This document discusses the role of state attorneys general in regulating charitable organizations and fundraising. It covers registration requirements for charities in most states, the purposes of registration like protecting donors and deterring abuse. It also discusses determining when internet or social media solicitation requires registration. Key considerations addressed are who is considered a solicitor, deceptive practices online, and avoiding legal liability through transparency and oversight of third parties.

1. Avoiding Trouble While Serving
Your Community:
The Attorney General's Role in the
Regulation of Charitable Organizations
and Solicitation of Charitable Assets
Belinda Johns
California AGO
Elizabeth Grant
Oregon AGO

2. Overview of Topics
1. Introduction
2. The State Attorney General’s Role in the Supervision of
Charities and Funds Raised for Charitable Purposes
3. State Charitable Registration Requirements
4. The advantages of transparency and the pitfalls of
noncompliance
5. Who is Subject to Registration Requirements
6. Application of Registration/Fundraising Requirements to
Social Media
7. Deception in Social Media Context
8. Questions?

3. Attorney General’s Powers
• Attorney General Mandate: to Protect Charitable
Assets for Intended Beneficiaries
• Represents the public beneficiaries of charity
• Supervises charities and the fundraisers who act on
their behalf
• Under State consumer fraud and charitable
solicitation laws:
• Aggressively pursue fraudulent solicitations and
other deceptive practices.
• Maintains Registry of charitable entities and
fundraising professionals

4. Overview of Charitable
Registration Laws
In General:
• 39 States and DC have registration/reporting requirements
but system not uniform.
• Registration requirements vary:
• required for charitable entities or individuals register if holding
property in the state and all fundraising professionals soliciting
in the state;
• “charitable organization” defined quite broadly.
• required only if soliciting in the state; and
• only apply to fundraising professionals.

5. Purposes and Benefits of
Registration
• Helps donors make informed choices
• Enables oversight by government, media, and public
• Increases confidence in sector
• Deters abuses without discouraging legitimate
activities
• Benefits your organization by ensuring information is
available (but make sure you are communicating
effectively).
• Noncompliance often a symptom of other problems

6. Types Of Fundraising
Professionals
1. Professional fundraiser/solicitor – any person or entity
who, for compensation, contracts with a charitable entity
for the purpose of soliciting funds.
• usually does not include bona fide employee of the charity who receives
regular compensation, i.e. salaried development directors
2. Fundraising Consultant – for compensation, plans,
manages, advises, counsels, consults or prepares materials
for solicitation purposes, but does not solicit, receive or
control funds or assets and does not employ anyone who
does. In several states, a fundraising consultant must submit
copies of contracts; in others, they might only need to
register if they have custody or control of funds from
solicitations and provide contracts upon request.
 Definitions vary by state but concepts are similar

7. Are You a Solicitor
or Consultant?
• Definitions of paid solicitor and professional fundraising
consultant vary state-by-state, but the IRS Glossary
definition “Professional Fundraising Services” is
helpful in interpreting whether someone is a PS, PFC, or
simply a vendor.
• Services performed for the organization requiring the exercise of
professional judgment or discretion consisting of planning,
management, preparation of materials (such as direct mail
solicitation packages), provision of advice and consulting
regarding solicitation of contributions, and direct solicitation of
contributions, such as soliciting restricted or unrestricted grants to
provide services to the general public. However, professional
fundraising does not include purely ministerial tasks, such as
printing, mailing services, or receiving and depositing contributions
to a charity, such as services provided by a bank or caging service.

8. 7
When Can The Attorney
General Act?
• A state (and its AG) have jurisdiction if the organization
has minimum contacts with the state, and
purposefully avails itself of the privilege of conducting
activities within that forum state, thus invoking the
benefits and protections of its laws.”
• The Zippo test (952 F. Supp. 1119 (W.D. Pa. 1997)).
• If a Web site is passive and merely posts information, there is
no jurisdiction.
• If a Web site is interactive, there may be jurisdiction
• If “clearly doing business” online, there is jurisdiction.
• Accepting donations could be “doing business.”
• 15 years after Zippo, very few websites are “passive.”

9. Determining if a Charity
Needs to Register
• Where is the charity domiciled?
• Where is the charitable trustee soliciting?
• Does the charity solicit and if so, in which states?
• Examples:
• Direct mail, telemarketing, honor boxes
• Charitable gaming – bingo, raffles, casino nights
• Sale of goods or services

10. 9
Determining When Internet
Solicitation Requires Registration?
• Existing statutes apply to internet solicitation
• So registration required if state court could
constitutionally assert jurisdiction to enforce
requirement
• That is: if the charity intends to direct activities into
a certain state.
• Also called “purposeful availment”
• Calder v. Jones 465 U.S. 783, 789 (1984)

11. 10
The Charleston Principles
and State Jurisdiction
• Jurisdiction to require registration is based on
“purposeful availment” and “intent to direct”
• Principles are guidelines for regulators
• Registration required:
1. In state where organization is domiciled
2. In other states if:
A. Specifically target persons physically located in
the state for solicitation, or
B. Receive contributions from the state on a repeated
and ongoing or substantial basis

12. 11
The Charleston Principles in 2011
• What does “specifically target” mean?
• Posts on Twitter, Facebook, etc.
• Website platform, i.e. First Giving, Crowdrise,
changingthepresent.org
• Platform (aka conduit)
• Those who use platform
• Various entities may come together on one website, each with different roles.
Registration requirements may depend on role.

