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AFP Internet Guidelines

Resource Center - Foundation

Introduction

The evolution of the Internet has impacted the charitable sector in many significant and positive ways. The Internet represents a potentially powerful new tool for advancing philanthropy. In response to the tremendous level of interest of AFP members in online solutions, these guidelines are promulgated to aid in the effort of charitable organizations to more fully realize the potential of the Internet. As nonprofits look with increasing frequency to Internet-based service providers, and as the business plans for dot.coms interested in the charitable sector are refined, dot.orgs must assert a stronger voice in the further development of business/charity Internet models.

Although there are numerous variations, the seven broad online transaction categories are charity malls/affinity programs, online financial contributions, corporate giving programs,auction sites, cause-related portals; online volunteering, and venture philanthropy. For all of these options, online donors are most concerned about how their funds will be used. Internet givers want demonstrable progress toward charitable goals.

The AFP Internet Transaction Guidelines provide basic guidance for AFP members and others considering engaging the services of an online or similar service provider. The remarkable speed with which the Internet has reached large segments of the world population, coupled with the rapid pace of change in the technology and business offerings of Internet-based service providers, suggest that long-term commitments should be made with considerable caution. By the same token, charities must, to the extent reasonable and appropriate, streamline and accelerate their internal processes to permit timely decisions and commitments. Failure to react will exclude nonprofits from the Internet revolution.

Though the barriers for Internet transactions may seem daunting for some charities, they are not insurmountable. For example, conventional wisdom teaches that philanthropy, at its core, is based on extensive direct human interaction. Yet, Internet transactions are largely impersonal and tend to lack the type of connections and relationships that mark philanthropy. The implications of this potential disconnect and the presence of a third party (the dot.com) in the donor-charity relationship have yet to be explored. Business models and management options must be developed that both realize the service delivery and economic efficiencies inherent in the Internet and generate strong and consistent charitable giving habits.

Cultural differences related to motives and missions present another potential obstacle to charity/dot.com relationships. Frequently, there is a tension between Internet-based service providers, who are learning about the charitable sector, and nonprofits, which traditionally don't fully use technology and are dubious of the dot.coms' intentions. Too often, charities initially mischaracterize their relationship with a dot.com as philanthropic. Usually, these are business relationships, even when there exists some level of donative intent on the part of the dot.com.

Another pervasive issue is privacy. Most online users want to control their personal privacy. Simply visiting a website should not constitute an approval for use of personal data gathered during the visit, without the visitor's prior approval. However, taking an online action may be interpreted fairly as implying permission for future contact--on or offline--by the website operator only. In this context, charities must promulgate their own meaningful privacy policies and demand that Internet service providers adhere to them.

Many Internet-based providers of services to charities focus on differentiating their online image from that of their online competition. Donors today are looking for differentiation among causes based on mission--not transaction handling. Standardization and uniformity of practices among Internet-based service providers may be a desirable outcome for the charitable sector.

Finally, nonprofits must control the process of brand sharing. Most charities have yet to conduct an online search to determine who is already using their brand identity. Newcomers to the sector need the credibility and goodwill that individual charity brands represent. Contracts or other licensing arrangements are critical for all transactions in which the dot.com proposes to use the dot.org's name. However, an exception may be appropriate if the online entity is a charity (such as helping.org) seeking solely to facilitate online donations to all charities.

These guidelines are intended to be dynamic and will be revised as new developments require. Comments are actively solicited and can be sent to webmaster@afpnet.org.

Related: AFP's Social Media Guidelines: Ethical, Safe and Effective Practical Standards

Note: The terms "Internet-based service provider" and "dot.com" are used synonymously throughout the guidelines. These entities should not be confused with "Internet service providers" (ISPs), which simply allow access to the Internet.

AFP Internet transaction guidelines

Internet transactions and similar relationships are fundamentally business transactions based on contracts and similar formal or implied agreements among the parties. All fundraising transactions, whether wholly or partially conducted on the Internet or through one or more websites, are likely to be governed by state and federal laws and regulations. For any proposed relationship, contract, or transaction model, consult qualified, independent professionals who are familiar with the charitable sector and Internet business law for advice. It is generally not advisable to rely solely on the advice and documents proposed by other parties to the transaction.

Most guidelines set forth below address issues raised in the context of third-party Internet-based service providers. Many of these issues are also relevant to a charity's own website, but that model is not the focus of these transaction guidelines.

1. The charity should have a formal agreement with all Internet-based service providers which seek to represent the charity or which will accept donations on behalf of the charity. A formal agreement is important in order for charities to keep control of their relationships with their stakeholders as well as their name and the reputation upon which it is founded. These are frequently the most important elements a charity has to offer in support of its mission. Failure to control a third party's use of a charity's name and reputation may result in public confusion and loss of confidence. A carefully written agreement ensures that rules and expectations are delineated should a disagreement arise.

The value to all charities of web-based services which facilitate contributions and other philanthropic activities should not be underestimated. Many of these services may permit charities with limited budgets to take advantage of the Internet's economic efficiency and ability to reach new donors. The websites of concern list a few well-known charities--often without the charities' knowledge or permission--and use that list to entice other charities to pay for services. While the intentions of sites that will accept contributions from all charities may be laudable, charities should have formal agreements with all sites that purport to represent them. An exception may be appropriate where the online entity is itself a charity (such as helping.org), which is seeking solely to facilitate online donations to all charities.

