Stay Compliant This #GivingTuesday
Black Friday and Cyber Monday—two days everybody has heard of and most of us have most likely taken part in—but what do you know about #GivingTuesday? After seeing a decrease of charitable donations in the days following Thanksgiving, Manhattan’s 92nd Street Y worked to create a social media fundraising campaign. It went viral, resulting in #GivingTuesday being adopted and passed on by other nonprofit organizations. Celebrated the Tuesday after Thanksgiving, #GivingTuesday is now an international movement, with online donations totaling over $177 million in 2015.
#GivingTuesday is a great opportunity for your nonprofit organization to kick off the charitable season. Your organization has the potential to bring in large donations and build relationships with long-term donors. Guidestar and GivingTuesday.org are two helpful resources that can help you launch a #GivingTuesday campaign. In the meantime, with the launch of any new or major fundraising event, it is a good time for a few compliance and risk management reminders.
As a general rule, as your organization’s outreach footprint expands, the opportunity for impact increases. As your organization plans for growth, it’s an excellent time to revisit ways to manage potential risk and to evaluate your organization’s way of doing things. We have seen our clients reap financial benefits and utter deep sighs of relief and gratitude when they begin thinking systemically about ways in which to minimize risk and build good will for their organization. Like many investments, those efforts will generally “pay forward”—sometimes exponentially so!
Charitable Solicitation Registration
Making sure your organization is following state charitable solicitation registration requirements is vital for any fundraising event or campaign. It’s crucial to check your compliance with each state’s requirements, especially for online giving. Since #GivingTuesday is designed around social media and online contributions, you may need to register in additional jurisdictions (…and you might also want to consider other legal issues, like trademark laws). It seems like decades ago, given the pace at which technology moves, but in 2001, the National Association of State Charity Officials released the Charleston Principles, a guide for regulating online charitable giving. Many state statutes at the time, though applicable to online solicitations, were drafted specifically to address more established fundraising techniques (such as telephone, direct mail, and in-person solicitations), and so the Charleston Principles were issued to provided clearer and uniform guidance for state officials tasked with the new challenge of applying their state laws to emerging media and electronic methods of soliciting charitable funds. The Charleston Principles recommend that state charity officials, when regulating organizations not domiciled in their states, interpret and enforce their respective state charitable solicitation statutes to require compliance with their respective state charitable solicitation laws and registration requirements if the charitable organization has an interactive website that allows online donations (e.g. “Donate Now” button) and if the organization (1) specifically targets for solicitation persons physically located in the charity official’s state; or (2) if the organization receives contributions from persons in the charity official’s state on a repeated and ongoing basis or a substantial basis through the organization’s website. For organizations without interactive websites (i.e., without “Donate Now” buttons), the Charleston Principles recommend that state charity officials consider (1) the organization’s outreach efforts to persons within their state (e.g., whether the organization invites further offline activity to complete a contribution, or establishes contact with the state such as sending email messages or other communications that promote the website) and (2) the factors above (regarding targeting and whether the organization receives contributions from persons in the state on a repeated and ongoing, or substantial, basis). An organization that is ramping up its solicitation efforts and is doing so online should review the Charleston Principles and should consult with an attorney specializing in nonprofit regulatory matters.
State charity officials take their state charitable solicitation statutes very seriously, and not only when it comes to enforcement against fraud. Registration fees may be an important revenue source for many states, helping to cover the costs of charity regulation. Despite the fact that many states allow for the use of a uniform registration statement, keeping up with the costs and different thresholds to the registrations can be challenging. Applying these rules and navigating these requirements while doing so affordably presents other challenges for many organizations. If your organization needs help understanding these rules and the registration requirements based on the solicitation of your organization, contact us, and we can provide guidance or connect you with resources that can help you navigate this process. If you want to learn more, read our blog post explaining charitable solicitation registration in more detail.
Videos are a great way to show people what your organization is all about. Whether it is footage from your organization’s latest fundraising event, testimonials from your organization’s clients, or employees discussing the values of your organization, videos can make a strong impact on your audience. With social media platforms like YouTube, Facebook, and Twitter, it’s now easier than ever to share videos with thousands of people with just a click of a button.
It’s essential that you get the consent of any person featured in your video. Having an event where you would like to take pictures and video? Consider whether your organization should require permissions and waiver forms to be signed by any participants, volunteers, and employees, and if so, how best to present these requests. There are a myriad of practical and legal issues to consider when drafting and presenting these documents. As just one example, you’ll want to make sure that you have the proper agreements in place with the people who create the footage for your organization!
Professional Solicitors and Fundraising Counsels
Your nonprofit organization may choose to hire a person or company to directly solicit contributions through telemarketing, canvasing, event marketing, or any other type of solicitations. Many nonprofit organizations may also consider using a fundraising consultant or fundraising counsel to plan their #GivingTuesday campaign, organize other fundraising campaigns, or help to write grant requests.
If your organization uses one of these professionals and provides the professional with any kind of compensation, your organization typically must register with the states where these solicitations are taking place. Even if your organization is exempt from charitable solicitation registration, using a professional solicitor may require you to register with some states. Organizations typically must also have written agreements (containing certain language) with these professionals. To protect your organization, your organization should only engage fundraising professionals who are familiar with these rules and who meet these requirements. Be wary of the fundraising professional who tells you, “I work for a lot of other organizations, and you are the first that has asked me for this.” Consult with legal counsel to determine if your organization is required to register and to understand what your organization’s contracts with these professionals need to cover. Checking in with legal counsel before engaging any professionals can help minimize risk manage resources, and help your organization stay in compliance.
IRS Required Acknowledgements
If any cash donations of $250 or more are received, your organization must provide a contemporaneous written acknowledgement to substantiate the donation. While the IRS only requires these written acknowledgements for cash contributions of $250 or more, for numerous legal reasons, it is best practice to send these acknowledgements to all donors for donations of any amount. The acknowledgement must contain the following:
- Name of the organization
- Amount of donation
- Description of any non-cash contributions
- Statement that no goods or services were provided by the organization
See here for more information on the IRS website.
The end of the year is a great time to review your donor acknowledgment letters (and pledge agreements) and to make sure that your organization appears correctly on Select Check (the IRS’ Publication 78 database).
As organizations are gearing up their #GivingTuesday strategies, legal counsel can support your organization’s legal needs and help you think systematically about your donor communications with a mind toward managing risk and conserving your organization’s resources. We welcome the chance to review your strategy and advise you on any legal issues that may be triggered by your #GivingTuesday plans.
For any questions or additional information about staying in compliance while planning your organization’s #GivingTuesday campaign – or any other fundraising campaign – please contact Cheshire Law Group.
This article is intended to be a general resource only and is not intended to be, nor does it constitute, legal advice.