Bates Wells & Braithwaite on online fundraising law

Howard Lake | 15 March 2000 | News

Charity law firm outlines legal issues involved in online fundraising.

Christine Rigby and Sean Egan, two lawyers at Bates, Wells and Braithwaite, write in this month’s Professional Fundraising magazine about the legal aspects to Internet fundraising. UK Fundraising has been given permission to republish the whole article.

Legal issues to consider when fundraising on the Internet

by Christine Rigby and Sean Egan

First published in the April 2000 issue of Professional Fundraising

Fundraising using the Internet is here to stay. There are many different ways in which the Internet can be used for fundraising and already there are some undoubted successes. Comic Relief set a new record raising £460,000 last Red Nose Day through on-line credit card donations. The Comic Relief appeal demonstrates the added value that television exposure can give to promoting a URL (your web address) and soliciting cash donations. Comic Relief added 19,000 e-mail addresses to their database and had 99% awareness. “The hardest thing is to drive people to your site” comments Amanda Horton-Mastin, Marketing Director at Comic Relief. Awareness of the interaction of different media is also important. “You still have to employ the traditional marketing techniques both off-line and on-line and you must make sure your URL is fully integrated into your marketing material.”

Julia Flynn, Oxfam’s Internet Manager, is upbeat about donating online: “People worldwide have been donating online to Oxfam GB for nearly three years now. It’s easy – the online process is straightforward and secure. It’s global – you can donate from anywhere in the world. And it’s readily available, 24 hours a day, 7 days a week, whenever you are online”.

But is it just about cash? Mark Astarita, Acting Chief Executive of The National Deaf Children’s Society does not think so. “The most value fundraisers can make from the Internet is not necessarily cash – they must focus on using it as a quick cheap and effective way of communicating material. It is likely to be most successful by turning words into action and campaigning and activation.”

Whatever stage you are at with your fundraising on the Internet, here are 10 key legal points to consider.

Legal top tips

1. Domain names – If you have already bought your domain name, check the terms upon which you acquired it. Some service providers charge an annual fee to renew the domain name and if you fail to pay, the name can be bought by someone else. Last year, Third Sector reported that a porn firm bought the US internet registration for Marie Curie Cancer Care when the renewal fees were not paid! Checking that your charity’s address is registered for both billing and administrative purposes should help to ensure annual fees are not overlooked.

   You should register your domain name as soon as possible to prevent other organisations using it or if it is likely to be valuable in itself, to prevent “cybersquatters” holding you to ransom. It is generally difficult to get a domain naming company such as Nominet to revoke a registration and you should expect to have to sue for passing off or trademark infringement which may well involve substantial costs.

   If you are concerned about third parties using a similar domain name to yours, there are services to provide constant monitoring of new domain names. For example, TMDS offers a global domain name watching service for £140 per name per annum.

2. Compliance with English charity law – if your organisation is a registered charity with gross income in the last financial year of more than £10,000, then its status as a registered charity must be stated in English on all documents soliciting money (Charities Act 1993 Section 5). It is sensible to assume that documents soliciting money include web-sites and emails soliciting money. Anyone who designs a site and fails to include this is guilty of an offence and liable to a fine of up to £1,000.

   Charities which are companies also need to show their registered company number, status and registered office address.

