Q.What is American Charities for Reasonable Fundraising Regulation (“ACFRFR”)?
A. It is a coalition of nonprofit organizations, their national associations and their supporters formed for the purpose of combating excessive regulation by means of litigation.
Q. How and why was it formed?
A. Legitimate, reputable charities have found it increasingly difficult, in the past few years, to express their concerns about excessive and fruitless regulation and to have those concerns seriously considered by those responsible for charitable and fundraising regulation. Thus, a number of nonprofits decided that, in order to have the charitable communities’ views taken seriously, some of the most excessive and costly regulation should be challenged in court. Thus they formed a coalition which operates as a 501(c)(3) public foundation under the name American Charities for Reasonable Fundraising Regulation, Inc. (formerly Charities U.S.A., Inc.).
Q. Doesn’t this coalition duplicate the work of other organizations such as the National Federation of Nonprofits, National Society of Fundraising Executives, Direct Marketing Association Non-Profit Council or the fund-raisers’ trade associations?
A. No. Most of these organizations do not wish to engage in litigation. Several very fine “umbrella” groups have attempted and will continue to attempt to negotiate with government officials to resolve differences regarding charitable regulation. Many are, nevertheless, supporting ACFRFR so long as litigation is thought to be useful or necessary. ACFRFR encourages such negotiations and has sought the support of these umbrella organizations in its own formation to insure that their viewpoints are well represented on ACFRFR’s Board of Directors.
Unfortunately, several states or localities have resisted efforts for compromise, have refused to listen to
reason, and consistently engage in regulation which is not only unreasonable and unnecessary but in some cases
clearly and blatantly unconstitutional. In a recent case, an Attorney General admitted in a Federal District Court
that he had advised his state’s governor that a proposed regulation was unconstitutional but the governor had signed
it anyway. It is this type of irresponsible regulation which can and should be challenged in court when all efforts
at persuasion and negotiation have failed.
ACFRFR’s Board of Directors, comprised of managers of nonprofit organizations must approve each and every lawsuit. If some early victories in the worst cases of overbearing and illegal regulation produce a climate whereby other states are willing to negotiate to improve their regulatory schemes without litigation, then ACFRFR will have been a success and can be disbanded.
Q. Given that there are known “frauds” in the charitable and fundraising community isn’t it appropriate to have government consumer protection and law enforcement activity and shouldn’t nonprofits be seen as encouraging such law enforcement activity?
A. Legitimate nonprofits and fund-raisers applaud appropriate law enforcement activity aimed at fraudulent charity scams. ACFRFR does not intend to defend organizations or individuals charged with fraud in fundraising or with mis-management of nonprofits. ACFRFR will only challenge regulations, which are unnecessary, excessive, duplicative, and expensive when those jurisdictions, which promulgate such regulations, refuse to listen to reason. Examples are the requirement that nonprofits engaged in nationwide direct response fundraising must register both with state authorities and numerous city and county authorities within that state in order to, for example, mail a letter into a county within the state. Such dual registration does not deter or prevent fraud and operates as a significant barrier to charitable fundraising activities.
Q. Doesn’t ACFRFR duplicate the work of the Free Speech Coalition?
A. These two groups might cooperate in some cases. During ACFRFR’s formation it approached the Free Speech Coalition to secure their support. ACFRFR has been told that Free Speech generally supports the stated goals of ACFRFR and it may, when appropriate, support specific litigation depending on the merits of the particular case. The members of Free Speech are mostly 501(c)(4) grass roots lobbying organizations while ACFRFR is more broadly based with 501(c)--(3), (4), (6), (8), and (17) and other types of nonprofits as members. ACFRFR operates without paid staff and was formed only to pursue litigation and views the Free Speech Coalition as an “umbrella” organization with its own educational programs, membership and agenda.
Q. Is the ACFRFR Board opposed to all regulation? Are ACFRFR members simply professional fund-raisers seeking an “open field” in which to have more freedom to make money raising funds?
A. Neither. In its initial statement of purpose, ACFRFR specifically indicated that it was not opposed to all regulation but only to unreasonable regulation. ACFRFR is a nonprofit corporation recognized by the IRS as a 501(c)(3) charity. Under its by-laws a Board of Directors elected by nonprofit members controls it. Voting members join by paying dues of $1,000 or more. Non voting members join by paying dues of less than $1,000. To serve on the Board one must represent a nonprofit corporation or a nonprofit coalition (e.g. National Federation of Nonprofits, DMA Nonprofit Council, Alliance of Nonprofit Mailers, National Society of Fundraising Executives, American Telephone Fundraisers Association, Association of Direct Response Fundraising Counsel, etc.). Board Members are elected if they have five votes (i.e. they represent $5,000 or more of voting members dues). Fund-raisers and other vendors to nonprofits are encouraged to and do support ACFRFR financially but can only be directly represented on the board through their nonprofit umbrella groups.
Q. Won’t the public perceive litigation against state regulatory agencies as an effort by illegitimate charities to perpetuate their illicit activities?
A. Increasingly the public seems to perceive some bureaucratic government regulatory activity with suspicion. Our litigation efforts will be accompanied by public relations efforts explaining that the costs of excessive and irresponsible regulation is paid by our donors and that we are seeking to reduce these costs of regulation and ultimately increase the level of compliance by eliminating unnecessary regulation.
Q. Isn’t the Nonprofit Litigation Coalition simply a lawyer driven way for certain attorneys to foment litigation for their own benefit?
