To complement the guerilla war we’ve declared against sleazebag ‘charities’ and solicitors (we refuse to call them fundraisers) in our Part 1 post, we need to mobilize both association and public official action.

These are some of the associations in our sector that are in position to act and should:

• Association of Direct Response Fundraising Counsel (ADRFCO)
• Association of Fundraising Professionals (AFP)
• Direct Marketing Association Nonprofit Federation
• Evangelical Council for Financial Accountability
• National Catholic Development Conference
• National Council of Nonprofits
• Independent Sector

In the regulatory sector:

• National Association of State Charity Officials
• National Association of Secretaries of State
• National Association of Attorneys General
• The Federal Trade Commission
• The Internal Revenue Service

And here are some starting thoughts on what we want from them.

Standardization and Transparency

Every nonprofit with income above a small threshold amount is currently required to file an IRS Form 990.

Problem is, the form can, and is, interpreted by nonprofits, their accountants and attorneys in a wide variety of ways and often to the detriment of transparency. In addition, the information in this annual filing is woefully out of date for anyone seeking to understand current operations of a nonprofit.

The same is true for the huge variety of forms employed by the various state regulators. In fact, they’re often even more useless than IRS Form 990.

What to do?

The business and financial world long ago realized the confusion and danger to commerce inherent in a patchwork of 50 state laws. Thus emerged The Uniform Commercial Code, the first of 118 Uniform Codes in the U.S. covering everything from Adoption to Victims of Crime.

A Uniform Charitable Standards Code, by whatever name, could vastly simplify the filing process for nonprofits and professional fundraisers. One filing – hopefully by electronic means, not paper – for 50 states.

Of course, passing a Uniform law like this requires lots of time and lots of money and our sector sure doesn’t have the resources of the business community that worked to put the Uniform Commercial Code in place.

Regardless, we should hold the goal out there and press appropriate state officials to take the lead. In the meantime we should press the IRS and states to do the following:

• Create an online filing system so that filings can be promptly posted, updated and made easily accessible to the public and the press.
• Modify the current IRS Form 990 and state forms so they provide key, clear, and more specific information like:
  • Annual revenue by source category of contribution;
  • Money paid to fundraising agencies, solicitors, consultants, and other key vendors;
  • Compensation paid to staff and listed by position;
  • Funds going to program;
  • Gifts-in-Kind by fair market value;
  • Name of lawyer or law firm retained;
  • Name of accountant accounting firm retained;
  • Period.

All of the items above – with the exception of listing names and addresses of lawyers retained, and source of funds by channel – are covered in some form or another by current IRS Form 990. We can already hear the organized bar screaming when requiring that lawyers’ names be included.

The point is, as an profession/craft/industry we need to press both the IRS and the state regulators for prompt and transparent information that provides a clear window into the operations of nonprofits when it comes to fundraising.

As part of our recommended ‘standardization’ objective, the fees, financial interest and connections with vendors would be required – under substantial or even severe penalty of law … not the current slap on the wrist nonsense.

Leaders of our sector should seek opportunities to address each of these public and official organizations in a unified manner to present our concerns and the actions we seek from them.

Fundraising Ethics

Within our sector, we need to take the lead regarding fundraising ethics. The recent guidelines set out by the Direct Marketing Association Nonprofit Federation are a very commendable start, but as Tom said in Monday’s post … just a start. For example, how about more focus on individual fundraisers on both sides of the table?

There’s not a consultant, agency, printer, list broker, you name the function who doesn’t ‘feedbag’ (that’s some agencies’ term, not ours) or otherwise pleasure their clients.

This used to be standard practice in Congress. Outings. Private Jets. Hookers. You name it. Until Common Cause came along with its straightforward campaign that ended extravagant gifts and honoraria – in those days the simplest form of corruption. (As fate would have it this was the campaign that found Agitator’s authors first working together. Here we go again!)

Today, for Congress this sort of ‘gifting’ is illegal and punishable. For the nonprofit sector, still acceptable and practiced.

Here’s what we propose – over and above the various donors’ bills of rights and various ethical guidelines governing organizations and agencies – an “Individual Fundraiser’s Code of Ethics” applied to everyone who works in a nonprofit and anyone outside who serves the sector:

• No meals or entertainment of more than a de minimus nature paid by a vendor/contractor;
• No travel paid by a vendor/contactor;
• No conference fees or preparation paid by a vendor/contractor;
• No unreported fees, honoraria, or kickbacks by whatever name from vendors to clients.

Why not a pledge by ‘clean’ nonprofits, agencies, consultants and staffs to forego this seemingly innocuous form of graft. And published somewhere in public view, a list of those who take the pledge.

We should demand that our sector ‘s professional and trade organizations lead the initiative for an up-to-date and comprehensive Individual Fundraisers Code of Ethics.

But if they don’t want to do it, we as individuals must.

Your thoughts and suggestions, please.

Roger and Tom

P.S. Is all this just a tempest in a US teapot? If our non-US readers are ahead of the game in the ethical fundraising department, we’d like to hear about it. What ‘rules and regs’ – legal or industry led – are you following that we laggards should embrace?