WASHINGTON - The National Committee for Responsive Philanthropy (NCRP) hailed as a "victory for accountability and truth in fundraising" today's unanimous U.S. Supreme Court ruling that states can protect donors from charitable telemarketing fraud without violating the First Amendment. As a watchdog group working to improve philanthropic effectiveness with an eye toward social justice, NCRP welcomed the decision as a triumph for American families, charities and the entire nonprofit sector.
"Fraud is not free speech," said NCRP Executive Director Rick Cohen. "Today, in a wise decision, the Supreme Court unanimously ruled that states can crack down on charitable telemarketing fraud while still protecting the First Amendment. This is a victory for accountability and truth in fundraising - and a decision that will ultimately benefit donors, charities and the vulnerable American families they serve."
The Illinois attorney general brought the case against Telemarketing Associates, a for-profit firm which had been contracted to fundraise over the phone for VietNow - a charity whose mission is to help Vietnam-era Veterans. Despite what donors were led to believe by the telemarketing firm, most of their contributions - a stunning 85 percent - went to the telemarketer and not to the charitable purposes the donors were told they would be funding.
"Public trust is central to philanthropic effectiveness - and it has been weakened of late," noted Cohen. "In this particular case, donors were actively being misled to believe that most or all of their donations were going directly to a charity - when in fact the for-profit telemarketer was pocketing nearly all of their money. Especially in the current climate when accountability is more salient than ever, America's charities should know better than to defend fraud in the guise of protecting free speech."
While the Supreme Court clarified that excessively high fundraising costs could not in and of themselves constitute fraud, they could be used to justify such a charge in combination with other factors - such as misrepresentation, as was found to be a factor in the present case.
