FTC FACTSfor Business

BUSINESS

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FEDERAL TRADE COMMISSION FOR THE CONSUMER

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s a businessperson, you may want to contribute to law enforcement

or public safety groups in your community or buy advertising in

publications that seem to be sponsored by nonprofit organizations.

While you give back to the community that supports your business,

be sure to apply the same savvy you use to make your business decisions when

you consider your response to a fund-raising appeal.

Support Through Advertising

You may be solicited to buy advertising in publications that look like they’re

sponsored by nonprofit groups, such as police or firefighter associations or child

abuse prevention programs. The publication might be a journal, magazine, calendar, yearbook, or even a souvenir program for distribution at a circus, variety

show or dance. But while the words “police” or “firefighter” may appear in the

title, the publication may not have an official connection with a genuine public

safety organization. It may not even be distributed locally.

Protect Yourself

If you’re considering supporting a local charity by buying ad space from a nonprofit group, ask:

• How many copies of the publication will be printed?

• How often will it be published?

• Is there a charge for the publication?

• Who is the intended audience: police and fire departments, libraries,

schools, paid subscribers?

• Where will the publication be distributed: locally, regionally, nationally?

• Have arrangements been made for dissemination?

• When will it be published?

• Can I see a copy of a previous edition?

• How much money has the publisher given to the charity in the past?

• What percentage of the proceeds goes to the charity’s programs, rather than

administration?

Donating to

Public Safety

Fund-Raisers

A
Facts for Business

If you decide to purchase ad space, ask to review

the draft before publication. In addition, ask to

receive a free copy when it’s published. Don’t

expect a large portion of your payment to support a charitable program; the costs associated

with soliciting ads and printing a publication

often take most of your payment.

Phony Invoices

Some fraudsters operate on the assumption that

purchasing policies in many businesses are

informal, at best. As a result, they may send

invoices and expect you to pay them without a

second thought. Be alert for invoices claiming

you’ve purchased ad space, or unsolicited

C.O.D. (Cash on Delivery) packages. It’s illegal

to mail a bill, invoice or “statement of account

due” that’s actually a solicitation for a donation.

If the notice is a solicitation, a disclaimer,

required by the U.S. Postal Service, should be

visible. It states:

THIS IS NOT A BILL. THIS IS A SOLICITATION.

YOU ARE UNDER NO OBLIGATION TO PAY THE

AMOUNT STATED ABOVE UNLESS YOU ACCEPT

THIS OFFER.

If you receive a solicitation that looks like an

invoice but lacks this disclaimer, contact your

Postmaster or local Postal Inspector.

Public Safety Solicitations

Most police and fire departments are funded by

your tax dollars. However, they may ask you to

contribute to their professional associations or

labor unions at local, state or national levels.

These groups typically use paid fund-raisers to

solicit donations. Be cautious; simply having the

words “police” or “firefighter” in an

organization’s name doesn’t necessarily mean

that local police and firefighters belong to the

group. Call your local police or fire department to verify any fund-raiser’s claims.

There’s no reason to be suspicious of all fundraising by police and firefighter groups. Asking

questions is the best way to make sure your

contribution supports activities that are important to you. If you’re interested in making a

donation, ask: how the group will use your

money and what percentage will go to the local

organization. Ask how your contribution will be

allocated. Some fund-raisers may be soliciting

funds for organizations that redistribute money

to other organizations. If that’s the case, a

smaller portion of your donation may go to the

organization in need. That’s because your contribution may pay twice as much in solicitation and

administration costs when it goes through one

group to get to another.

One major tip-off to a rip-off is a suggestion that

you’ll receive special treatment for donating –

for example, that you won’t be stopped for

speeding if you display a police organization’s

decal on your car window.

And keep in mind that donations to some police

or firefighter groups may not be tax deductible.

Many types of organizations are “tax exempt,”

including fraternal organizations, labor unions

and trade associations, but that doesn’t mean that

donations to them are tax deductible.

Special Events

Sometimes, police or firefighter groups hire

professional fund-raisers that produce traveling

circuses or variety shows as special fund-raising

events. The fund-raiser usually sells tickets for

the show on the phone or in person. In many

cases, the solicitor says that if you’re not interested in attending the show, your tickets can be

given to handicapped or underprivileged children. If that’s the claim, ask how many children

will benefit and how they’re selected; how many

tickets have to be sold and how they will be

distributed; and whether transportation for the

children is included. In some communities, the

number of children “eligible” to receive free

tickets is limited and transportation may not be

provided.
Facts for Business

In addition, depending on the terms of the

agreement between the public safety group and

the promoter, the group may receive only a small

portion of the total money raised once the promoter recoups the costs associated with producing the event and its fees.

