Nonprofit `telefunders' should try being honest

May 21, 2006|By JAY HANCOCK | JAY HANCOCK,SUN COLUMNIST

When James Madison wrote the First Amendment, presumably he had no idea that one day it would protect fundraisers who call your house, obtain a donation for what you thought was a good cause and then pocket most of the money.

But that's what the amendment does, to the lasting shame of the charity industry and the judges who confused misleading telemarketing spiels with sacred free speech. In a 1988 case involving Baltimore's National Federation of the Blind, the Supreme Court blessed schemes in which only a few pennies on each donated dollar end up with a nonprofit. The court even banned states from making charities disclose such shenanigans to a would-be donor, saying it would violate their right of expression.

This scarcely believable state of affairs won't change soon. But the courts offer hope that sanity will prevail in nonprofit fundraising. Last week, the justices left standing an appellate court ruling in a Maryland case that held that the free-speech privileges of nonprofits had limits and that fundraisers aren't completely exempt from the standards binding other businesses.

Again the case involved the National Federation of the Blind, which has a history of litigating for what it says are the rights of the disabled and the nonprofit groups representing them. It also has a history of questionable fundraising. Last year I wrote about Oregon regulators' crackdown on that state's NFB branch, which was paying 60 percent of the funds raised in its name to a for-profit company owned by a director of two NFB affiliates.

The Maryland case was about the Federal Trade Commission's Telemarketing Sales Rule, issued in response to a section of the 2001 USA Patriot Act.

The rule prohibits professional fundraisers from calling before 8 a.m. or after 9 p.m., from blocking caller ID and from using robodialers that sometimes phone with nobody on the line - not even a recording - if computers place more calls than telemarketers can handle.

It also requires professional solicitors to identify themselves and the nonprofit in whose name they are working. And it bans nonprofits from calling you if you ask them not to. (The national "do-not-call" database applies only to commercial businesses. You have to ask nonprofits to leave you alone one at a time.)

Display of nerve

In an impressive display of nerve, the National Federation of the Blind, joined by Special Olympics of Maryland, argued that this violated their free-speech rights under the First Amendment. They also said the FTC exceeded its authority.

Apparently they believe professional "telefunders" should be able to call you any time, even if you tell them not to, without immediately disclosing that they are seeking money and without displaying their information on caller ID.

Nonsense, said U.S. District Judge J. Frederick Motz of Baltimore. Nonsense, agreed the U.S. Court of Appeals for the 4th Circuit, whose ruling was left in place after the Supreme Court refused to hear the nonprofits' appeal.

NFB's and Special Olympics of Maryland's lawsuit forced 4th Circuit Judge J. Harvey Wilkinson to state the perfectly obvious in his written opinion.

"After 9 p.m., family members might, for example, be cleaning house for the night, bathing, paying bills, discussing homework, planning this or that, reading, watching TV, or simply getting ready to turn in," he wrote.

"Before 8 a.m., they might be eating breakfast, dressing, shaving or fixing lunch for spouses or kids. The First Amendment does not require us to interrupt these family moments."

There are limits

No kidding. The First Amendment does not allow people to shout "fire" in a crowded room where there is no fire. It does not permit corporations to disseminate fraudulent information about stock offerings. It doesn't allow stores to falsely advertise.

And it shouldn't allow unfettered solicitation by nonprofits. Ideally, the 1988 case creating a special standard for nonprofits - allowing fundraisers to pretend your money is going to charity when most of it isn't - would be overthrown. Perhaps the 4th Circuit's ruling will lay the groundwork for further reforms.

Meanwhile, you should rarely if ever donate in response to a telephone sales pitch. True, it might come from a volunteer who will direct all your money to the good cause. (And the FTC restrictions do not apply to volunteer solicitors.) But it also might come from a professional who could keep 60 percent of it or more - legally, without having to tell you.

jay.hancock@baltsun.com

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