Charity Regulators and the Menace of Regulating Online Activity

Recently I took an online webinar about state regulations of online fundraising. People could opt to listen in to the webinar via telephone.

The webinar was taught by two state charity regulators, which I found disappointing because the presentation was so one-sided and incomplete. The regulators in the webinar are lawyers in the attorney general offices of their respective states.

The laws governing online fundraising are very unclear, and the two lawyer-regulators even admitted that there are enough circumstances where even they don’t know the answers to who is regulated, and who must register and report activity.

The lawyer-regulators referenced case law outside the area of charitable fundraising to support their presentations. As a lawyer myself, I am aware that many, if not most, people who work for charities don’t read case law about charitable fundraising, and certainly don’t read case law that doesn’t seem to even apply to them.

Participants in the webinar could send questions electronically, so I sent in the following one: “If the lawyers enforcing these laws cannot say with certainty what activity triggers registration, aren’t nonlawyers who want to comply with the law at a disadvantage?”

The lawyer-regulator who answered my question (and I’ll keep her anonymous so I don’t embarrass her), was supposed to repeat the question for the telephone audience. Instead, she left out the first part – “If lawyers enforcing these laws cannot say with certainty what activity triggers registration” – and stated only the second part — “aren’t nonlawyers who want to comply with the law at a disadvantage.”

So, in essence, she censored my question. That didn’t sit well with me. But that’s typical of charity regulators.

Her answer was typical too, meaning rather meaningless.

She said that people who aren’t sure should contact a state charity regulator.

I can dissect that answer several ways.

First, since even the lawyer regulators can’t explain all the times a charity must register its online activities, what good is it to ask them?

Also, have you ever tried calling a government agency with a legal question? You’ll likely get a response only that they can’t provide legal advice.

Thirdly, there are over forty states with charitable solicitation laws. People with questions can’t be expected to contact all of them. Laws vary from state to state, and even states with similar laws don’t enforce them the same way.

Fourthly, even charity regulators who might answer your question aren’t likely to give the right answer, and certainly won’t give an answer that protects your rights.

If you have a legal question, you’re better off asking a lawyer instead of a regulator. That, though, is expensive.

It is lost on state charity regulators that they and their laws are dinosaurs.

There is a way to protect donors (even better than the current system) without these confusing burdens on charities, but charity regulators don’t care.