13. 12

14. 13

15. 14

16. 15
Who is Soliciting?
• “Solicitation” may be broader than people realize:
• Oregon defines solicitation as any request for a contribution, including
any offer to sell any property or services, in connection with which the
name of a nonprofit is used as an inducement for making the
contribution or which implies that a part of the contribution will be
donated to any nonprofit organization
• But who is soliciting if via social media?
• Just because you’re online, does not mean you’re making the ask.
• Previous example: First Giving, may or may not be “asking”

17. 16

18. 17
Is doGoodr.com soliciting?
• Answer: probably not
1. Not compensated by the nonprofits listed on the site
2. Content is supplied by nonprofits, not doGoodr.com
3. Donation button goes to nonprofit’s website
• http://www.youtube.com/watch?v=SjAPDb0LjeQ&feature=player_embe
dded

19. 18

20. 19
Is Changingthepresent.org
Soliciting?
• Answer: It could be
1. Website includes “cart” for donations
2. Website fees are based on amount donated
• Above and beyond credit card fees
3. Website creates its own content
4. Website operator gives impression that have
independently reviewed and vetted
organization
• Combination of factors could lead to conclusion
that being compensated to solicit contributions

21. 20
When Is A Platform
A Professional Fundraiser?
• Example1: The platform that appears to endorse
• Many sites provide online platform for charities to build online
presence.
• Example: First Giving
• A platform could be considered a professional fundraiser if:
• Places nonprofit into an issue portfolio, higher search rank, “featured”
nonprofit – all for higher fee (or a fee)
• All original content that requests funds, for a fee
• see definition of pro fundraiser
• Any content created by the site for a fee comes closer to definition of a
professional fundraiser.

22. 21

23. 22
Is Will Ferrell A
Professional Fundraiser?
• Crowdrise Example:
1. Will Ferrell: not compensated but is making the
“ask”
2. Crowdrise: compensated but may or may not be
making the “ask”
3. Cancer for College: receives the donated funds but
not making the “ask”
• May not even know it is listed…
• But see many state laws that require charity’s written consent to fundraise on
its behalf
• If directing volunteers or aware of effort, could be a different analysis
4. Network for Good: acting as a (c)(3) donor advised
fund.

24. Charitable Sales Promotion/
Cause Marketing
• Cause Marketing – an advertising or sales
campaign with proceeds benefiting charity
• For-profit entity may be a “commercial
coventurer”
• May trigger registration requirement for charity
• Most states have laws applicable to commercial
coventurers, including disclosure and record
keeping requirements

25. Cause Marketing Considerations
• Want to avoid any misleading advertising using a
charitable pitch, e.g., an undisclosed cap on contributions.
• BBB Standard 19 re: Cause Marketing. Clearly disclose
how the charity benefits from the sale of products or
services:
• Actual or anticipated percent of sales to charity
• Duration of the campaign
• Any maximum or guaranteed minimum contribution

26. 25
Social Media – What Could Go
Wrong and Who Would Be
Responsible?
• Deceptive Solicitations
• Organization sounds charitable, but isn’t
• Organization may have 501(c)(3) status, but donations used for
personal benefit.
• Example: Ripoff Foundation creates a page on an otherwise
legitimate online platform and collects $50,000 by claiming to help
lemurs, but use funds for Mr. Scam’s Corvette.
• Fraudulent schemes not new, but speed of Social Media is

27. 26
Social Media – What Could Go
Wrong and Who Would Be
Responsible?
• Charities have less – or no – control
• Message and tools
• Misleading or false claims may be made by others
• Others soliciting for restricted purposes that are not
consistent with charity’s goals
• Who owns the donor list?
• Who assures the charity gets the donations?
• May also trigger registration requirements – Let’s have a
competition among college students in Oregon to raise
money for X Charity

28. 27
Who Is Responsible
For Deceptive Acts?
• Actual knowledge of fraudulent misuse
• FTC v. Neovi: defendant engaged in an
unfair practice thru its online services
when it "engaged in a practice that
facilitated and provided substantial
assistance to a multitude of deceptive
schemes.“ 604 F. 3d 1150
• Software allowed anyone to create a check, woefully insufficient
safeguards

