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IRS Now Complicating Charitable Giving, What’s Next?

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This column originally appeared on Visit for a complete archive of past columns.

The holiday spirit is all around us, as we provide gifts not only to our friends and loved ones, but also to the charities that we value and support. Yet, in the midst of all this year-end generosity, some shareholder activists and Internal Revenue Service officials are being decidedly Grinch-like. Even worse, they’re hoping a new IRS regulation will disincentivize people from making charitable donations.

As the Acton Institute revealed several weeks ago, the IRS is proposing new rules giving nonprofits the option of disclosing any donor who gives $250 or more to the organization. This represents a significant shift away from the current scenario, which simply requires charitable organizations to remit a “contemporaneous written acknowledgement” (CWA) to donors who’ve given $250 or more in cash, goods, or services. Under the newly proposed rules, nonprofits would have the option to collect donors’ Social Security numbers instead of sending a CWA; subsequently, the nonprofits would send the donors’ information to the IRS.

This new method for documenting donors’ gifts is problematic on several levels. The National Council of Nonprofits, an umbrella organization, cautions against such a move by the IRS. The Council of Nonprofits points out that, in 2009, a similar proposal failed to gain traction when the United States Government Accountability Office (GAO) warned that it would have a detrimental effect on nonprofit organizations. The GAO explained that taxpayers may become reluctant to give charitably if it means handing over their Social Security number, since this information is so closely linked with the threat of identity theft. The GAO underscored that identity theft is a very real concern, and that donors may be hesitant to give their Social Security numbers out to a nonprofit volunteer who they’re not certain will safeguard it. Additionally, the GAO warned that even if the IRS provided separate and unique numbers solely for charitable-giving purposes, the extra paperwork could create a bureaucratic headache for nonprofits large and small.


The Council of Nonprofits raises the (very logical) question: Why would the IRS want to create a new, parallel reporting system that puts a significantly heavier administrative burden on both nonprofits and government personnel? The contemporaneous written acknowledgement works perfectly well.

The backlash against the proposed IRS regulation comes from all points on the political spectrum. The libertarian 501c3 organization Freedom Works said in a statement that “the new rule is part of the IRS’s continued efforts to reduce the reach and effectiveness of non-profit organizations. Many of you will remember the proposed regulations from last year that would have narrowly defined ‘social welfare’ to shut down conservative organizations critical of the IRS.”

On the other side of the aisle, New York State Democratic Party Executive Director Basil Smikle said recently that “the nonprofit lobby will push back really hard. My guess is that they will succeed.”

Those who support nonprofits should push back really hard – and they should succeed. Charitable giving allows all Americans the freedom to support the causes they care about. In turn, our nation’s nonprofits provide services upon which so many people depend. The idea of making it more difficult to help those in need – and to risk the identity security of charitable donors – would make even the Grinch cringe.