If you decide to purchase tickets, write a check

payable to the nonprofit organization, not the

person collecting the money or the company

running the event. If you get unsolicited tickets

in the mail, you have no obligation to pay for

them or return them to the promoter.

Vending Machine and

Donation Canisters

Businesses often are asked to donate retail space

to owners of vending machines or donation

canisters, with a portion of the proceeds going to

charity. Iron out the terms of the agreement

before you donate any space. Three arrangements are common:

• Employees or volunteers of a nonprofit or

charitable organization own and service the

collection device. Net profits go to the organization.

• A private vending machine operator owns and

services the device. The operator contracts

with a nonprofit organization to use its name

and remits a portion of the funds collected to

the organization. Review a copy of the contract or letter of agreement between the machine operator and the nonprofit before you

allow a device to be placed at your business.

• A commercial operator has a contract to use

an organization’s name, but doesn’t remit any

proceeds from the device. Instead, the beneficiary organization receives a one-time or

periodic “royalty,” and sometimes has the

opportunity to place a service message on the

device. In this situation, the operators may not

be required to register as commercial fundraisers if the device displays a prominent

statement like “all proceeds go to the owner of

this device,” and the owner is identified as

someone other than the charity. It depends on

state law. Some states require commercial

operators to register with the state Attorney

General or Secretary of State and prominently

display the percentage of monies collected

that go to the nonprofit group on the device.

Donation Do’s

Take the following precautions to help ensure

that your donation dollars benefit the organizations and people you want to help.

• Request written information. Ask for the name

of the organization, its mission, plans for

achieving its objectives, and how much of

every dollar collected is used for charitable

purposes.

• Call the beneficiary organization. Find out

whether they’re aware of the solicitation and

have authorized the use of their name. If the

answer is no, you may be dealing with a scam

artist.

• Find out how your donation will be distributed. How much will go to the program you

want to support, and how much will cover the

charity’s administrative fund-raising costs?

• Refuse high pressure appeals. Legitimate

fund-raisers don’t push you to give on the

spot. They take the time to explain the purpose of their solicitation and the goals of the

beneficiaries.

• Research claims of local support. If a charity

tells you that your donation will support a

local organization, call the organization to

verify the claim.

• Consider the costs. When you buy merchandise or tickets for special events, or when you

receive “free” goods in exchange for a donation, remember that these items have costs and

that a portion of your contribution is being

used to pay for them. That leaves less for the

beneficiary.

• Avoid cash gifts because they can be lost or

stolen. For security and record-keeping pur-
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

May 2003

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

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Facts for Business

poses, it’s best to pay by check. Make it

payable to the beneficiary, not the solicitor.

Avoid solicitors who want to send a courier or

use an overnight delivery service to pick up

your donation.

Charity Check-Up

Before you write your check, check out the

organization with one of these groups:

BBB Wise Giving Alliance

4200 Wilson Boulevard, Suite 800

Arlington, VA 22203-1838

(703) 276-0100

www.give.org

American Institute of Philanthropy

3450 Lake Shore Dr., Suite 2802 E

Chicago, IL 60657

(773) 529-2300

www.charitywatch.org

GuideStar

427 Scotland Street

Williamsburg, VA 23185

(757) 229-4631

www.guidestar.org

Your Local Charity Registration Office

Most states require charities to be registered or

licensed by the state. Contact your state Attorney

General’s office or Secretary of State. Links to

state charity regulators also can be found at the

National Association of State Charity Officials

Web site — www.nasconet.org.

Many smaller, newer or local charities may not

be rated by these organizations. Some fraternal

organizations, such as police and fire groups

may not be rated at all.

Where to Complain

If you believe a particular organization may not

be operating for charitable purposes or is making

misleading solicitations, contact your state

Attorney General or the Federal Trade Commission.

The FTC works for the consumer to prevent

fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid

them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or

call toll-free, 1-877-FTC-HELP (1-877-382-

4357); TTY: 1-866-653-4261. The FTC enters

Internet, telemarketing, identity theft and other

fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement

agencies in the U.S. and abroad.

Your Opportunity to Comment

The National Small Business Ombudsman and

10 Regional Fairness Boards collect comments

from small businesses about federal compliance

and enforcement activities. Each year, the

Ombudsman evaluates the conduct of these

activities and rates each agency’s responsiveness

to small businesses. Small businesses can

comment to the Ombudsman without fear of

reprisal. To comment, call toll-free 1-888-

REGFAIR (1-888-734-3247) or go to

www.sba.gov/ombudsman.