Introduction
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N.Y. Estates, Powers, and Trusts Law 8-1.1 et seq.
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N.Y. Not-For-Profit Corporation Law 112(a)(4), 706(d) & 714(c)
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N.Y. Executive Law Article 7-A
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15 U.S.C. 44
New Yorkers give generously to charities. In fact, each year New Yorkers give over $10 billion to charitable organizations.1 Most charities are honest in their methods of soliciting contributions. However, there are some organizations that misuse fundraising methods, taking advantage of well-meaning people who want to help a good cause.
The New York State Attorney General works to protect donors, charities, and the beneficiaries of charities. The Attorney General’s supervisory authority over charities is rooted in the common law of charitable trusts and corporations, as well as the power of the State to protect the interest of the public in assets pledged to public purposes. In addition, the Attorney General has broad authority under State statutes to regulate not-for-profit organizations and charitable trusts and to commence law enforcement investigations and legal actions to protect the public interest.
The Attorney General is responsible for overseeing the administration of charitable assets in the State of New York and for enforcing laws governing the conduct of the management of charitable entities. (Estates, Powers and Trusts Law (“EPTL”) 8-1.1 et seq.; Not-For-Profit Corporation Law (“NPCL”)).
The New York State Attorney General has the authority to investigate and prosecute fraudulent charitable solicitations and manages the registration of charitable entities, professional fundraisers, professional solicitors, and fundraising counsel. (Executive Law Article 7-A). Those entities are not only required to register with the State Attorney General but must also file annual reports which are available from the Attorney General’s Charities Bureau to the public upon request.
Fraudulent charitable solicitations have been the subject of many legal actions by the office of the New York State Attorney General. These lawsuits compel deceptive fund raisers to follow the law or to stop conducting business in New York. The Attorney General's office also tries to restore money that good-hearted New Yorkers give in good faith to charities when they have discovered fraudulent acts by those charities.
The Federal Trade Commission (FTC) generally only regulates profitable companies. However, it also has jurisdiction over profitable companies soliciting donations for charities, and for not-for-profit trade associations, and even charitable organizations, to the extent that they engage in business activities. Therefore, even a charitable entity engaging in commerce or selling goods or services will be covered by the FTC’s Unfair and Deceptive Acts and Practices Law.2
Click on the link below to find more information about this topic.
- When Considering a Charitable Contribution
- Mail Solicitations
- Solicitations on the Internet
- Solicitations in Person
- Solicitations Over the Phone
- Tickets and Merchandise Sales
- Giving to a Law Enforcement Group
- Do Not Pay Contributions In Cash
- Complaints
- For More Information
When Considering a Charitable Contribution
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N.Y. Executive Law 174-b(5)
Consumers should consider the following when contemplating a donation:
- Find out how the charity distributes the donation. Consumers should ask for information about its programs and for a copy of its financial report. Consumers should be wary if the organization will not provide information about its programs and finances upon request. Honest charities will be happy to give out information. In New York, they are required by law to respond within fifteen (15) days of your request. 3
- Ask what proportion of the money given actually goes to support the charity's program and what proportion goes to administrative and fundraising costs. Charities do have legitimate and necessary fundraising and administrative expenses, so consumers should beware of claims such as "all proceeds will go to the charity”.
- Be skeptical of emotional appeals that talk about problems but do not explain the programs provided by the organization or how the money raised will be spent.
- The Office of the New York State Attorney General’s Office issues the “Pennies for Charity”, report relating to telemarketing campaigns in New York, which shows donors how much of their contributions made in response to telemarketers’ solicitations are actually retained by the charity. It is intended to be used as a tool to assist prospective donors as they decide which charities to support. It can also be used by charitable organizations to evaluate a professional fundraiser’s performance. Consumers can visit website of the Office of the New York State Attorney General at http://www.charitiesnys.com/pennies_report_new.html to view these annual reports.
- Check out background information on the charity. To find out if a charity is required to register, or to receive a copy of its financial report, call 212-416-8401 or write to: New York State Attorney General, Charities Bureau, FOIL Section, 120 Broadway, New York, NY 10271.
- Find out if an organization is registered. Consumers can visit the Office of the New York State Attorney General Charities Bureau Registry Search at http://bartlett.oag.state.ny.us/Char_Forms/search_charities.jsp.
To find an organization, search by organization name, registration number, or federal Employer Identification Number (EIN), or a combination of these search criteria.
Mail Solicitations
All literature from the not-for-profit organization should identify the charity and explain how the donation money will be used. If it does not, consumers should call or write the charity to ask for program and financial information before making a contribution. Some organizations send fundraising materials that look like actual bills. Others enclose realistic looking copies of checks and request matching funds. Consumers should not feel pressured to respond. Consumers should read the information carefully.
Consumers should note that they are not required to pay for or return merchandise mailed to them from charities if they did not order the item(s).
