State-Level Data Privacy Laws and Nonprofits
While the federal government is “lost in translation” most of the time as it pertains to data privacy (especially when many lawmakers are in their 70’s and 80’s), state legislatures are beginning to “flex their muscle” on this issue. Data privacy has become a critical concern for nonprofits as state-level regulations continue to evolve. Two recent developments—the California Consumer Privacy Act (CCPA) and the court decision in Atlas Data Privacy Corp. v. We Inform, LLC —highlight the growing complexity of compliance obligations for nonprofit organizations.
The Impact of Atlas Data Privacy Corp. v. We Inform, LLC
In Atlas Data Privacy Corp. v. We Inform, LLC, the court addressed the issue of financial penalties tied to data privacy violations based on New Jersey’s “Daniel’s Law.” The court ruled that fines for violations require a finding of negligence. This decision underscores the importance of proactive data management by nonprofits. No longer is it enough for organizations to rely on "good faith" efforts; they must now implement demonstrable safeguards to protect data and avoid charges of negligence.
For nonprofits, this ruling raises the stakes for data privacy compliance. Nonprofits often handle sensitive donor information, volunteer records, and beneficiary data. If found negligent in their data protection practices, they could face significant financial penalties. This means nonprofits must focus on regular audits, employee training, and enhanced cybersecurity protocols.
California’s Approach to Nonprofit Data Privacy
California's CCPA has set a precedent for comprehensive data privacy regulation. While CCPA’s primary focus is on for-profit businesses, certain nonprofit activities may fall within its scope, especially if they engage in commercial activities or share data with for-profit partners. The California Privacy Rights Act (CPRA), an expansion of the CCPA, adds further obligations, including stricter opt-out rights for consumers and greater data transparency.
Nonprofits with a presence in California must remain vigilant. While the CCPA does not explicitly govern most nonprofits, those with complex data-sharing practices may still be impacted. Organizations should assess whether they are inadvertently subject to the law and align their data privacy policies accordingly.
Several other states are also considering legislation in 2025…some new laws and some that would include nonprofits into their already existing “for profit” laws regarding data privacy. Nonprofits face increasing scrutiny in the realm of data privacy. The Atlas decision emphasizes the need to avoid negligence, while California's privacy laws hint at broader future compliance challenges. By adopting strong data protection measures, nonprofits can mitigate legal risks, maintain donor trust, and operate ethically in an era of heightened privacy awareness.
