Transparency and Fundraising

A Working Group Report from the Editorial Integrity Project Transparency in Fundraising for Public Media

INTRODUCTION AND GOALS

The goal of this document is to provide station leaders, employees, Boards, and licensees with an overview of the issues related to transparency in public media fundraising.

Trust is the foundation of the relationship between the public and public media. Donors don’t require a contract and rarely even make specific requests about how their money is to be used-they simply have faith in the integrity, expertise, and goodwill of their local station. Transparency helps our friends, critics and the public have a fuller understanding of how we work.

This type of transparency will…

  • Help donors and other interested parties form an accurate picture of the operations of a station.
  • Allow the public to hold a station accountable for its activities.
  • Make information easily accessible.
  • Allow for some degree of comparability between stations and with other non-profits.
  • Protect anonymity (when allowed by law) and donor information.
  • Protect donors and non-executive staff from undue or inappropriate scrutiny.
  • Increase donor confidence and trust.

  1. DONOR RIGHTS

Station executives would be wise to consider the needs of the donor on par with the needs of the station. A donor should have rights before and after their contribution is made. Some stations have found it helpful to have a formal Donor Bill of Rights (or e-Donor Bill of Rights).

After accepting a gift, stations have an ethical obligation to carry out that donor’s wishes.

The easiest way to honor donor intent is for the station and donor to have clear expectations about the giving process from the outset. For larger gifts, stations should prepare a document that outlines the details of the gift, the donor’s intent for use of the gift, timelines for completion of the contribution and the work it funds, and the method of recognition.

When dealing with donor information, stations should make it clear how donor records will be used and who has access to their data. We recommended that stations have a policy laying out restrictions for volunteers and staff to accessing member data. Of particular concern is access to files during a pledge drive and throughout fundraising campaigns. Even Boards of Directors (also Advisory Groups, Advisory Boards, etc.) should have limited access to donor information in the normal course of business.

Some stations rent or exchange parts of their donor list to other nonprofit organizations. If a donor’s name and contact information will be rented or exchanged, stations must disclose this (preferably on their website or in another appropriate venue or donor communication) and allow donors to opt out easily. Section 396(k)(12) of the Communications Act sets out restrictions and terms for this sort of activity, including the requirement that CPB-funded stations may not share or rent lists to any political candidate or political action committee.

It is common practice for stations to create a written record of every significant interaction they have with some donors. Upon request, donors must be given access to this information. All policies concerning donor rights should be posted on a station’s website.

  1. DONOR ACKNOWLEDGMENT

Educating donors and potential donors

In donor relations, as in any relationship, communication is essential. Perhaps the biggest challenge in establishing transparency with potential donors is education. Stations should assume that (a) donors know relatively little about FCC crediting rules and their applications; (b) they will not be familiar with the structure of media credits; and (c) they may not be aware of editorial firewall requirements intended to protect the integrity of the content and, by extension, the integrity of the station.

Transparent organizations are explicit from the outset about public media’s journalistic standards and editorial firewall. It is best practice to have a written explanation of how these operate to share with donors and prospective donors.

The general principle embodied in the FCC’s sponsorship identification rules is that the public is entitled to know who is trying to influence its opinion. Thus, underwriters must be identified on-air because they provide consideration in exchange for the broadcast of the matter, namely the underwriting acknowledgement itself.

When a donor restricts the use of a donation to a particular program, the donor must not only be identified on-air concurrently with the broadcast of the program, but must also be identified in writing in the “Donor List” maintained in the station’s public inspection file. The donor list is limited to those who contribute funds earmarked for the production of specific programs. 

Internal Revenue Service (IRS) acknowledgement regulations for contributions

IRS rules primarily focus on the deductibility of donation rather than on disclosure of the donor by the recipients of donations. A donor may not claim a tax deduction for any single charitable contribution of 250 dollars or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution. While stations are not required to provide this written acknowledgment, good stewardship dictates that every contribution be acknowledged to provide donors with a valid claim for a deduction.

Anonymous gifts

Some donors may wish to remain anonymous because they do not want members of the community to know the recipients and the amounts of their gifts.

It should be station policy that significant and/or exclusive donors to support an on-air production must be named.

All anonymous gifts accepted for purposes other than on-air production must still be entered into the station records with full contact information and details of the gift, if that information is available.

Donor Funds and anonymity

At some stations, donors are able to pool their contributions into a fund, which is then used to support some specific activity (e.g. The WXYZ Fund for Environmental Reporting).

If the Donor Fund restricts its donation to the production of a particular program or type of programming (as is often the case), then it is considered a sponsor and must be acknowledged on-air, as well as in the Donor List.

