What (and Who) We Should Be Asking About State Laws

February 16, 2017 - by Tiffany Neill

Originally published in AdVents, a DMAW publication

As direct marketing fundraisers, we generally have three big questions when it comes to state registration laws:

1. Are our contracts complete?
2. Are we properly registered to raise money in the states that require registration?
3. Do we have the right disclosure language on our fundraising pieces?

Unfortunately, there is one question we often forget to ask:

Are these laws changing?

Many of us assume that the laws basically stay the same. We dutifully copy and paste contract language and sacrifice valuable real estate in our campaigns to hold the disclosure language. The fact is, contracting, registration and disclosure requirements can change frequently as state legislatures take up new measures. And sometimes this legislation includes unacceptable infringement on the ability of nonprofit organizations to raise money. This is something we all need to be aware of.

For example, last year, some states sought to regulate charities in new and problematic ways:

  • In the legislative sessions in both Oklahoma and Missouri, bills were introduced that said that animal rights organizations could not solicit the residents of those states for gifts “intended to be used on program services or functional expenses outside of this state or for political purposes inside or outside the state.” This would have prevented national animal rights groups from fundraising in those states unless the gifts were going directly to programs (not political issues) in those states.

  • California tried to pass a law that would have required every nonprofit soliciting gifts in California to put a prominent link to the state Attorney’s General Office on the home page of the website and in every document employed in solicitation.

  • Nevada had no clear way for nonprofits not physically located in the state to register to raise money there.

On the face of it, these sorts of bills seem so beyond the pale (and in violation of First Amendment protections on freedom of speech) that many fundraisers assume there is no way they can pass. The danger in that thinking is that, sometimes, problematic legislation does become law (as the Nevada measure did several years ago), and we all must struggle through interpretation of the new measure. At the same time, few professional fundraisers have the bandwidth to follow every bill that arises in the states. And, it can be costly to always turn to outside counsel to manage every new question that comes along.

So, what can be done? Here are some suggestions:

Know what you don’t know
Admit going into things that you may not have all the answers on what is required to fundraise in a particular state. Let’s face it, it’s not our main focus. So, if your fundraising program changes and you start fundraising in places you didn’t before, check the basics. Are there registration requirements to fundraise and have we followed them? Do we need to change any contracts?

Build a basic tool kit of information
Someone at your organization can be appointed “keeper of the keys” and get all the e-newsletters and other email dispatches that come from the Direct Marketing Association (and its Nonprofit Federation), Independent Sector, Direct Marketing Association of Washington, Association of Fundraising Professionals and any specific associations for your subject area (university or hospital fundraising for example). Then, have someone periodically skim and give you the highlights.

Act when you are asked to!
If one of those organizations or other professional groups sends you a note saying, “Hey we need people to support X,” take a few minutes and do so. You likely won’t be able to send a note to a state legislature unless you live in that state, but there are often other measures you can take.

Build a personal network
It always helps to have people you can turn to with questions. With relatively few direct marketing fundraising professionals out there, it is good to know your colleagues. You can find out what other people are doing about particular state matters, or learn if they have met with similar challenges. Plus, it’s always nice to catch up. And, if you can’t find the right answer among your colleagues in DMAW and other groups, you can often reach out to the Association of Direct Response Fundraising Counsel (adrfco.org) through one of their member or partner firms.

Use your legal counsel
You likely have a law firm that manages your state registration matters— they will be up to date on the most recent regulations. Ask questions about language in contracts, disclosures, etc. And periodically find out if there are new laws about which you should be concerned. There are charges for these conversations so be wise, but in the end, it may save you a nasty fine.

You can easily get bogged down trying to keep up with all the regulations and matters that impact fundraising. As you think about state registration issues, you can come up with an action plan on more sweeping matters—such as postal reform (to the list of resources above, you should add the Alliance of Nonprofit Mailers, if it is a USPS matter). Every inch of real estate we put into a fundraising piece matters—so we should know as much about the space we dedicate to the required state disclosure language as we do about the right way to structure the offer. Spending a few minutes of each week on these matters will save time and energy later.

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