes, and donation amounts—which were previously kept confidential from the public. The IRS Secretary is required to make this donor list, known as Schedule B of Form 990, public within 60 days of processing the form. Congress justifies this by stating that once an NGO takes federal money, it’s basically acting as an agent of the U.S. government and should be held to the same strict financial oversight standards as a federal agency.

The New Cost of Doing Business with Uncle Sam

This bill fundamentally changes the risk calculation for NGOs that rely on a mix of public and private funding. Currently, many large donors rely on the privacy afforded by Schedule B to contribute to causes—whether it's a food bank, an environmental group, or a policy think tank. This bill removes that privacy entirely for any organization that accepts federal money. For example, a local community organization that receives a small federal grant to run an after-school program must now expose its entire list of private, individual contributors. This could create a chilling effect: Donors who prefer to remain anonymous, perhaps due to fear of harassment or simply a desire for privacy, may stop giving to organizations that accept federal aid, forcing those groups to choose between federal grants and private funding.

Missing the Filing Deadline Means Losing Status

The consequences for non-compliance are severe and swift. If an NGO that receives federal funds fails to file that Schedule B donor list on time, the IRS must issue a warning. If the organization still hasn't filed within 60 days of receiving that warning, it automatically loses its tax-exempt status. Think about the administrative pressure this puts on smaller organizations. A tiny non-profit with limited staff might miss a deadline due to an administrative oversight, and that mistake could cost them their entire tax-exempt status—a financial death sentence. While the bill allows for reinstatement if the organization can prove a “good reason” for the failure, the initial revocation is a massive hurdle that could halt operations instantly.

The Trade-Off: Transparency vs. Privacy

The core of this legislation is a trade-off between public transparency and donor privacy. For taxpayers, the benefit is clear: you get to see who is funding the non-profits that are also using your tax dollars to push their agendas or provide services. This increases accountability. However, the cost is borne by the private donors and the organizations themselves. Organizations involved in sensitive work—like advocacy for marginalized communities or groups that face strong political opposition—often rely on donor anonymity to protect their contributors from potential backlash or harassment. By forcing public disclosure, the Act may inadvertently make it harder for these groups to raise necessary funds, regardless of how well they use their federal grants. It’s a classic case of policy overreach where the penalty (full donor exposure) seems disproportionate to the offense (receiving a federal grant).