If you are a Professional Fundraiser, we think it's about the coolest thing a company can do.
The ideas and creativity of Professional Fundraisers to raise money for charities – and to make money for themselves doing it – is indisputably a great thing for nonprofits and their causes.
But, there have been some bad apples in the Professional Fundraising bunch, which leads to…
There are also serious, sometimes very recent, regulations at the state level governing Professional Fundraisers that include nasty fines, penalties, and bad public relations.
We recently attended a National Association of Attorneys General (NAAG) webinar on this topic, and be forewarned: professional fundraising scrutiny is front and center in the regulatory crosshairs of most AG offices.
Why Professional Fundraisers get scrutiny
Professional Fundraisers get scrutiny because nonprofits and/or consumers have been burned in the past.
Some Professional Fundraisers have used nonprofits to raise money and then not paid any proceeds to the nonprofits.
Other Professional Fundraisers structured agreements with nonprofits that effectively prevented the latter from benefiting substantially from the partnership, even in cases of highly successful fundraising endeavors.
Also, some Professional Fundraisers have been less than forthcoming to consumers on how their fundraising works, what the prizes are (in the case of sweepstakes or drawings), what portion is paid to the nonprofit, and what portion is paid out in prizes or rewards.
“But that’s not us! We’re different!”
We know that’s not you.
Like the vast majority of Professional Fundraisers, you're motivated by the nonprofit causes you support and the drive to build an ethical, compliant, profitable business.
But the regulators don’t know that you’re a good guy.
Am I a Professional Fundraiser?
First things first: how do you know if regulators consider you a Professional Fundraiser to begin with?
As we’ve delved further into Professional Fundraising regulations, we can say with confidence that regulators use some simple rules and, when in doubt, will judge you to be under the professional fundraising regulations passed by their states.
A Simple Test
There are multiple aspects to deciding if you are a Professional Fundraiser, but we cut it down to one simple, if/then statement:
You're a Professional Fundraiser IF...
Your business solicits money on a charity’s behalf. You may solicit donations through a variety of means, including via an internet platform, a charitable auction, the sale of tickets for an event, and more. This is especially true if you use the nonprofit’s name or likeness in your fundraising efforts.
So, if you:
- solicit donations and contributions on a charity’s behalf and
- organize drawings, raffles, charitable lotteries or sweepstakes, or
- facilitate the selling of a product by others, or
- solicit direct donations
and there is any public alignment, marketing, co-branding, advertising, usage of logos or names, of and with the nonprofit(s), then…
You are a Professional Fundraiser.
Importantly, you are a Professional Fundraiser in the eyes of every regulating state of which we are aware and subject to the resulting rules and regulations.
Most larger Professional Fundraisers know they are regulated and understand the serious and costly implications.
Many Professional Fundraisers, we find, are in denial.
We don’t blame you for being hesitant.
Being a regulated Professional Fundraiser exposes you to various, cumbersome regulatory registering and reporting requirements.
No one would choose that.
But yet, the if/then parameters are quite simple.
Talk to one of our experts today to find out how Change can help you.
Is running afoul of state regulations an existential threat?
Can getting caught as a noncompliant professional fundraiser destroy your business?
We aren’t in the business of hurting other companies, so we’ll stay out of naming names.
But unregistered and non-reporting Professional Fundraisers have been roughed up pretty badly over the last few years.
The results of being noncompliant almost always results in penalties and rewards, but it can also lead to a loss of your license to do business in a state – and refusal from other states to approve your license (Colorado as a recent example).
But more importantly, regulatory states’ AG offices want the good citizens of their states to know that they are protecting them.
So, regulatory actions are almost always accompanied by a media and press blitz on the part of the state regulating authority.
This not only trashes your reputation with nonprofits and consumers, but it also draws a big red target around you for other state AGs.
It destroys your ability to conduct other fundraising campaigns and get nonprofits to contract with you for your services.
Don’t believe us?
Google “State AG actions against professional fundraisers”.
Note the website articles, regulations, and numerous news stories of regulatory action.
Again, press releases are the state AGs’ best friends and they wield them freely.
I’m a Professional Fundraiser, now what?
States want to see three things:
In general, states have deployed the following mechanisms, which, be forewarned, are cumbersome, time-consuming, and costly:
- registration of each nonprofit relationship in each state
- registration for each Professional Fundraiser in each state
- public filing of contracts and conformity to state contract requirements
- disclosure of funds paid to specific charities as well as %s of money raised
- disclosure of monies received by charities
Change has developed a turnkey solution for Professional Fundraisers that simplifies lives, cuts costs, and assures compliance.
Schedule an informational meeting today to discover how we can help you solve your Professional Fundraising challenges.