A. No. The Nonprofit Litigation Coalition was initially conceived of and formed by representatives of nonprofits and fundraisers when they grew frustrated with the attitude of certain state regulators who said they were “not interested in the viewpoints of the charities being regulated.” This came to a head after a meeting in Georgia when the official organization of state regulators announced it was closing its meeting to those who are regulated. It became apparent that a few states, at least, were not interested in collaboration to detect fraud or negotiation over regulatory schemes. At least one state regulator viewed the costs of regulation and revenue from fines of legitimate nonprofits as an additional source of revenue and as a “profit center” for his state.
The Board of Directors of ACFRFR will select which cases to pursue. It will also select which lawyers to hire to pursue these cases based on the experience, competence, price, and location of the lawyer. Lawyers who have been involved with the coalition to date have donated countless hours to help nonprofits and others create this vehicle. Everything from staff time to postage to office space to printed letterhead to a telephone line has been donated. The Coalition is run by and for nonprofit organizations seeking to put some balance back into the regulatory equation. With the annual costs of compliance for national nonprofits engaged in direct response fundraising now exceeding $20,000 per year and in many organizations costing as much as $50,000 or more, many nonprofit managers feel it is their fiduciary duty to their donors and other supporters to refuse to cooperate with unconstitutional, illegal, unnecessary, and excessive regulation.
Q. Has the ACFRFR Board committed to any litigation at this time?
A. Yes. After extensive discussion in 1996, the Board unanimously agreed that the first lawsuit should be against the City and County of Los Angeles and focus upon the compelled speech requirement of the Los Angeles mandatory disclosure form. It was further agreed that the second lawsuit should be against either the City of Columbus, Ohio or Pinellas County, Florida and focus upon the requirement of dual registration in a state and a city or county as well as the issue of the necessary “nexus” between a city or county acting as a regulator of an out of state charity or fund-raiser. In 1997 another lawsuit against Los Angeles successfully struck down major portions of the Los Angeles ordinance and the decision was made to proceed immediately with the suit against Pinellas County.
On August 25, 1997, the litigation coalition filed suit in Federal District Court for the Middle District of Florida against Pinellas County, Florida. Joining ACFRFR were a full service direct mail fundraising agency and a copywriter, both based in Virginia. ACFRFR sued both in its own name (having been anonymously assigned the rights of one or more fundraisers) and in a representative capacity. The Pinellas County Attorney is representing the defendant. The lawsuit alleges that the requirement of registration in Pinellas County by all charitable fundraisers is unconstitutional for several reasons. In summary they are because:
1) fundraisers without offices, business dealings, or other connections to Pinellas County are forced to submit to the jurisdiction of the county and to regulation of their out-of-state transactions. This is a violation of the Commerce clause and due process clause of the U.S. Constitution; and
2) the regulation is unnecessary, burdensome, redundant with the State of Florida, and not narrowly tailored to accomplish legitimate municipal governmental interests. This is a violation of the 1st Amendment rights of the charities with which the fundraisers work, as well as the 1st Amendment rights of the citizens of Pinellas County.
Q. Why was the lawsuit brought on behalf of fundraisers rather than charities?
A. The reason has to do with legal strategy (although clearly charities will benefit from a plaintiff’s victory). A charity does mail its letters into Pinellas County. While ACFRFR clearly does not believe that this means that local jurisdictions can regulate charities, the commerce clause case is stronger for the fund-raisers since it clearly isn’t their mail and they have no contacts with the county whatsoever.
ACFRFR is very confident in its legal position, fully expects to win the Pinellas case, and when it does, fully expects the court to award its legal fees which can then be used to pursue litigation on behalf of the nonprofit sector in other locations and cases.
Once precedent is set in Pinellas County that suggests that localities cannot regulate activities with which they have no connection or nexus, the next stage is to argue on behalf of a charity that the act of mailing their letter to a prospective donor is an insufficient connection or nexus to give the county or state jurisdiction over a charity. This latter case, when won, will eliminate regulation by local jurisdictions which can cripple any national efforts at direct response fundraising simply due to the number of such jurisdictions (estimated at in excess of 15,000).
Q. Will the Litigation Coalition undertake other litigation as well?
A. ACFRFR does and will continue to entertain requests to embark on litigation in its own name (thus allowing charities to remain anonymous) when it serves the overall interests of the nonprofit community and can be undertaken with full funding without draining financial resources from the main ACFRFR agenda which is to eliminate the most egregious, unnecessary, excessive and burdensome state and local regulations of charitable fundraising.
Q. How can my organization join ACFRFR?
A. Your nonprofit organization can directly join ACFRFR or it can make a restricted gift to any cooperating “umbrella” organization and ask that your gift be kept confidential. Simply indicate that your gift is designated to be used to support ACFRFR.
Q. Where can I get more information about ACFRFR?
A. Call or write to:
AMERICAN CHARITIES FOR REASONABLE FUNDRAISING REGULATION
3124 N. Tenth Street
Arlington, VA 22201
Or, feel free to contact any member of the Board of Directors:
Rita Smith, National Taxpayers Union, Alexandria, VA (President)
Lee Cassidy, National Federation of Nonprofits, Washington, D.C. (Treasurer)
Charles Hardin, Council for Government Reform, Arlington, VA
Elke Lewis, TradeBank International, Washington, D.C.
Cleta D. Mitchell, Americans Back in Charge, Washington, D.C.
Robert Tigner, Association of Direct Response Fundraising Counsel, Washington, D.C.
Dated April 1998