2. A formal agreement should make clear which party (the charity or the Internet-based service provider) is required to register with appropriate regulators should the activity on behalf of the charity conducted by the Internet-based service provider require registration. Internet-based service providers should be prepared to respond to inquiries from regulators, and the agreement should specify if the Internet-based service provider will indemnify the charity from adverse actions by regulators.

3. A formal agreement should specify who has legal control of the contributions. Does the Internet-based service provider simply act as a conduit, passing on the money, or does it legally control the money at some point in the process and then pass it on to the charity? A formal agreement should specify that the Internet-based service provider cannot claim a charitable deduction for contributions facilitated by the Internet-based service provider.

4. A formal agreement should specify on what schedule, and by which means contributions will flow to the charity from the Internet-based service provider. For example, will donations be sent upon receipt, weekly, quarterly? Will donations be transmitted in the form of checks by mail, bank wire transfers, etc.? AFP recommends that Internet-based service providers send contributions to the charity as they are received, since this procedure may lessen concerns about which party has legal control of the contributions and ensure that the site is acting primarily as a conduit for the contribution.

5. A formal agreement should specify whether or not the charity will be able to monitor its account in real time, or if the Internet-based service provider will supply a periodic report pursuant to an agreed upon schedule. Because documentation is important for audit purposes, the agreement should also provide for reconciliation statements prepared by the Internet-based service provider to confirm the charity's receipt of all Internet donations during a given reporting period.

6. A formal agreement should specify all "transaction," "after transaction," "account management," and other fees that are charged against a gift to the charity. The Internet-based service provider should clearly and unambiguously disclose to all potential donors and site visitors that a "transaction" or similar fee will be charged against the donation for administration of the gift, if such a fee is charged.

7.The Internet-based service provider should assume liability for ensuring the completion of the donation transaction. For example, all money intended for the charity--less any agreed-upon fees--will in fact be transmitted in a timely and secure manner.

8. A formal agreement should specify whether or not the Internet-based service provider is capturing demographic information or similar data of any kind concurrent with the transaction, or in post-transaction surveys. The agreement should specify who owns such data, and upon what terms the owner will make it available to the other party to the agreement.

9. If information about donors is being collected, the Internet-based service provider should clearly and readily disclose this fact to potential donors and site visitors. A simple and straightforward option should be provided to allow donors and visitors the option to restrict or prevent such data collection.

10. A formal agreement should specify which party's privacy policy controls the donation transaction. Any privacy policy should be credible, effective, and meaningful. It should address such issues as confidentiality, use of information, secure storage of data, secure transactions, use of cookies, specific conditions for release of individual data, opt-out options, and similar matters. If the charity's privacy policy is stronger than the Internet-based service provider's, then the Internet-based service provider should accept and conform to the charity's privacy standards. The governing privacy policy should be posted on the website.

11. A formal agreement should specify how the charity's name, logo and/or other identifying marks will be used on the website and in any related communications and materials. The Internet-based service provider should afford the charity a reasonable opportunity to review and approve in advance each proposed use by the Internet-based service provider of the charity's name, logo, and other identifying marks.

12. If the Internet-based service provider offers the charity space to include information about itself and its activities, a formal agreement should specify who is responsible for writing, editing, and updating the information, and how the information will be presented and on what schedule.

13. A formal agreement should specify the terms and conditions for "charge-backs" and other requests for refunds from donors.

14. A formal agreement should specify the degree of liability which the Internet-based service provider assumes to the donor, the charity, and third parties for information, transaction handling, and losses related to the Internet-based service provider's administration of a donation.

15. A formal agreement should also specify what happens if the Internet-based service provider ceases to operate or exist. The Internet-based service provider should have policies and procedures in place to protect the interests of both donors and the charity in case of this contingency.

16. A formal agreement should also specify fair and reasonably time-limited termination provisions that the charity may exercise should it find that the Internet-based service provider is not meeting the needs of the charity.

17. The Internet-based service provider should clearly indicate its status as either a for-profit or a nonprofit organization.

18. The Internet-based service provider should clearly indicate whether the donor is entitled to a charitable deduction, and accurately describe the limits (if any) on such deductions based on applicable laws. This information should be readily and clearly available to any person who visits the site.

19. The Internet-based service provider should clearly explain the purpose of the site, its relationship with the charities it is representing, and how donors can use the site.

20. All charities should know whether or not the Internet-based service provider adheres to the AFP Code of Ethical Principles and Standards of Professional Practice and whether appropriate employees are members of AFP?

21. AFP encourages charities to closely examine the purpose and operations of the Internet-based service provider. Is the site a passive facilitator of contributions, or will it aggressively seek out donations through email or other means? Does the site encourage direct contributions, or are those who visit the site primarily interested in acquiring products or services and giving a percentage of their purchases to charity (cause-related marketing)? Not all of these approaches will be appropriate for all charities. AFP encourages charities to spend some time evaluating the "feel" of a site to determine if it is a good fit with the nature and mission of the charity.

22. Assuming that a "transaction" fee is charged by the Internet-based service provider, the charity should consider the size of the fee and its effect upon the donor. The charity should ask whether the fee negotiable; are fees capped at an agreed-upon level or based on a sliding scale? Competition continues to drive down Internet transaction fees, and charities should consider putting competition to work for them and their potential donors. The fees and other costs associated with the website--including the way it draws upon advertiser or major gift support to underwrite its operations--should be reasonable in light of the fundraising opportunity it represents for participating charities.

Copyright 2000, AFP. All rights reserved.



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