Senate Bill 62 is set to become law in mid-summer 2023. Kentucky Nonprofit Network stands with state associations of nonprofits across the nation in fighting similar unnecessary and confusing legislation in their states. We are disappointed that calls to improve this bill to protect the integrity of charitable nonprofits and address a host of implementation issues were ignored by the bill sponsor. We are disappointed that this bill was not vetoed by the Governor.
Despite our disappointment, this is an important opportunity to remind charitable 501 (c)(3) nonprofits and donors that donor information always was, and still is, private and secure. Nothing about Senate Bill 62 changes that. What Senate Bill 62 does do is protect the privacy of donors to unincorporated nonprofits and nonprofit LLCs – entities lumped under the broad tent of the word “nonprofit,” but not subject to the same reporting requirements and now benefitting from the same protections as 501 (c)(3) charities.
The 2021 U.S. Supreme Court ruling cited as the impetus for this legislation reinforced existing federal law protecting donor privacy for charitable nonprofits and for that reason, this legislation is at best – unnecessary. Unfortunately, it has mistakenly planted seeds of doubt and confusion regarding donor privacy among nonprofits and their donors. At worst, Senate Bill 62 is so broad that it is codifying protections into Kentucky law for entities with little to no oversight or required reporting, threatening the integrity of charitable nonprofits just when they need donors most.
Senate Bill 62 also creates significant confusion on compliance that is certain to be a distraction and cause heartache for many worthy Kentucky charities. And we are troubled that Senate Bill 62 has the potential to weaken law enforcement’s ability to weed out bad apples who are taking advantage of donors. This legislation is fraught with unknown consequences that put the integrity of the sector and law enforcement’s ability to protect consumers at risk.
If Senate Bill 62 only codified the U.S. Supreme Court ruling, it would have been unnecessary, but not risky for charitable nonprofits. The problem is that Senate Bill 62 does so much more. There are thousands of charitable nonprofits with critically important work to do in Kentucky. Donor trust is essential to their ability to raise needed funds to accomplish their missions and meet community needs. These charities cannot afford to be hijacked by partisan interests. Senate Bill 62 becoming law will make that easier.
Kentucky Nonprofit Network 