Here are the 7 draft principles falling within the category of "Principles for Responsible Fundraising Practices" developed by the Panel on the Nonprofit Sector’s Advisory Committee on Self-Regulation of the Charitable Sector:
- Solicitation materials and other communications with donors and the public must clearly identify the organization and be accurate and truthful.
- Contributions must be used for the purposes described in the relevant solicitation materials, in the way specifically requested by the donor, or in a manner that reflects the donor’s intent.
- Charitable organizations must provide donors with appropriate acknowledgments.
- Charitable organizations should implement clear policies, based on the organization’s exempt purpose, to determine whether accepting a gift is in the best interests of the organization.
- A charitable organization should provide appropriate training and supervision of the people soliciting funds on its behalf to ensure that they understand their responsibilities and applicable federal, state and local laws, and that they do not employ techniques that are coercive, intimidating, or intended to harass potential donors.
- Organizations should not compensate internal or external fundraisers based on a commission or a percentage of the amount raised.
- A charitable organization must respect the privacy of individual donors and must not sell or otherwise make available the names and contact information of its donors without prior permission, except where disclosure is required by law.
Here are some of my observations:
- Integrity in charitable solicitations must be a key priority for organizations. An organization that has not yet received a determination of tax-exempt status must disclose such status in its solicitations.
- In California, donor intent may be enforced under the charitable trust doctrine. Generally, even if a donation is not expressly restricted, it may be restricted to furtherance of the charity’s purposes at the time such donation was accepted. A charity’s purpose is determined not only by its articles and bylaws, but also by its Form 1023 application and its marketing and solicitation materials. Respecting donor intent is also a good business practice.
- Under recently enacted laws, a donor must have a bank record or written communication from a charity in order to substantiate a deduction for a charitable contribution. The donor must have a written contemporaneous acknowledgement from the charity to substantiate a deduction for a contribution of $250 or more. In addition, a charity must generally provide a written acknowledgement to any donor who contributes $75 or more and receives goods or services of substantial value from the charity in exchange.
- Gift acceptance policies can provide safeguards in several circumstances, including: (1) guidance to staff with respect to whether a gift restricted to funding an activity which may be inconsistent with furthering the charity’s mission should be accepted, and (2) the requirement of appropriate due diligence before the acceptance of an in-kind gift with associated potential liabilities (e.g., raw land which may have hidden hazardous waste liabilities).
- Smaller and newer charities that use volunteers to solicit funds on their behalf must ensure that they meet any state and local registration requirements and provide guidance to their volunteers, even if it appears that the applicable laws reflect common sense practices. Charities and their representatives should generally refrain from from giving legal and tax advice to donors (e.g., "your donation is tax-deductible"). California charities must be aware of their requirements with respect to the use of commercial fundraisers and fundraising counsel.
- The rationale behind this principle is to avoid the creation of an incentive for fundraisers to put their own interests ahead of those of the organization.
- Preserving the trust and confidence of donors should be an express goal of all charities.
You can view the Advisory Committee’s Draft Principles for Responsible Fundraising here.