Nonprofits Must Comply with CAN-SPAM Regs
(Dec. 20, 2004) As expected, nonprofit organizations are not automatically exempt from the final regulations recently published by the Federal Trade Commission (FTC) regarding the CAN-SPAM Act.
Instead, the final rules closely mirror the FTC's original proposal that created a three-prong test to determine if the primary purpose of an email is considered 'commercial' or 'transactional or relationship' in nature. If the purpose of the email is determined to be 'transactional or relationship' in nature, then the email is exempt from the requirements of the CAN-SPAM Act.
Despite the decision by the FTC, the final rules should have little impact on charities unless they traditionally distribute numerous emails that contain only marketing or advertising content, although a few concerns still exist. The final regulations were not a surprise, as the FTC had indicated it would probably take this approach in earlier comments.
The CAN-SPAM Act was passed by Congress in 2003 to crack down on unsolicited commercial emails. Most of the legislative history of the bill, as well as comments by congressional staff, indicate that the congressional intent of the legislation was to exempt emails from nonprofit organizations.
Nevertheless, and despite comments from AFP and other organizations, the FTC has decided to include such emails. In the final regulations, the FTC noted that 'it is possible - or even likely - that emails between a nonprofit and its members would constitute 'transactional or relationship messages,' but refused to create an actual exemption.
Applying the Commercial Test
To determine if the purpose of an email is 'commercial' in nature, organizations should look at three criteria:
1) If the email's content solely advertises or promotes a product or service, it would be deemed commercial.
2) Should the email contact both commercial content and also content under the FTC's 'transactional and relationship' category, which is not deemed commercial in nature, then the email would be considered commercial in nature if either
a) the recipient deems from its subject line that the message advertises or promotes a product or service or
b) the 'transactional or relationship' content is not located at or near the beginning of an email
3) If the email contains both commercial and non-commercial content, it would then be deemed commercial if
a) from the subject line the recipient concludes that the email advertises or promotes a product or service or
b) if the recipient concludes from the text that the main purpose is to advertise or promote a product or service.
If an email is determined to be commercial, then the organization must have the explicit permission of the recipient(s) before sending the email. The email must also contain an electronic opt-out, a valid postal address and obvious and conspicuous notices at the beginning of the message that the email is commercial in nature.
Most nonprofit emails will probably be exempt from the proposals so long as they are not completely commercial in nature and the nonprofit places the 'transactional and message' content at the beginning of the email.
However, nonprofits should be aware that some concerns still exist with the bill. For example, once someone has opted out of receiving any future emails, that individual's email address cannot be shared anywhere (e.g., a membership directory). Even if a member still wants his or her email address printed in a directory, organizations would legally be prohibited from doing so.
AFP wishes to thank the American Society of Association Executives for their work on this issue.
Related AFP ResourcesSenate Passes Bill Tax Reform Bill Without Universal Charitable Deduction
Tax Reform Bill Would Reduce Giving, Repeal Johnson Amendment
Charitable Giving Coalition Sends Letter on Trump Tax Plan
AFP Rebuts Opinion Piece on Charitable Giving Incentive
New Charity Package Introduced in Senate