Be Reasonable
By Henry Goldstein
March 10, 2003

On March 3rd, the US Supreme Court heard oral arguments in Ryan v. Telemarketing Associates, Inc., a case that hinges on what constitutes “reasonable” fundraising costs, and whether prior disclosure is a restraint on first-amendment protected free speech.

On the face of it, all the charity trade groups, who filed friend of the court briefs opposing the State of Illinois, are thrilled, and probably relieved – pending the Court’s ruling, expected this spring. After all, who’s to say what’s “reasonable” when it comes to judging fundraising costs?

In bringing fraud charges against the telemarketer, for allegedly misleading donors by not disclosing in advance that 90% of the funds raised went to the marketer, not the charity, Illinois scared the daylights out of the charity pack. Moreover, for First Amendment fundamentalists like me, the Justices’ skepticism on hearing Illinois’ arguments was apparent good news, indeed. It certainly looks like the Court will not re-visit three major prior decisions – which essentially protect charities’ free speech rights. With all this good news, why am I thinking the charity business will win this battle but lose yet another round in the public opinion war? How much good fortune can we stand?

Charity groups like Independent Sector and the Association of Fundraising Professionals (AFP) (on whose Foundation board I sit and herewith dutifully disclose), lined up to protect their right to conduct business as usual, and tangentially protect a total skuzzball from the law’s long arm. Feeling they had no other choice, really, the lobbyists could perhaps console themselves with the idea that the worst cases make the best law, a truism in the civil liberties lexicon.

Forty states and the AARP - noting that the elderly are more often victimized by scams than other people – along with the Wise Giving Alliance of the Better Business Bureau, toed up the other way.

What’s wrong with this picture is that the donors are cropped out of it. Despite the sins of United Ways, national and local Red Cross, Boy Scouts membership policies, 9-11 frauds, Internet scams, and much else, most of us continue to give because we like a particular charity, and we more or less assume it does good works with our money. Even if someone could devise a way to rationalize fundraising costs to the satisfaction of a smart eight year old, I doubt that it would make much difference to the emotions of giving.

On the other hand, if the general public truly understood that while this case may be about the First Amendment, superficially, the sad fact is that AFP, Independent Sector and the other trade groups should be working a lot harder on the question of how to define “reasonable” fundraising costs, instead of ceding it to the states’ attorneys’ general who are defining it by default. Even if Illinois loses in the Supreme Court, the A.G.s have found themselves a potent political issue, an eye-glazer that almost no one gets, but that makes charities look just awful on News At Eleven, and worst of all, has the Bush executive branch strongly behind it. “Charity telemarketer scams 90% of donations,” is a much better bite than “Reasonable fundraising costs a complex issue.”

Much has been made of the “Donor Bill of Rights,” a ten-point manifesto endorsed by AFP, Independent Sector, and other groups. Article 3 says donors should “have access to an organization’s most recent financial statements.” Well, yes. But nothing about “reasonable” fundraising costs there, plainly a subject no one wants to tackle.

In the absence of leadership on the industry’s part, why is it so unreasonable for state governments, backed by the anything-goes-free-market Bush administration, to take on fundraising costs?

By cloaking their argument in the First Amendment, the charity lobby has very cleverly shifted the ground – from getting at the issue of legitimate fund raising costs – to a highfalutin rationale of constitutional principle, an argument which I in fact strongly support. At the same time, Telemarketing Associates seems to have perpetuated a fraud on the giving public, and the industry seems to condone it. That I don’t support.

Be reasonable.

Henry Goldstein is president of the Oram Group in New York. Click here to send an email.