Rules of Business Ethics and Practice

Members of the Association are businesses or divisions of businesses that provide consulting services to nonprofit organizations with respect to direct response fundraising. Members do not solicit funds from the public. Services provided by members include offering advice and counsel; conducting feasibility studies and tests; designing and managing campaigns; developing and producing solicitation materials; and obtaining lists of prospective donors. All those enjoying membership in the Association subscribe to the following standards and requirements as a condition of that membership. Some provisions of these Rules may not be applicable to services provided by members to political, religious, or commercial organizations.

1. Accountability of Members

The Association recognizes special obligations of public accountability due to the status enjoyed by the client group it serves. Accordingly, upon the request of a member of the public, a member will:
  1. Acknowledge the existence of a client relationship with a particular nonprofit organization.
  2. Provide a copy of the contract governing its employment as fundraising counsel or inform the inquirer where the contract may be obtained.
  3. Provide a list of the member's owners and/or principals.

2. Accountability of Clients

A member of the Association will not knowingly serve an organization that fails to meet minimum standards of public accountability. A member will take reasonable, affirmative steps to assure that a client organization meets these standards. A client organization must:
  1. Maintain an independent, functioning board of directors (or other governing body).
  2. Provide detailed information on its finances upon request.
  3. Not permit self-dealing or material conflict of interest on the part of its officers, directors, or employees.
  4. Operate consistently with its stated purposes.

3. Obtaining Clients

Nonprofit organizations deserve an extra degree of care when approached by a business offering fundraising services. Accordingly, a member of the Association will not:
  1. Exaggerate its performance record or lead a prospective client to a false conclusion that a given result is guaranteed.
  2. Offer any kind of compensation to an officer, director, employee, or advisor of a prospective client for aid in obtaining the client's business.
  3. Enter into the business relationship without reasonable assurance that the client understands the economics and processes of direct response fundraising.
  4. Enter into the business relationship without first stating in writing the reasonable expectations for fundraising income.
  5. Perform work for compensation for a client without a written contract.
  6. Execute a contract with any party other than one reasonably appearing to have the authority to commit the client.

4. Contracts

For the protection of both members of the Association and nonprofit clients, contracts must contain minimum safeguards. Therefore, any contract entered into between a member and a nonprofit organization will contain provisions that:
  1. Clearly describe the services to be provided and the compensation to be paid.
  2. Specify the period for which the contract has effect.
  3. Allow the nonprofit organization ten days from the date of the contract's signing in which to cancel the contract without obligation.
  4. Require final approval from the client for list selection, copy, and cost projections.
  5. Promise prompt, detailed analysis of results upon the campaign's conclusion, upon the close of the client's annual accounting period, or upon the client's reasonable request.
  6. State that the client bears financial responsibility for all services procured in execution of the campaign.
    1. Clearly state the terms and conditions, if any, for relieving the client of its contractual obligations before the time specified as the contract duration; and
    2. give the client fair notice of any continuing obligations that may exist after a termination by the client.

5. Fees

A member of the Association must base its fee on actual services to be provided at a prearranged, reasonable level of compensation. Necessarily, "reasonable" can only be determined by all the factors involved, including: the time and type of labor involved, the nature and duration of the professional relationship between provider and client, and the ability and experience of those performing the services. Fees based on a percentage of fundraising proceeds, however stated, are not favored. A member may enter into such an arrangement only if it is based on an actual, demonstrable, and fair assessment of probable outcomes and if the resulting compensation remains within reasonable bounds.