Considerations for Non-Broadcast Content

The FCC regulations regarding funding in support of specific programming do not apply to non-broadcast content. So, stations are not normally required to disclose the names of donors funding education/outreach efforts. The working group believes a donor that is determined on the local level to be unacceptable as a program funder should also be an unacceptable funder for non-broadcast elements of that program.

In general, we believe that the FCC’s principle that “the public should know who is trying to influence its opinion” should apply to all editorial expressions, whether

on-air, on-line or other ways, and we recommend that stations disclose all funders of a project’s non-broadcast (as well as broadcast) elements.

Considerations for foundation grants

The acknowledgment procedures for foundations should mirror those mentioned above for other types of donor

  1. THE AVAILABILITY OF FUNDRAISING INFORMATION

One of the clearest ways for a station to show its commitment to transparency is to make documents available on their website. Station websites should have board members (if applicable) and key staff listed, as well as an annual report available for download. Stations that do not produce an annual report should consider making a summary of their revenue streams available online. Independent organizations should have their most recent 990 available for download, and make reference to their audited financial statements (some do this in an FAQ section).

Stations should also consider publishing a list of production funders on their website, instead of just in the public file.

  1. GIFT ACCEPTANCE POLICIES

Aside from protecting the station, gift acceptance policies help donors understand what type of gifts they can make and their options for directing their gift to a specific area. In some cases, an institutional license-holder (like a university or school board) may have its own policy that applies to certain types of gifts a station may receive. In such cases, the station’s policy should inform potential donors that additional requirements from their parent institution may apply.

Having the document freely available may prevent an uncomfortable situation where a station must turn down a gift.

  1. THE COST OF FUNDRAISING

The most common fundraising expenses are the salaries and benefits for development staff, a percentage of occupancy costs (not all stations have these), postage, printing, special event costs, and consultants.

As a best practice, all stations (regardless of license-type) should publish their aggregate fundraising costs both as a dollar amount and a percentage of expenses in their annual report.

The generally accepted range for fundraising costs is 20-30 percent of overall expenses, although this varies widely from station to station. Most commonly, the ratio of fundraising and general administration cost to total revenue is expected to be below 25 percent.

We concede that it may not be realistic to expect all stations to adopt ‘best practices’ in the area. In the spirit of transparency, however, stations should make a good- faith effort to report their cost of fundraising as accurately as possible while working internally to improve their tracking and allocation methods.

  1. RELATIONSHIPS WITH THE INSTITUTION THAT

HOLDS THE STATION LICENSE

In general, institutional stations should be mindful of policies of the parent institution that govern the way they accept and process gifts, store and share donor information, and designate contributions.

Some institutional licensees may decide to organize a volunteer group that is involved in securing annual gifts to the station. Therefore, friends groups must operate with the same care and commitment to transparency as the station they were created to support. At a minimum, if friends groups help make decisions about managing contributed funds, donors must know.

  1. CHALLENGE GRANTS

Many stations have found that challenge grants are excellent tools to increase the amount and the motivation for individual gifts during on-air pledge drives and other fundraising campaigns.

As a matter of transparency and good donor relations, a station should report back to the donor the impact of their grant soon after the application/offering of such a grant. If the grant maker of a failed challenge has not already authorized the station to roll their challenge into another hour or simply make it a standard gift, they should be contacted and asked for clarification.

This approach is highly unethical. In the area of challenge grants, this working group recommends full disclosure. To be safe, stations may want to use only dollar-for-dollar matching and avoid the problematic goal-based challenge grant.

THE DONOR BILL OF RIGHTS

Voluntary action is the basis for good philanthropy. It is a tradition of giving and sharing that is primary to the quality of life. To ensure that philanthropy merits the respect and trust of the public, and that donors and prospective donors can have full confidence in the nonprofit organizations and causes they are asked to support, we declare that all donors have these rights:

I.To be informed of the organization’s mission, of the way the organization intends to use donated resources, and of its capacity to use donations effectively for their intended purposes.

II.To be informed of the identity of those serving on the organization’s governing board, and to expect the board to exercise prudent judgment in its stewardship responsibilities.

III. To have access to the organization’s most recent financial statements.

  1. To be assured their gifts will be used for the purposes for which they were given.
  2. To receive appropriate acknowledgement and recognition.
  3. To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law.

VII. To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature.

VIII. To be informed whether those seeking donations are volunteers, employees of the organization or hired solicitors.

  1. To have the opportunity for their names to be deleted from mailing lists that an organization may intend to share.
  2. To feel free to ask questions when making a donation and to receive prompt, truthful and forthright answers.