29. 28
Avoiding Deceptive Acts
• Both the charity and the site must be
proactive
• The specific acts necessary to prevent deceptive content
can be summarized as follows:
• You need a system that:
1. Stops basic misuse automatically
• Ex: (c)(3) verification
2. Detects more sophisticated attempts at fraud
3. Requires some active effort to detect fraud. Legal standard is
generally “knew or should have known”
• no head in the sand
4. Fixes flaws as they become known

30. 29
Deceptive and Unfair Practices in
Social Media Context
• “Reasonable consumer” standard
• Issues of concern to regulators:
1. Failure to adequately disclose ALL fees
• Stating 100% goes to nonprofit when PayPal gets 3% is a misrepresentation
2. Not turning over money to organization or cause in a timely manner
3. Nonprofits that do not exercise due diligence before choosing online
partners.
4. Platforms that endorse or vet without doing due diligence
5. Fake testimonials/recommendations/paid endorsements
6. Profile “hi-jacking” on platforms and other forms of ID theft
• Platforms should aggressively watch for this
7. Charging unnecessary fees
• Saw one website that listed nonprofits then demanded joining fee to tweak
address information.

31. Social Media – Policy
Considerations
• Moves very rapidly/globally/reactively
• Makes traditional educational messages about research
and proactive giving difficult
• Makes enforcement efforts more difficult
• Focus on Causes/Not Organizations
• Need Infrastructure to Solve Problems
• Destabilizing Focus on Short Term Strategies/Latest
Trends?
• Most popular causes attract the most fraud (disaster
relief)

32. Social Media – Policy
Considerations
• Makes Control of Messaging More Difficult
• Charity may not even be aware of solicitations
• Creates impression of micro-donor control/lack of
administrative costs
• Demand for constant "new" information
• May Lead to Less Transparency/Accountability
• More people involved in fundraising/more access to
donor data
• Blurring of sector makes it difficult for pubic to distinguish
between types of entities/types of solicitations/solicitation
overload

33. 32
Wait, There’s More…
• The Communications Decency Act
• Older statutes that are still good law
• Privacy issues (the sleeping giant)

34. 33
The Communications Decency Act
• Some providers of interactive computer services have
immunity from some state law claims under Section 230 of
the Communications Decency Act (CDA), 47 U.S.C. § 230(e)(3)
• The immunity is provided to service providers but not content
providers.
• A service provider is completely passive and displays content that is wholly
provided by third-parties while a content provider displays content for which it is
wholly or partly responsible.
• A website can be both
• Can be immune for some content on its website and not immune for other
content.
• Could have immunity as long as the website isn’t
encouraging or facilitating unlawful conduct.

35. 34
Communications Decency Act
Case Examples
1. Roommates.com ran a website designed to match
people renting out spare rooms with people
looking for a place to live. Then it asked about
gender, sexual orientation, and children.
• Sued for Fair Housing Act violations, 521 F.3d 1157 (9th Cir. 2008).
• Not immune because CDA provides immunity only if the interactive computer
service does not ‘create or develop the information in whole or in part.
• By mandating information in violation of the FHA, Roommates.com was
‘developing’ that information rather than just passively allowing it to be
posted.

36. 35
Communications Decency Act
Case Examples
2. Carafano v. Metrosplash.com, Inc., 339 F.3d 1119
(9th Cir. 2003).
• Anonymous person created a profile for
Carafano, an actress, on an internet dating
site.
• Website was immune because the libelous
content was created “entirely by the user
without prompting or help from the website”

37. 36
Older Statutes That Are Still Good Law
• Laws created for good purposes years ago
• not in every state but you need to be aware of these issues and
respond to them
• Some states require written permission from the
nonprofit before soliciting on its behalf.
• Some states require that funds solicited be placed into
a bank account controlled by the nonprofit.

38. 37
Privacy Issues
• Well beyond the scope of this presentation
• Will be important in the coming years
• Some general concepts:
• Must protect data against theft
• Also, must disclose when will use or sell data
• Data is an asset - donor lists, etc.
• Remember what your donors and constituents
expectations are.
• If they believe you violated their privacy they won’t give and will
tell their friends
• Even if you violated no laws

39. Resources
• Internal Revenue Service “Stay Exempt” Training -
www.stayexempt.org
• Federal Trade Commission - www.ftc.gov
• NASCO – www.nasconet.org
• BBB for Charities and Donors - www.bbb.org/us/charity
• Independent Sector - www.independentsector.org
• National Council of Nonprofits - www.councilofnonprofits.org
• Council on Foundations - www.cof.org
• Urban Institute - http://www.urban.org
• Multi-State Filer Project - www.multistatefiling.org

40. Contact Information
Belinda Johns, Senior Assistant Attorney General
California Attorney General’s Office
455 Golden Gate Ave., Suite 11000
San Francisco, CA 94102
belinda.johns@doj.ca.gov
Elizabeth Grant, Senior Assistant Attorney General
Oregon Department of Justice
1515 SW 5th Ave., #410
Portland, OR 97201
elizabeth.grant@state.or.us

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