The Law of Fundraising. Bruce R. Hopkins

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Название The Law of Fundraising
Автор произведения Bruce R. Hopkins
Жанр Экономика
Серия
Издательство Экономика
Год выпуска 0
isbn 9781119873457



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3.9 LIMITATIONS ON FUNDRAISING COSTS

      The law of another state provided that a charitable organization registered under its solicitation statute could not expend an “unreasonable” amount of its gross contributions for fundraising. An amount in excess of 25 percent of total contributions was presumed to be unreasonable, and the secretary of state was empowered to—using unstated criteria—approve higher costs. This provision was subsequently removed from the state's charitable solicitation statute.

      An unsuccessful attempt involved shifting the limitation away from the charitable organization and placing it on the amount of compensation received by the professional solicitor. Thus, one state had a provision prohibiting a professional solicitor from receiving more than 25 percent of the total amount received in a solicitation. This rule has since been removed from the solicitation act; during the time it was part of the statute, the state regulators conceded that the law was unconstitutional and not being enforced. The law of another state provided that a charitable organization could not pay a professional solicitor an amount in excess of 15 percent of the contributions received. This law also asserted a rebuttable presumption in connection with the fundraising costs of charitable organizations, which placed a general limitation on fundraising costs of 35 percent, albeit with an opportunity for higher expenses in the event of “special facts and circumstances.” This provision was not enforced and has since been eliminated.

      The law of another state provided that a charitable organization may not pay a professional solicitor more than 25 percent of contributions received and that a charitable organization may not have fundraising expenses in excess of 50 percent of contributions received, again with an opportunity for the allowance of higher expenses in the case of special circumstances. During the time before the provision was removed, the state regulators were uncertain as to whether or how to enforce it. The law of another state provided that a charitable organization could not pay a professional solicitor for services in connection with the solicitation of contributions in excess of a “reasonable percent” of gifts raised. This law also authorized the state's secretary of state to pass judgment on the contract between a charitable organization and a professional solicitor, and to force renegotiation of the agreement or perhaps disallow it where the contract would “involve an excessively high fundraising cost.” These rules are no longer in the law, and the state regulators evinced little interest in enforcing them while they were.

      Many states require a statement about any percentage compensation in the contract between the charitable organization and the professional fundraiser and/or professional solicitor. One rule in this regard provides that the contract must state the “guaranteed minimum percentage of the gross receipts from contributions which will be remitted to the charitable organization” and the “percentage of the gross revenue for which the solicitor shall be compensated.” One state requires that a contract between a charitable organization and a professional fundraiser be filed with the state where there is percentage-based compensation.

      A rare rule prohibits a professional fundraiser from receiving compensation from a charitable organization if the compensation depends wholly or partly on the number or value of charitable contributions that result from the effort of the fundraiser.

      The information filed in accordance with a state's charitable solicitation act, whether contained in an application for registration, annual report, contract, or other document, is a matter of public record. This requirement encompasses information filed by charitable organizations, professional fundraisers, professional solicitors, and commercial coventurers. The fact that these records are public is usually stated in the statute.

      This type of provision is frequently buttressed by a record-keeping requirement. In almost all instances, this record-keeping obligation is imposed on the soliciting charitable organization; however, in some states, the requirement is confined to professional fundraisers, professional solicitors, and/or commercial coventurers.

      Many of these laws require that the information be maintained, by the regulators and/or the regulated, for a stated period, usually three years. Where the records