The Federal Trade Commission (FTC) continues its oversight of charitable fundraising conduct. This month, the FTC issued guidance for both donors who donate to charities through online giving portals and businesses that offer such portals. The agency also warned consumers to be wary of potential charity scams in the wake of recent natural disasters that trigger solicitations for money to help victims of those disasters. Earlier this year, we noted that the U.S. Department of Justice, at the FTC’s behest, filed a law enforcement action against a national charity fundraiser for allegedly violating telemarketing laws.
Although the FTC lacks jurisdiction to regulate legitimate charitable organizations directly, it can—and does—regulate the activities of for-profit entities that help charities with their fundraising activities, such as professional fundraisers, fundraising counsel, and commercial co-venturers. The FTC’s attention to online giving portals reflects its recognition that charity fundraising is gravitating toward the use of newer platforms that may raise consumer protection issues similar to those that arise with traditional fundraising methods (e.g., telemarketing and direct mail). Tracy Thorleifson, the lead FTC attorney for charitable fundraising issues, tells Venable that “the FTC’s guidance underscores the Commission’s desire to encourage businesses to be transparent with donors and make compliance a priority.”
Nonprofit organizations that have turned to online giving portals as a fundraising option, or are considering doing so, should note the FTC’s compliance expectations as they vet potential online platforms with whom to partner. In addition, nonprofits should be aware that the receipt of charitable donations through online giving portals may raise tax issues as well.