6. Donor Lists.

The acquired donor list is the essential product of a direct response campaign. Its primary value for the nonprofit client lies in future fundraising from donors who are now identified as such and have a relationship with the organization. The donor list also has secondary, but considerable, value due to its potential as a commodity in the direct response marketplace. The economic justification for direct response fundraising depends upon the management and control of the list resource by the nonprofit organization. As an ethical principle, it follows that the donor list is inherently the property of the nonprofit. At the same time, we recognize that the list resource can afford the means by which a nonprofit, especially one that is new or undercapitalized, can sustain a fundraising program. A nonprofit organization is free to dispose of its list resource -- like any other property -- in any manner it chooses. But, the fiduciary relationship of client and fundraising counsel creates a special case. The Association firmly believes that voluntary restraints upon dispositions of list rights to counsel are essential. These and other measures can only serve to protect the security and integrity of the donor list. Therefore:
  1. A member may not acquire any right or interest from its client that precludes the nonprofit client's right to conduct fundraising with its donor file when and as it sees fit.
  2. All income or financial benefit derived from the donor list's marketplace value must go to the nonprofit client unless the following conditions are met:
    1. An allocation to counsel, as part of payment of fees for services rendered, is clearly specified in the contract.
    2. Before entering into the contract, counsel must provide the nonprofit client with a written, full, and fair disclosure of the marketplace value of donor lists.
    3. Any right of a member to income from the donor list must be terminated with the end of the member's services as counsel.
  3. Notwithstanding the above, a member may retain a contingent security interest in a donor list's marketplace applications, provided:
    1. the security interest is fully and clearly set out in the contract; and
    2. the security interest applies solely to the satisfaction of earned and overdue fees of certain amount and attendant direct expenses, as set out in the client-counsel contract.
  4. To protect the security and integrity of the donor list, a member firm shall use its best efforts to assure that:
    1. the nonprofit client has the right to evaluate proposed list rentals or exchanges, to examine the proposed mail packages or scripts, and to veto those rentals or exchanges it deems competitive or otherwise damaging to its fundraising interests.
    2. the donor file is protected by a "decoy" or "seed" system, monitored by the nonprofit client or its designated agent, designed to track every transaction involving the donor file.
    3. a regularly updated, duplicate copy ("fire file") of the donor file, readily accessible and obtainable by the nonprofit client, is maintained.

7. Fundraising Methods

Members of the Association owe obligations of truthfulness and integrity directly to the donating public. Accordingly, in conducting a campaign, members will not:
  1. Knowingly misrepresent a nonprofit organization's mission, accomplishments, or plans for the future. A member will take reasonable, affirmative steps to avoid such a misrepresentation.
  2. Knowingly impart expectations to the public that cannot be fulfilled. A member will take reasonable, affirmative steps to avoid creating such an expectation.
  3. Knowingly create confusion between the nonprofit client's identity and that of any other nonprofit, governmental, or business organization or person. A member will take reasonable, affirmative steps to avoid creating such confusion.
  4. Receive donations or exercise control over the expenditure of donations.
  5. Perform work for a client when reasonable professional judgment suggests that the undertaking in question will jeopardize the client's existence.

8. Conflict of Interest

Strong protections against even an appearance of conflict of interest are necessary. This is due to the great public trust placed in nonprofit organizations and, by implication, in the businesses that serve them. Accordingly, a member of the Association shall assure that:
  1. All decisions by the nonprofit client affecting its business dealings with the member shall be undertaken without the prospect of undue influence. No officer, director, principal, or fiduciary of a member (or close relative of any of the preceding) may serve a client organization as officer, director, or key employee.
  2. A client knows in advance of any material relationship between the member and a third party who provides services related to a direct response campaign on which the member advises. Whether or not disclosed, a member may not engage in an interested transaction that does not demonstrably benefit the client.
  3. No credit or loans be extended to a client conditioned upon the continuation of the employment relationship between member and client.

9. Donor Privacy

The health of direct response fundraising depends upon maintaining trust in and support for direct response methods among a substantial segment of the giving public. It follows that both donors and prospective donors must be afforded every reasonable consideration when making a gift to a nonprofit organization. The ascendancy of public concern for issues of privacy compels the organized attention of the direct response community. Donors’ right to “privacy,” as they broadly define that right, must be acknowledged and protected and their reasonable requests honored by the organizations receiving their gifts. To assure this, a member of the Association will consistently, and demonstrably, encourage its nonprofit clients to:
  1. Maintain an "opt-out" system, whereby donors are regularly informed (ordinarily, at least once a year) of list rental/exchange practices and are afforded a reasonable opportunity to withdraw their names from such uses.
  2. Maintain an in-house suppression file to honor "don't mail to me" requests from the general public or from prospective donors who have self-identified as a result of a prior solicitation.
  3. Provide all donors/members with a reasonable opportunity to opt-out of listings in the organization's publications.
  4. Make every reasonable effort to honor donors' requests regarding frequency and types of mailings.
  5. As appropriate and practical, utilize the Mail and/or Telephone Preference Service, administered by the Direct Marketing Association, as a suppression list for acquisition efforts.
    1. Establish and maintain formal procedures and standards for approving or rejecting list rental/exchange requests.
    2. Protect and monitor its donor file with a "decoy" (or "seed") system, designed to track every transaction involving the donor file.

10. Confidentiality

All dealings between members of the Association and their clients are confidential, except:
  1. as provided in 1, above;
  2. where the subject matter is a public record; or
  3. where a member is obeying the legitimate disclosure order of a lawful authority.
 

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Phone

Robert Tigner,
General Counsel
202.293.9640

Address

Email

Robert Tigner,
General Counsel
adrfco@msn.com