Last week, in The U.K.’s New Fundraising Sheriff,  I noted the failure of UK fundraisers and The Institute of Fundraising at self-regulation.

That failure has now led to proposals for greater government intervention and the as-yet-unknown imposition of new rules that may prove difficult and even unwise.

One thing is certain. This is no time for the sector and its trade association to acquiesce or silently lick its wounds while new rules are proposed and then imposed. We’ve already seen how well that strategy worked!

What’s  essential now is that the nonprofit community, its consultants, agencies, vendors and trade associations take steps to assure that the new ‘regulator’ knows what it’s doing and puts forth reforms that truly benefit donors and nonprofits alike.

Unintended and sometimes dire consequences too often spring from the well-meaning ignorance of regulators. When this occurs it’s time for the sector to speak up and take action to keep reforms on track.

Nothing better illustrates the importance of trade association/nonprofit involvement with regulators than the tragedy that was averted in new California fundraising regulations signed into law by Governor Jerry Brown last week.

Let me explain.

  California, with an economy just a bit smaller than that of the UK’s, is by far the largest fundraising market in the US.   The attorney general of California has been a vigorous — if often over-zealous    and inept — ‘protector’ of consumer interests in fundraising.

In response to a case clearly involving the abuses of ‘misrepresentations in solicitations’, ‘self-dealing’ and ‘excessive executive compensation’ on the part of the charity Help Hospitalized Veterans the attorney general proposed changes in the California fundraising statutes.

Among the sensible reforms proposed:

• A prohibition against fundraising counsel being compensated on commission;

• A prohibition against fundraising counsel handling/controlling funds of the charity;

• A lengthening of the statute of limitations to 10 years for charitable enforcement actions to include fundraising counsel and other third parties.

BUT…among the proposed reforms was one that I can only term as ‘idiotic’ or, to put it more charitably, ‘unworkable’.

The original proposal required — prior to soliciting funds — the disclosure of whether a portion of the gift would be diverted to a paid fundraising company or consultant and how much.

Whether the solicitation was to be made by email, direct mail, phone or in person the disclosure of the fundraising counsel’s involvement and cost had to be prominently noted. Verbally if a personal face-to-face major, planned gift visit or a telemarketing call was being made. In writing and with at least “12-point type” if by mail, email.

Of course the original proposal would have imposed thousands and thousand of dollars in costs of compliance, not to mention its confusing effect on donors.

The nonprofit community and their trade associations rallied and sprang into action. Thanks to the intense, skillful, costly and time-consuming efforts of the Direct Marketing Association Nonprofit Federation (DMANF), the Association of Direct Response Fundraising Counsel (ADRFCO), and the Wounded Warrior Project and other nonprofits, the disclosure requirement was dropped.

Although it’s infuriating that so much time and money had to be spent to block a clearly wrong-headed reform, what is important is that the nonprofit sector and its trade associations rallied to get the regulator back on track.

With the UK’s fundraising trade association, the Institute of Fundraising and parts of the nonprofit sector in the UK at least temporarily discredited who will step in to watch and help guide he watchdogs?

Roger

P.S. An Agitator raise to Senny Boone of DMANF, Bob Tigner of ADRFCO and The Wounded Warrior Project for your work on behalf of all US fundraisers.