6 More Fundraising Legal Tips



Fundraising and development professional should tighten up their knowledge of laws affecting their work. Earlier we posted Top 5 Fundraising Legal Tips. Here are 6 more:

  1. When soliciting pledges, understand whether your organization and the donor intend the pledge to be legally enforceable. If there is a contract and either consideration given by the charity for the pledged amount (e.g., promise to do something or not do something) or reliance by the charity on the promised pledge to charity’s detriment, the pledge is likely to be legally enforceable. But that doesn’t necessarily mean that a charity should always sue a donor that reneges on a pledge. Here’s a good resource on the subject from Pearlman & Pearlman: Legal Issues Related to Unfilled Charitable Pledges.
  2. Understand the varying deductions a donor can take for a charitable contribution, depending on the type of contribution (e.g., money, stock, land, art) and recipient organization. See IRS Publication 526: Charitable Contributions. But don’t give legal or tax advice to your donors. And note that these laws are changing.
  3. Have policies to help ensure your organization and its employees, volunteers, and agents (while acting as representatives of the organization) do not make any misrepresentations, infringe on anyone’s copyrights, breach any contract provisions, or otherwise violate applicable laws when creating and publishing your fundraising materials. See, e.g., 10 Issues to Address in Your Nonprofit’s Social Media Policy.
  4. Be aware of the difference between a qualified sponsorship payment and advertising income. Your organization may be responsible for paying unrelated business income tax on the latter. Here’s a good resource on the subject by Ellis Carter on the Charity Lawyer Blog: Corporate Sponsorship or Taxable Advertising?
  5. Include risk management as part of the planning process for events. Check out the Nonprofit Risk Management Center for resources (e.g., Managing Special Event Risks).
  6. If you’re contracting with a professional fundraiser, check whether your state has registration requirements for such professionals and additional requirements for charities that enter into such contracts. In California, make sure you visit the Attorney General’s website (FAQs – Commmercial Fundraisers).