The public should be wary of appeals asking to return something such as a questionnaire or survey which may be used to divert the consumer’s attention from the organization's program and how the donations will be spent. Additionally, the request may be a ploy to secure personal information for other undisclosed purposes.
Solicitations on the Internet
When contemplating a charitable donation online, a consumer should never give out credit card numbers or other personal information via the Internet unless the site is secure and there is reassurance that the organization soliciting is legitimate and familiar to the donor.
Solicitations in Person
When faced with a solicitation in person, a consumer should:
- Ask for identification. Door-to-door solicitors should have written or photo identification authorizing that person to solicit on behalf of that charity.
- Request printed material describing the charity's program, how it uses its donations, its address and its phone number.
- Inquire what the charity does with the money and if the contribution is tax deductible. Consumers should also get a receipt.
- Never feel pressured to give a contribution. There will always be an opportunity to give to a legitimate charity at a later time.
Solicitations Over the Phone
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16 C.F.R. 310 et seq.
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N.Y. General Business Law 399-p
The FTC’s Unfair and Deceptive Acts and Practices law regulates telephone solicitations for charitable contributions. The implementing rules specifically prohibit misrepresentation of the following: (1) the nature, purpose, or mission, of any entity on behalf of which the charitable contribution is being requested; (2) that any charitable contribution is tax deductible in whole or in part; (3) the purpose for which the charitable contribution will be used; (4) the percentage that goes to the charitable organization or program after administrative costs are deducted; (5) material aspects of prize promotions, including if a charitable contribution is required to win a prize; or, (6) affiliation, endorsements, or sponsorship by any individual or government.4
The public should not fall for high pressure tactics such as repeated phone calls or threats. Consumers do not have to agree to donate at the time of the call, or to have someone pick up the contribution shortly thereafter. Consumers have the right to say no, the right for materials to be in writing, and for more time while researching the charity. Potential donors should ask if the solicitor is a hired telemarketer. New York law requires that professional telemarketers identify themselves and tell the consumer that the telemarketer is being paid to solicit contributions.5
Tickets and Merchandise Sales
When purchasing or donating merchandise or tickets for a charitable purpose, consumers should ask how much of the purchase price will go to the charity and who will receive the tickets or merchandise, as well as confirm how much of the proceeds will go to the charity.
Giving to a Law Enforcement Group
Many people show support for their local police department by giving to police fraternal organizations. Unfortunately, sometimes con artists, taking advantage of the public's concern, make fraudulent solicitations.
When asked to give to a police organization, consumers should contact the local police department or other law enforcement agency to check on the identity and the legitimacy of the group asking for the contribution. Consumers should be wary of a solicitor who uses coercive or abusive tactics or who promises that such contributions will entitle donors to better police protection or special privileges. This is illegal.6
Do Not Pay Contributions In Cash
All contributions should be made by check or credit card, and made payable directly to the charity. Consumers should retain this documentation for tax purposes.
Complaints
To lodge a complaint about an organization that has solicited a contribution fraudulently or improperly, contact the New York State Attorney General's Charities Bureau or the regional office of the Attorney General.
Office of the New York State Attorney General
The Capitol
Albany, NY 12224-0341
Attorney General’s General Helpline: (800) 771-7755
For a complete list of all regional offices of the Attorney General in New York State, see www.ag.ny.gov.
For More Information
For further information about a national charity, consumers may write to one of these agencies that monitor the activities of charities.
Philanthropic Advisory Service Council of Better Business Bureaus
4200 Wilson Boulevard
Suite 800
Arlington, VA 22203-1804
703-276-0100
www.give.org
Better Business Bureau - New York Philanthropic Advisory Service
257 Park Avenue South
New York, NY 10010
212-358-2873
www.newyork.bbb.org
- www.oag.state.ny.us/charities/charities.htm.↑
- 15 U.S.C. 44; see also American Medical Ass’n v. FTC, 638 F.2d 443 (2d Cir. 1980), aff’d per curiam 455 U.S. 676 (1982); FTC v. National Comm’n on Egg Nutrition, 517 F.2d 485 (7th Cir. 1975), cert. denied, 426 U.S. 919 (1976); Community Blood Bank, Inc. v. FTC, 405 F.2d 1011 (8th Cir. 1969); Miller v. Risk Management Foundation, 36 Mass. App. Ct. 411, 632 N.E.2d 841 (1994).↑
- N.Y. Exec. Law 174-b (5) (2008).↑
- 6 C.F.R. 310. et seq. See 68 Fed. Reg. 4580, 4612 (Jan. 29, 2003) (discussion of rationale and details; The FTC interprets this prohibition to encompass misrepresentation that a charity or its services are local and the FTC interprets this prohibition as extending to “sound-alikes,” the use of a name similar or identical to that of a legitimate charity)↑ .
- N.Y. Gen. Bus. Law 399-p (2008). ↑
- N.Y. Executive Law Article 7-A 175-2(h) (2008).↑