The Law of Fundraising. Bruce R. Hopkins

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СКАЧАТЬ Professional Fundraiser

      There is considerable confusion about the meaning of the term professional fundraiser. The dilemma arises from the fact that the term, and its nemesis professional solicitor, was developed in an era when the roles of the parties were discrete and thus much easier to identify. Basically and historically, a professional fundraiser was a consultant—an individual or firm that did not directly participate in the solicitation process but rather who worked with the charity in designing the fundraising plan. In most cases, the charitable organization was the person that undertook the actual fundraising, using volunteers. By contrast, a professional solicitor was a person who was paid to solicit gifts in the name of the charity.

      During this era, the roles were separate and distinct. The fundraiser planned and did not solicit. The solicitor pursued gifts and was not involved in planning the campaign. In many instances today, that formal dichotomy is followed. Increasingly, however, the roles are being blurred, usually because the professional fundraiser is undertaking one or more roles in the area of solicitation.

Most states adhere to a definition such as this: a professional fundraiser is any person who, for a flat fixed fee under a written agreement, plans, conducts, manages, carries on, advises or acts as a consultant, whether directly or indirectly, in connection with the solicitation of contributions for or on behalf of a charitable organization. This type of definition usually is followed by the admonition that a professional fundraiser may not actually solicit contributions as a part of the services.

Often excluded from the ambit of the term professional fundraiser are the officers and employees of a registered³¹ or exempt³² charitable organization. Also usually excluded from the term are lawyers, investment counselors, and bankers, even if they advise a client or customer to contribute to a charitable organization.

      Some states use a definition of the term professional fundraiser in a different manner, with some, as discussed as follows, having a definition of the term that also encompasses most categories of professional solicitors. About a dozen of the states' laws lack any definition of this term.

      Part of the reason for the confusion in this area is the variation in terminology among the states. In about one-fifth of the states, the person usually generically referenced as a professional fundraiser is identified by means of that term. Other states, however, intending the same meaning, use the term professional fundraising counsel. Still other states prefer fundraising counsel. Other terms used in various state laws are fundraising consultant, professional fundraiser consultant, and professional fundraising consultant.

Presently, the state laws regarding fundraising regulation reflect considerable misunderstanding of the meaning of the term professional fundraiser in relation to the term professional solicitor.³³ As noted, some state laws so broadly define professional fundraiser (or equivalent term) that the term includes what is normally meant by professional solicitor. Terms used to describe a professional solicitor include phrases such as professional fundraising firm, professional commercial fundraiser, and commercial fundraiser for charitable purposes. A few states use the term professional fundraiser to describe what is generically meant by the term professional solicitor.

(h) Professional Solicitor

      The discussion about the traditional and contemporary roles of professional fundraisers and professional solicitors is to be recalled, in understanding the confusion between the two terms as seen from the perspective of the term professional solicitor.

The term professional solicitor is generally defined in a state charitable solicitation act in one of two ways.

      Most states define the term professional solicitor to encompass one of three types of persons or relationships. One is a person who, for a financial or other consideration, (1) solicits contributions for or on behalf of a charitable organization, where the solicitation is performed personally or through agents or employees; or (2) solicits through agents or employees specially employed by or for a charitable organization, who are under the direction of such a person. The other is a person who, for a financial or other consideration, plans, conducts, manages, carries on, advises, or acts as a consultant to a charitable organization in connection with the solicitation of contributions but does not qualify as a professional fundraiser (or equivalent term).

      When this definition (or something comparable to it) is used, about one-half of the states employ the term professional solicitor. A few use the term paid solicitor. Other phrases used are professional commercial fundraiser, professional fundraising firm, paid fundraiser, and commercial fundraiser.

      This definitional approach is usually accompanied by exclusions for officers, employees, lawyers, investment counselors, and bankers. On rare occasions, there will be other exclusions, such as for persons whose sole responsibility is mailing fundraising literature.

      Some states define the term professional solicitor to mean any person who is employed or retained for compensation by a professional fundraiser to solicit contributions for charitable purposes. With this definition, the terms used are professional solicitor, paid solicitor, or professional fundraiser.

      The confusion in the law in this area, regarding the appropriate line of demarcation between the terms professional fundraiser and professional solicitor, is seen in use of the prevailing definition of the term professional solicitor in defining the term professional fundraiser. One law defines a professional solicitor as a commercial fundraiser for charitable purposes, while another law terms what is generally known as a professional solicitor as a paid fundraiser. The law in a state dubs what is usually defined as a professional solicitor a professional fundraiser and separately defines the term professional solicitor.

(i) Fundraising

Given the uncertainties surrounding the foregoing definitions, it is not surprising that the term fundraising can be confusing. Nowhere is this confusion more evident than in the definition of the phrase fundraising activities employed by the IRS in its instructions accompanying the annual information return.³⁴ Thus, the IRS's fundamental definition of fundraising is that it consists of “activities undertaken to induce potential donors to contribute money, securities, services, materials, facilities, other assets, or time.” The inclusion of time and services in this definition of fundraising is perplexing. For example, a request of someone to serve on a board of directors or otherwise as a volunteer (a gift of time and services) is hardly fundraising. A key component of the word fundraising is fund.

      The IRS's position is that fundraising activities include “publicizing and conducting fundraising campaigns; maintaining donor mailing lists; conducting fundraising events; preparing and distributing fundraising manuals, instructions, and other materials; professional fundraising services; and conducting other activities involved with soliciting contributions from individuals, foundations, governments, and others.” However, the maintenance of a donor mailing list can be thought of as an administrative or other management function; the preparation and distribution of fundraising materials can be regarded as an educational undertaking. The references to foundations and governments invoke the solicitation of grants as the equivalent of solicitation of contributions. The catchall phrase about activities involved with the solicitation of contributions СКАЧАТЬ