Below is a summary of the key tips provided by NASCO.

NASCO’s Tips for Charities:

1.  “Protect your brand.”  Charities should consider establishing a policy regarding who can fundraise on their behalf, and a process for potential fundraisers to seek authorization.

2.  “Research your charity’s online fundraising presence.” Third-party fundraising platform websites allow charities to carry out their own fundraising campaigns, but many websites also allow individuals to set up peer-to-peer fundraising campaigns without the involvement (or knowledge) of the charity.  (These websites typically partner with a tax-exempt donor-advised fund to receive and receipt donations, and then distribute the donation to the donor’s recommended charity.)  If your charity does not want to be included on a fundraising platform, contact them to request that your organization be removed from the website.

3.  Carefully research fundraising platform policies before using one.  Make sure you understand what kind of fees will be deducted, how donor information will be used by the website, when and how contributions will be sent to the charity, what type of fraud prevention measures are in place, and what kind of accounting a charity can obtain from the website.

NASCO’s Tips for Donors:

1.  “Make sure you are donating to a legitimate charity.”  Confirm that any email or text message solicitation you receive is legitimate by contacting the charity or visiting its website. Be wary of “look-alike” websites (i.e., a website created to look like a real charity’s website) and sound-alike charities (i.e., a charity with a name very similar to that of a reputable and well-known charity).  Before donating, research the legitimacy of a charity through websites like the IRS’s search tool of organizations eligible to receive tax-deductible contributions, Guidestar, and various charity watchdog websites.

2.  Take appropriate steps before initiating or donating to a peer-to-peer fundraising campaign.  Individuals who want to set up a peer-to-peer fundraising campaign should contact the charity to obtain permission to use their name beforehand. In addition, donors should make sure that the donation will go directly to the charity and not to the individual supporter. Donors should make sure they understand what fees will be charged and/or taken out of the donation, and how their personal information will be used by the website.

NASCO’s Tips for Fundraising Platforms:

1.  “Conduct basic due diligence to discourage potentially fraudulent uses of your platform.”  This includes verifying on the IRS website that charities included on the platform are tax-exempt and eligible to receive tax-deductible contributions, and that the charities are registered to solicit donations wherever they are required to do so.  Confirm that any person claiming to work for a charity actually does, and that any bank account information provided is that of the charity and not of any individual.

2.  Obtain written permission from each charity before collecting funds for it. NASCO notes that “[a]t least 38 states require express/written permission from a charity before its name is used in connection with a solicitation.”

3.  Educate charities and their donors who use your website by having clear and transparent terms and conditions for using the platform.

• Clearly disclose what type of vetting will be done before a charity can participate on the website.  Fundraising platforms should make sure this is clearly set forth in their FAQs or other webpage describing how the platform works.
• Be transparent about donation transfer policies and practices. This includes any transaction fees, the portion of the donation that the charity will actually receive, any minimum thresholds that must be donated before funds will be disbursed, and how often funds will be transferred.
• Promptly comply with any request from a charity to be removed from the website. Include contact information specifically for charities to ask questions or report fraud.

4.  Implement anti-fraud measures.  Establish and implement policies and procedures that will help detect and deter fraud, and review and fix flaws in the procedures as they become known.

5.  Be aware of, and comply with, any applicable fundraising regulatory requirements. Depending upon the type of services provided and how your fundraising platform works, “[y]ou may be classified as an unregulated vendor, or a moderately regulated commercial co-venturer or professional fundraising consultant/fund-raising counsel, or a more actively regulated commercial fundraiser/ professional solicitor.”  Make sure you understand your legal status, and comply with any applicable registration, reporting, and contract requirements.

NASCO’s tips on internet and social media fundraising provide plenty of guidance for charities and fundraising platforms to consider, but one issue it does not directly address is when a state has jurisdiction over a charity or fundraising platform whose fundraising activities are carried out on the internet.  Stay tuned for my next blog, which will review state charity regulators’ current guidelines on when state registration and reporting requirements are triggered by internet-based fundraising activities, and highlight some of the legal and practical considerations that nonprofits, fundraisers, and fundraising platforms face when trying to apply them.

The post State Charity Regulators Offer Tips on Internet and Social Media Fundraising first appeared on Perlman Sandbox.

The online marketing strategies being used are quite diverse, including:

• Facebook Promotions: “Like” our company page, and we will donate $X to charity; Visit our Facebook page, and vote for your favorite charity to receive $X.
• Online Sweepstakes: Make a donation or take a simple quiz to show your knowledge on an important issue, then enter to win a prize.
• Online Contests: Submit an entry (e.g., a T-shirt design; a proposal to solve a global epidemic) for a chance to win funding or a prize; winner selection may combine an expert panel with public voting.
• Customized Online Fundraisers: Individuals or charities can create their own fundraising page on a third party crowdfunding site to raise funds.
• Cause Gaming:  Play our game to help generate funds for charity.

Nonprofit marketing experts advise groups adopting social media and online marketing strategies to keep it simple, make it meaningful, and be selective to avoid taxing your limited resources. But what do the lawyers say?

Here are five legal considerations for charities to keep in mind as you consider adopting new internet-based strategies:

1.      Understand the structure and limitations of your chosen platform.  Each platform has its own set of rules that will affect your options, ranging from the ability to raise funds for a charitable cause (e.g., not via Kickstarter), to the voting mechanisms you can and cannot use (check out Facebook’s promotions guidelines).

2.      Make sure your promotion rules are clear and thorough. Think about worst case scenarios (e.g., fraud via automated voting) or unexpected situations (e.g., a tie in votes), and build in appropriate protections and procedures. The last thing you want is to have your creative efforts become the next nonprofit social media scandal.

3.      Consider the privacy issues triggered by your promotion. Many organizations and for-profits are using online engagement strategies to grow their database of contacts and convert first timers into regular supporters.  Make sure the rules for our promotion clearly address how personally identifiable information will be used, and if tied to your website’s privacy policy, make sure that policy is up to date as well.

4.      Analyze your fundraising regulatory compliance obligations. If your online promotion is helping to raise funds for a charitable cause, you and possibly any third party site you are using to raise funds could be subject to fundraising registration requirements in 40+ states. The Charleston Principles, a nonbinding set of guidelines adopted by state charity regulators in 2001, provide the most concrete guidance for charities and companies engaged in charitable fundraising activities to determine their state compliance obligations (although the regulatory community is actively re-examining those Principles – consider how much the world of internet-based fundraising has changed over the last 11 years!).

5.      Promotions laws still apply in cyberspace.  Whether you’re dealing with online raffles, contests, or sweepstakes, many of the federal, state and local rules still apply (although certain ones may not, such as sweepstakes rules embedded in the federal Deceptive Mail Prevention and Enforcement Act), and complying with every jurisdiction’s laws can be a challenge.  And if you think the internet makes it a snap to take your promotion global, think again.  Some jurisdictions regulate promotions so strictly that many groups simply opt to make their promotions void in those locations.

With over a million nonprofits in the U.S. vying for funding and constituents to support their charitable mission, it has become imperative for organizations to find ways to stand out in the marketplace of ideas. With some thoughtful planning, though, charities can harness internet and social media platforms to multiply their impact and reach.

The post Social Media and Online Marketing for Nonprofits: A Legal Perspective first appeared on Perlman Sandbox.