Spamming will soon be Illegal and contrary to public policy
Canada’s anti-spam law will come into force on July 1, 2014. This legislation intends to stop unsolicited commercial electronic messages and unwanted spyware and malware from being transmitted and installed on our computers. It will impact commercial activity in the charity and not-for-profit sector because commercial activity defined in this legislation could occur “whether or not the person who carries it out does so in the expectation of profit”. Spamming will be against the law on July 1st unless it is sent incompliance with the new legislation. There will be a place and procedure where anyone who feels they have been spammed to report it to the government on a website appropriately called fightspam.gc.ca. ( http://fightspam.gc.ca/eic/site/030.nsf/eng/h_00017.htm )
There is some relief for charities. In the final regulations it has been made clear that there will be an exception for a commercial electronic message “that is sent by or on behalf of a registered charity as defined in subsection 248(1) of the Income Tax Act and the message has as its primary purpose raising funds for the charity”. There is no such relief for not-for-profit organizations that are not registered charities.
Registered Charities – do not spam!
Registered charities will still need to purify their messages to ensure that the primary purpose is raising funds for the charity to fall under the exemption and to avoid potential issues with their charitable status. Fundraising by Registered Charities, CG-013, issued April 20, 2012, bears further scrutiny in light of the new anti-spam law (http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/fndrsng-eng.html#N10346). This guidance has a section entitled “When is fundraising not acceptable?” It answers the question in the positive by saying that fundraising is acceptable unless it is described in a delineated list. It states:
“Fundraising by registered charities must be conducted within legal parameters. Fundraising is acceptable unless it:
. is a purpose of the charity (a collateral non-charitable purpose);
. delivers a more than incidental private benefit (a benefit that is not necessary, reasonable, or proportionate in relation to the resulting public benefit);
. is illegal or contrary to public policy;
. is deceptive; or
. is an unrelated business.
Charities that engage in unacceptable fundraising cannot be registered under the Income Tax Act because they are not constituted and operated exclusively for charitable purposes, or they are not devoting their resources to charitable purposes and activities.”
“Illegal or contrary to public policy”
In light of the new anti-spam law soon to be relevant to charities fundraising practices,the specific prohibition against fundraising activities that are illegal or contrary to public policy deserves first mention. The guidance gives examples worth considering.
Examples of Fundraising activities that are illegal.
The guidance says:
“Examples of illegal fundraising activities are those that are criminally fraudulent, or violate federal or provincial statutes governing charitable fundraising, charitable gaming, the use of charitable property, or consumer protection.”
This is a very wide net and could include failing to comply with the new anti-spam law. The CRA could consider unlawful fundraising electronic communications in the same light as stealing from the elderly, which would no doubt be considered to be a criminal offence. In this respect charities should really govern themselves accordingly and prepare to comply with anti-spam rules in all of their fundraising communications If they do not or choose not to understand and comply with all that governs them, they may be doing so at their own peril.
Examples of fundraising activities that are contrary to public policy.
The guidance says:
“For example, making a fundraising solicitation that does not comply with Canadian Radio-television and Telecommunications Commission directives or telemarketing rules, or other established government policy, may be considered contrary to public policy.”
This seems to speak directly to the new anti-spam rules. Indeed the Canadian Radio-television and Telecommunications Commission (CRTC) has published final regulations related to Canada’s anti-spam legislation. A copy of the regulations can be found on the CRTC website http://www.crtc.gc.ca/eng/archive/2012/2012-183.htm. This is where all the details are about what you can and cannot do. So if a charity wants to send out a message that does not have as its primary purpose raising funds for the charity it needs to comply with the regulations just like everybody else does.
What is prohibited?
Firstly it is “prohibited to send or cause or permit to be sent to an electronic address a commercial electronic message unless the person to whom the message is sent has consented to receiving it, whether the consent is express or implied”. For the not-for-profit sector, it is helpful to note the Act defines an “existing non-business relationship” as one arising (in the last 2 years before the message was sent) from a donation or gift to or volunteer work for a registered charity, or membership in a club, association or voluntary organization (as defined by the regulations). Regardless of how an organization defines “membership” or any commonly used definition of a club, association or voluntary organization, the regulations under this Act prescribe that “membership” is the status of having been accepted as a member of a club, association or voluntary organization in accordance with its membership requirements. Furthermore the prescribed definition under this Act of a club, association or voluntary organization is one that “is organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any purpose other than personal profit, if no part of its income is payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder of that organization unless the proprietor, member or shareholder is an organization whose primary purpose is the promotion of amateur athletics in Canada.” (emphasis added).
Note that this is a slightly different definition than the one used in the Income Tax Act where a not-for-profit is defined in section 149(1)(l) as ” a club, society or association that, in the opinion of the Minister, was not a charity within the meaning assigned by subsection 149.1(1) and that was organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder was a club, society or association the primary purpose and function of which was the promotion of amateur athletics in Canada.” (emphasis added).
Seeing the words “personal profit” instead of just “profit”, clarifies that consent could still be implied for those organization that otherwise meet the definition, but who still intend to “profit” from their activities in a way that will not benefit a person individually. This is a very interesting clarification and one that will be welcomed by those organizations that are indeed profitable but where every cent of the fruits of their labour goes back to their cause but need to maintain communication with their supporters.
What are the conditions for use of consent?
Secondly, one should treat consent with respect. A commercial electronic message must be in a form that has very specific requirements including identification of the person who obtained the consent, the sender’s identity and contact information (must be valid for a minimum of 60 days), a withdrawal of consent mechanism and a prescribed unsubscribe mechanism. It may not be unusual to see the legally required part of the message be much longer than the message itself. We may be reading a lot of fine print in our emails from now on. How small can a font be?
What is an organization to do?
As with most legislation there are exceptions. The prohibition will not apply to a commercial electronic message that is an interactive two-way voice communication between individuals or sent by facsimile or voice recording to a telephone account. That is what the National Do Not Call List registration procedure deals with. The Act does not apply to broadcasting a message in the old fashioned way (as defined subsection 2(1) of the Broadcasting Act). Perhaps personal one to one communication will come back into vogue or we will see more commercials paid for by the sector.
There are some new fashioned ways to communicate that do not seem to be covered by this legislation. The use of social media methods like tweeting, blogging or posting on sites like LinkedIn or Facebook are not caught under this specific legislation because the messages do not necessarily end up in somebody’s inbox. So tweet, blog and post away and try to increase your followers for all of your organization’s communications needs. But don’t wait for July 1 st to prepare. It is now time to start to train all staff and volunteers who deal with electronic communication about these new requirements and get ready to comply. No organization wants to find themselves the subject of a complaint on the spam reporting centre, and/or or the subject of the revocation process by the CRA charities directorate because of fundraising communications that do not comply with the new anti-spam laws and are therefore considered either Illegal or contrary to public policy.