3. Content of sites – the more exciting the site, the more chance that all sorts of different copyright works have been used eg photographs, music, film, computer gimmicks. Check you have the necessary permission to use any copyright works not created by employees of the charity. If your website has been designed by a consultant, get them to warrant that the site does not infringe any third party rights and that you have the necessary licences to use all the software involved in running the site. Some specialist software companies will give permission free of charge to charities. Check as well that all assets used to create the sites are assigned to you on delivery. For example, copy, code, programs, images and sound files. It is also handy to ask for a detailed style sheet of the site’s design so that you know what fonts and colours have been used.
4. Links and framing – as a rule get permission before linking your site to another site. Failing to do this could be copyright infringement. If you are not going to seek permission you should look at the particular nature of the linking and whether that is likely to infringe another party’s rights. Also, take care who you link to – in a recent German case the prosecution argued that if you link to someone else’s site you can be held responsible for material on that site.
5. Libel – if your website hosts a newsgroup or discussion forum, be aware that in some situations the charity could be held responsible for any libellous comments made by contributors. A lecturer recently sued Demon Internet successfully because a defamatory notice about him was posted to a newsgroup which could be accessed via the Demon Internet server. Part of the problem for Demon was that it had failed to remove the offending notice even though the lecturer had told them about it. Play safe in practice by responding promptly to any complaints by third parties and removing any offending material.
6. Protecting the content of your site – copying from websites happens all the time and is difficult to prevent. However, if you use the © symbol on all your pages, it shows that the charity is the copyright owner of material on the site and acts as a warning against copying. On the other hand, there are some pages you want to actively encourage visitors to copy eg. sponsorship or donation forms so make it clear which pages can be printed off.
7. Donations – if your website allows for credit card donations, how secure will the credit card information be? If you are using a non-encrypted system, you should make this clear to users and include a disclaimer – otherwise the charity might be held responsible for any credit card fraud resulting from the data being inputted on to your site.
8. If you want more than just a one-off payment, is an electronically completed donation form legally binding? Probably not – under the current law, covenants or deeds which create legally binding obligations to pay need original signatures with witnesses. But, there are proposals (due to come into force in April 2000) to modernise Gift Aid rules so that donors can give the necessary information over the Internet to trigger Gift Aid top-up to their donations – for more information on this visit www.inlandrevenue.gov.uk/pbr/charity.htm.
9. Codes of practice – remember that codes of practice such as the British Codes of Advertising and Sales Promotion apply equally to the Internet. A recent analysis by a UK law firm showed that more than 50% of the web sites they looked at could be breaking consumer and advertising laws.
10. Data protection – collecting data via the internet triggers the data protection legislation. Following changes to the law in the Data Protection Act 1998, you need to include a more detailed opt in notice.

    For example:

    XYZ Charity

    Data protection Act 1998

    We would like to use your information;

    (a) for use in connection with our charitable activities [ ]

    (b) to pass to our associated Trading Company XYZ Trading Limited [ ]

    (c) to pass to other organisations with [similar objects] [ ]

    Please tick the appropriate box(es) to grant us your permission.

11. Trading – if you are advertising fundraising events run by the charity’s trading subsidiary (such as challenge events) or if you are advertising merchandise sold through the trading subsidiary, you do not necessarily need a separate site for the trading company’s activities. But the relevant pages should make clear they are activities carried out through the trading company. And the charity should recover from the trading subsidiary a proportion of the costs involved in setting up and servicing the site.
12. There is new legislation in the pipeline which will impact particularly on Internet sales. Regulations relating to distance selling are due to come into force later this year and the Government is fast-tracking an e-commerce bill. At the moment it is a case of “watch this space” as the law develops.
13. Corporate sponsorship and cause related marketing – these can take on a whole new look on the internet with links between a charity and a corporate sponsor’s site, a company hosting a charity’s website and corporate banners across charity sites or mentioned in the footer of charity e-mails. The rules about commercial participators in the Charities Act 1992 apply to “promotional ventures” which almost certainly covers Internet promotions.
14. Therefore, the usual requirements apply – the commercial participator should have a written agreement with the charity and the commercial participator is committing an offence if they do not make a statement describing how much they have given or are going to give the charity. Remember as well that sponsorship payments can attract VAT and tax so structure the payments so that they are tax efficient.

If it all sounds too difficult, Sarah Norris, Internet Development Manager at CAF has some advice. “Internet best practice is not as off-putting as it may seem, but it does mean that you need to apply the same rigour to your Internet conduct that you would to any other method of business. Fundraisers are certainly making innovative use of the Internet, but where charity professionals are really breaking ground is in finding new, unique ways to educate, engage and empower donors and supporters using web and email.”

