The FTC’s advice for online giving portals that collect on behalf of charities
Seventy-eight percent of Americans believe companies must do more than just make money - they must also positively impact society, according to the recent 2018 Cone/Porter Novelli Purpose Study. Not only did 79% of respondents say that they are more loyal to purpose-driven companies, but 73% said they would be willing to defend those companies. As for-profit businesses continue to find ways to demonstrate their positive social impact, one recent trend is by teaming up with online giving portals. Businesses such as online retailers and crowdfunding sites (like GoFundMe) are increasingly directing consumers to online giving portals that offer lists of charities to which consumers can donate. These online giving portals seem like a win-win for businesses and donors. They make it easy for businesses to collect funds on behalf of charities, and they offer donors a quick and simple way to donate to a cause they support.
But, in a recent blog post, the Federal Trade Commission (“FTC”) voiced its concerns about online giving portals. First, they may be misleading donors, who might mistakenly believe that their donations are going directly to their designated charity, when in reality another company may get the money first, take a portion of it as a fee, and then pass the rest onto the charity. And secondly, these portals may be running afoul of advertising law principles.
The FTC’s post offers advice for businesses that want to use online giving portals to raise funds on behalf of charities without violating advertising laws. The commission says businesses must ensure that donors can easily obtain “clear and truthful” information about where their funds are sent, how much of it goes to the actual charity or cause they support, and how long it takes for that money to get there. It should also be clear to donors whether their personal information will be shared with the charity or anyone else.
The FTC advises businesses to “be obvious.” Disclosing these details about the donations and the use of the donors’ personal information should not be buried in fine print, at the bottom of the page, or through a poorly labeled link to another page. And the commission advises businesses to simply tell the truth. Provide clear, accurate, and easy-to-find information about the charities offered through that online giving portal and the portal’s relationship with those charities.
Finally, the FTC points out that some states have specific regulations regarding what third parties can and cannot say about a designated charity, and advises that businesses consult any applicable state laws.
Many of these state laws also require other compliance steps if your business is running an online giving portal or even just teaming up with one. These may include registration and filing requirements, so it’s important to plan these activities in advance and consult with experienced counsel.
Businesses are recognizing the brand value and other benefits of creating social value, but consumer trust in charitable giving has been declining in recent years. Given this landscape, we are likely to see increasing regulatory actions and attention to charitable giving. Be sure to heavily vet any online giving portal with which your business is considering partnering to both stay on the right side of advertising laws and to maintain consumer trust and a good brand reputation.