The Law of Fundraising. Bruce R. Hopkins

Edition; also with Ms. Blazek, The Legal Answer Book for Private Foundations; with Thomas K. Hyatt, of The Law of Tax‐Exempt Healthcare Organizations, Fourth Edition; with David O. Middlebrook, of Nonprofit Law for Religious Organizations: Essential Questions and Answers; with Douglas K. Anning, Virginia C. Gross, and Thomas J. Schenkelberg, of The New Form 990: Law, Policy and Preparation; with Ms. Gross, of Nonprofit Governance: Law, Practices, and Trends; and with Ms. Gross and Mr. Schenkelberg, of Nonprofit Law for Colleges and Universities: Essential Questions and Answers for Officers, Directors, and Advisors. He also writes Bruce R. Hopkins' Nonprofit Counsel, a monthly newsletter, published by John Wiley & Sons.

Mr. Hopkins maintains a website providing information about the law of tax‐exempt organizations and charitable giving law, including charitable fundraising law, at www.brucerhopkinslaw.com. Material posted on this site includes a current developments outline concerning this aspect of the law, and summaries of and indexes to his monthly newsletter.

      Mr. Hopkins earned his JD and LLM degrees at George Washington University National Law Center, his SJD degree at the University of Kansas School of Law, and his BA at the University of Michigan. He is a member of the bars of the District of Columbia and the state of Missouri. He is the Professor from Practice at the Kansas University Law School, teaching courses on the law of nonprofit and tax‐exempt organizations, including charitable fundraising law 2007–2020.

      Mr. Hopkins received the 2007 Outstanding Nonprofit Lawyer Award (Vanguard Lifetime Achievement Award) from the American Bar Association, Section of Business Law, Committee on Nonprofit Corporations. He is listed in The Best Lawyers in America, Nonprofit Organizations/Charities Law.

      Alicia M. Beck is Vice President and Director of Philanthropy of UMB Bank based in Kansas City, Missouri. Prior to this role, Ms. Beck was an attorney at Polsinelli PC where she specialized in advising nonprofit entities. Her clients included national hospital systems, research organizations, private foundations, colleges, universities, associations, social welfare organizations, and governmental entities. Ms. Beck assisted these clients with formation, structure, and operational issues, including fundraising regulation. She also had experience with various tax restructuring issues relating to international entities.

      Ms. Beck received her JD degree from the University of Kansas School of Law. Ms. Beck received an LLM in taxation from Northwestern University. She received a BA in Supply and Value Chain Management from Texas Christian University. She is a member of the bars of the states of Illinois, Kansas, and Missouri. She was also selected a 2015 Kansas and Missouri Rising Star for Tax Law.

CHAPTER ONE Government Regulation of Fundraising for Charity

      1  § 1.2 Charitable Fundraising: A Portrait (a) Scope of Charitable Giving in General (b) Online Charitable Fundraising

      2  *§ 1.3 Evolution of Government Regulation of Fundraising

      3  § 1.4 Contemporary Regulatory Climate

§ 1.2 CHARITABLE FUNDRAISING: A PORTRAIT

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      From the standpoint of the law of charitable fundraising, two aspects of the portrait of charitable giving in the United States are important: the extent of charitable giving in general and the increasing use of the Internet for the purpose of soliciting charitable contributions.

(a) Scope of Charitable Giving in General

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Charitable giving in the United States in 2018 is estimated to have totaled $427.71 billion, a 1.7 percent decrease from the 2017 amount of $435.1 billion.²⁴ Giving by individuals in 2018 amounted to an estimated $292.09 billion; this level of giving constituted a little more than 68 percent of all charitable giving for the year. Grantmaking by private foundations was an estimated $75.86 billion (17.7 percent of total funding). Gifts in the form of charitable bequests in 2018 were estimated to be $39.71 billion (9.3 percent of total giving). Gifts from corporations in 2018 totaled $20.05 billion (4.69 percent of total giving for that year).

Contributions to religious organizations in 2018 totaled $124.52 billion (30 percent of giving that year). Gifts to educational organizations amounted to $58.72 billion (13.8 percent); to human service entities, $51.54 billion (12.1 percent); to foundations, $50.29 billion (11.8 percent); to health care institutions, $40.78 billion (9.5 percent); to public‐society benefit organizations, $31.21 billion (7 percent); to international affairs entities, $22.88 billion (5.3 percent); to arts, culture, and humanities entities, $19.49 billion (4 percent); and to environmental and animals groups, $12.7 (3 percent). Giving to individuals (e.g., gifts in kind) totaled $9.06 billion (2 percent) and unallocated giving was $6.53 billion (1.5 percent).²⁵

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(b) Online Charitable Fundraising

Not that many years ago, use of the Internet for charitable fundraising was only nascent. One analysis of online fundraising, in its beginnings, did not have statistics on this approach to gift solicitation.^25.1 But it was clearly coming, and was expected to someday be a major force in charitable fundraising. Now that “someday” has arrived.

In mid‐2014, The Chronicle of Philanthropy gave a special report on online fundraising, with the theme being “Digital Giving Goes Mainstream.”^25.2 Among the findings in this report was that Internet gifts climbed 13 percent in 2013 in relation to 2012, although online fundraising “still accounts for a very small portion of the money charities rely on.”^25.3 Nonetheless, in 2013, the Leukemia & Lymphoma Society raised more than $98 million online, the California Community Foundation raised more than $95 million online, and the American Heart Association raised $59 million in that manner; other totals were more than $45 million (World Vision), about $40 million (Campus Crusade for Christ International, Cystic Fibrosis Foundation, National Christian Foundation, Salvation Army), about $30 million (March of Dimes Foundation, Young Life), and about $20 million (Global Impact, Memorial Sloan Kettering Cancer Center, United States Fund for Unicef, University of Michigan).^25.4

About one year later, another report speaks of the “transformative promise of online fundraising” that has yet to materialize.^25.5 This report looks at the “short history of online fundraising” and finds that it “is not without signs of progress.” It summarizes the successes of online‐giving websites and notes that “[y]ear to year, more people give money online to charity.” Still, for most charitable organizations, this report states that online giving “represents a sliver of their overall fundraising.”