Further reading:

Fundraising on the Internet by Howard Lake, published by Aurelian Information Ltd

Fundraising and the Law by Bates, Wells & Braithwaite and Centre for Voluntary Sector Development – due to be published later this year by Directory of Social Change

Useful sites to visit:

www.fundraising.co.uk

www.open.gov.uk

www.charity-commission.gov.uk

www.cafonline.org/charitycentre

www.oxfam.org.uk

Part 2: Cancerlink case study

In the year 2,000 Cancerlink is changing its focus and positioning to give a greater emphasis to the unique access to support it provides as the leading charity working with over 700 cancer self help and support groups nationwide.

The charity identified the need for a Web site that would add value to all the support services it provides to people with cancer, their families and those caring for them. The Web site would create a Cancerlink community on line, that would develop in tandem with the project work undertaken to strengthen and develop support available to people in local communities. By this means Cancerlink perceive that awareness of and loyalty to the brand will be strengthened and indirect as well as direct fundraising opportunities maximised. The charity’s forward planning in advance of the current three-month project to develop the site included purchasing appropriate domain names in advance.

Cancerlink prioritised the need to find a Web site designer who would address the need for corporate, trust and public fundraising opportunities, in the structure and content of the site.

“This Web site is key in raising awareness of Cancerlink as the charity valuing people’s experience of cancer. By bringing people together as a ‘virtual community’, sharing and using their experience to help each other, we will also be giving them a credible voice in shaping cancer services. The Web site will also be vital in helping us to raise funds for this much-needed work.”

Dr. Judith McNeill, Chief Executive, Cancerlink

Above all the charity perceived that for the Web site to both work hard for Cancerlink, and to be seen and used as a vital and easily accessible service to the client base, the site’s designers would need to be strategic partners.

It was essential that the designers not only demonstrated a strong grasp of the Web site brief, but also of Cancerlink’s values, in order that sensitivity to the needs of people living with cancer would direct and inform all aspects of the site’s development.

Archipelago brings together the expertise of three companies with technological, design, and strategic expertise. Archipelago’s motivation in taking on this Web site design project was the opportunity it offered to bring people together, and to get a network to work properly. The internet is a network that is largely not used in a constructive way – “there are very few effective charity sites” comments Jeremy Kay of Archipelago.

“I am personally fascinated by not just the content but the function of the internet, and see this as a great opportunity for a charity like Cancerlink to create an interchange of information from a range of different perspectives.”

Jeremy Kay, Archipelago

Jeremy’s understanding of the internet is that it cannot be perceived in isolation as a direct fundraising tool, and to take this approach is counterproductive, and shows a lack of understanding of the web. An online donations facility has cost implications for charities, and should not necessarily be seen as an immediate priority unless and until sufficient awareness of the charity’s brand and Web site has been established, as in the case of Comic Relief. Brand loyalty needs to be created through constructing a site that has been developed in response to users’ needs and meets clear demands from the client base, so that visitors to the site perceive it as a ‘safe haven’.

From a legal and moral perspective, Archipelago and Cancerlink are working to ensure that at any stage on their journey through the site, and at all times people feel safe and their needs are met. There are technological solutions to allow people to opt in, to give permission for a connection with a third party to be made, rather than using the opt out method, often favoured in commercial sites for example. The client and designers are examining the confidentiality, data protection and emotional implications of options around bulletin boards, chat rooms, databases and linking services.

In Cancerlink’s case, the prerequisite was to recognise that the nature of the web lends itself to exchanging perspectives and building relationships. Above all the success of a charity site is dependent on establishing the trust that is a precondition for the long-term development of fundraising, and for building a sustainable donor base.

Clare Benjamin

PR Officer

Cancerlink

Christine Rigby and Sean Egan are solicitors at Bates, Wells & Braithwaite

About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale. He is the founder of Fundraising Camp and co-founder of GoodJobs.