Nonprofit Blog

Welcome to the Nonprofit Blog hosted by the professionals at Armanino, CPAs & Consultants. This blog is set up to inform nonprofit organizations of trends, rule changes, best practices and free educational offerings that we have built to support nonprofit organizations. Our professionals bring you their insights from an accounting and organization perspective to help nonprofits reach their goals. We support our clients with advice, direction and best practices.

Friday, December 11, 2015

IRS Proposal: Nonprofits Should Collect Donor Social Security Numbers

Posted by Renee Ordeneaux

The Internal Revenue Service (IRS) has proposed a rule change that would allow nonprofit organizations to collect social security numbers for donors contributing $250 or more and report those contributions to the IRS on a new form. This would serve as an alternative to providing “contemporaneous written acknowledgment” to the donor.

If you’d like to weigh in by the December 16 comment deadline—and we think you should—CLICK HERE.

Here are some concerns:

  • Identity Theft – Collection of social security numbers would make nonprofit networks and email more attractive to hackers and identity thieves. Securing data to protect private information could be costly, and breaches would erode trust with donors.
  • Donor Communication and Cultivation – Almost every nonprofit understands that thanking donors is an important part of cultivating the donor relationship. Few organizations would feel that reporting to the IRS would supplant the need to communicate directly with their donors.
  • Impact on Donations – Because of identify theft concerns, donors would be less likely to contribute. The proposed system is voluntary, but it is likely that a good portion of the public would not understand that and contributions could be reduced throughout the sector.
  • More Work – Someone would have to collect, verify and report. Obviously, this takes time.

Comments are easy to submit at the website above, and ironically, you’ll find the following warning on the IRS page:

WARNING: All comments will be made available to the public. Do not include any personally identifiable information (such as Social Security number, name, address, or other contact information) or confidential business information that you do not want publicly disclosed. All comments may be posted on the Internet and can be retrieved by most Internet search engines.

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