On October 19, 2012, the New York AG issued “Five Best Practices for Transparent Cause Marketing,” in an effort to increase clarity in charitable organization disclosure practices.  The Best Practices are as follows:

1) Clearly Describe The Promotion;

2) Allow Consumers To Easily Determine Donation Amount;

3) Be Transparent About What’s Not Apparent;

4) Ensure Transparency In Social Media; and

5) Tell the Public How Much Was Raised

The Best Practices were immediately adopted by two of the largest charitable organizations, the Susan G. Komen for the Cure Foundation and the Breast Cancer Research Foundation (BCRF).  The NY AG, Eric Schneiderman, commended the two agencies, proclaiming their adherence indicates their desire to “lead[] the industry to great transparency and accountability,” and will “bolster public confidence in cause marketing.”  This announcement comes during National Breast Cancer Awareness Month, a period saturated with pink ribbons and promotional partnerships.  The timing of the Best Practices promulgation could not have been more perfect to raise Komen and BCRF coffers, but other significant questions are also raised:  What exactly do the best practices mean in terms of current charitable solicitation regulations and requirements?  Will other “cause marketers” be strong-armed into accepting the NY AG best practices?  And finally, will the Best Practices spur other similar state guidelines, or will the result be more burdensome than beneficial to charitable organizations?

Currently, charitable solicitation practices are governed by the Model Law for Charitable Solicitations (MLCS, see the full text here).  This Model Law was developed as a project among the various Attorneys General, and was enacted into law in 1986.  The Model Law § 7 contains specific requirements for charitable solicitation, including a description of the goods/services offered, the manner of benefit to the organization, and the total (or if the total is unavailable, the estimated) benefit the organization will receive.  Additionally, the Better Business Bureau has its own Standards for Charitable Accountability (full text available here), which are substantially similar to the MLCS.  In essence, the Best Practices do not differ from the MLCS or the BBB standards, with the exception of the Social Media Transparency.

So, one might ask, why release clearly repetitive and redundant Best Practices?  While the 1986 adoption of the MLCS did not address social media standards, an amendment regarding social media transparency requirements could easily augment the current Model Law.  Perhaps another reason lies in the calculated adoption of the Best Practices by Komen and the BCRF – with such prominent charitable organizations announcing their compliance, other organizations may be pressured to follow suit, even if their disclosures are already sufficient under MLCS and BBB standards.  Charities thus face a conundrum:  adopt the Best Practices and the (potentially significant) cost of amending their disclosures across all platforms, or risk losing donations and support because they are not as “transparent” as the Best Practices require.  Such a Hobson’s choice could result in less money going towards the cause and more money towards duplicative Best Practices compliance.

New York has always had a proactive Attorney General, and perhaps this is the latest example of nipping a perceived problem in the bud.  But absent clear evidence of fraud among charitable organizations, are the Best Practices really necessary?

Press Release of the Best Practices and their full text can be found here.