1 1 2 3 FEDERAL TRADE COMMISSION 4 5 6 7 8 GIVE & TAKE: 9 10 CONSUMERS, CONTRIBUTIONS, AND CHARITY 11 12 13 14 15 Tuesday, March 21, 2017 16 8:30 a.m. 17 18 19 20 Federal Trade Commission 21 Washington, D.C. 22 23 24 25 2 1 FEDERAL TRADE COMMISSION 2 I N D E X 3 4 PAGE: 5 Welcome and Introductory Remarks 3 6 7 Panel 1 - Combatting Charity Fraud - 8 Enforcement Issues 15 9 10 Panel 2: The State of Giving Today - 11 An Overview of Charities and Donors 55 12 13 Panel 3: Why Give? A Look at What Motivates Giving 102 14 15 Panel 4: Future of Fundraising - Emerging 16 Challenges for Donors & Regulators 136 17 18 Panel 5: Navigating Charitable Giving Today - 19 Current Donor Choices and Challenges 184 20 21 Panel 6: Data for Good - Empowering Donors 22 Through Education 253 23 24 25 3 1 FEDERAL TRADE COMMISSION 2 I N D E X 3 PAGE: 4 Panel 7: Safeguarding Donors from Fraud and 5 Deception - Identifying Possibilities 6 and Priorities 293 7 8 Concluding Thoughts 333 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 WELCOME AND INTRODUCTORY REMARKS 2 MS. KOPEC: Good morning, everybody, and 3 welcome to the FTC and NASCO’s Joint Conference, Give & 4 Take, focusing on consumer contributions and charity. My 5 name is Janice Kopec, and I am an attorney with the FTC’s 6 Division of Marketing Practices. And it’s my job to 7 spend just one or two minutes giving you some logistical 8 details about the day. 9 So before we get started, I wanted to remind 10 everyone of just a couple of things. One, if you’re here 11 in the auditorium, I wanted to remind you that if you 12 leave the FTC building without an FTC badge, you will be 13 required to go back through security, including going 14 through the full security process. So be mindful of 15 exiting and entering. 16 Restrooms are just outside of the auditorium. 17 Coffee is across and down the hall. And then the 18 cafeteria, if you go out of the auditorium and go to the 19 left, you’ll find your way there. 20 In the event of a fire or an evacuation -- I 21 have to say this -- of the building, please leave in an 22 orderly fashion, go outside the main gates or whichever 23 exit you’re directed to, and turn left or head toward C 24 Street. You will have to check in with somebody. 25 You will notice that the event today is being 5 1 videotaped, webcast, and photographed, and recorded. By 2 participating in this event today, you’re agreeing that 3 your image and anything you say or turn in may be posted 4 on ftc.gov or one of the Commission’s publicly available 5 social media sites. 6 We’re looking forward to a lively discussion 7 today, and we welcome questions. There are question 8 cards available in the hallway immediately outside of the 9 auditorium, on the table with the FTC materials. If you 10 have a question, fill out your card, raise your hand, and 11 someone will come and get it. 12 For those of you participating by webcast, we 13 welcome you as well, and you can email your question to 14 [email protected] or tweet it to #giveandtakeftc. 15 The hashtag has the “and” written out, A N D. 16 With that, I’d like us to get started, and I’d 17 like to introduce the Acting Director of the FTC’s Bureau 18 of Consumer Protection, Tom Pahl, who will kick us off 19 today. 20 Tom? 21 MR. PAHL: Thank you. Good morning, everyone. 22 Thank you for coming. Thank you for coming to our first 23 conference addressing consumer protection issues relating 24 to charitable giving. We welcome those who are with us 25 in the room today, as well as those joining us online 6 1 through the webcast. We are pleased to cosponsor this 2 event with the National Association of State Charities 3 Officials, or NASCO, our state colleagues with oversight 4 of charities. 5 We are a generous nation. Total U.S. giving in 6 2015 reached $373 billion. Individual Americans 7 contributed the vast majority of those funds, giving a 8 staggering $264 billion. Per-capita giving by U.S. 9 adults rose to $1,100, while household giving averaged 10 over $2,100. 11 Charitable giving is critical to the common 12 good. We must protect charitable giving from those who 13 seek to abuse it. Charity fraud hurts donors, intended 14 recipients, and legitimate charities. Equally important, 15 it tears at the public trust that underlies the American 16 commitment to charitable giving. 17 The FTC stands strongly with our state partners 18 in protecting Americans from fraud. Last year, the FTC 19 and all 50 states shut down four sham nonprofits that 20 told donors they were helping cancer patients. And, in 21 fact, these sham nonprofits were simply helping 22 themselves. American donors lost over $187 million to 23 these sham nonprofits. Legitimate cancer charities lost 24 out on potential donations. And, most importantly, 25 cancer patients did not get the help they so sorely 7 1 needed. 2 For decades, the FTC has engaged in law 3 enforcement and education to protect consumers from 4 deceptive practices by for-profit fundraisers and sham 5 nonprofits. To continue to be effective, we need to 6 understand how technological advances and changing 7 demographics affect our work against charity fraud. 8 With our NASCO partners, we are here today to 9 enrich our understanding and explore what we should do 10 differently and what we can do more of. We must protect 11 donors from fraud so their minds can be at ease when they 12 open their hearts and give generously to others. 13 So how do we do that? First by maintaining and 14 continuing our efforts to make law enforcement, 15 watchdogs, and charities effective in deterring, 16 detecting, and challenging charitable fraud. Second, by 17 maintaining and continually improving what we do to 18 educate and empower consumers to protect themselves. 19 Through enforcement, education, and empowerment, we can 20 do great good. 21 This is an exciting time. Marketing and 22 technology are evolving to create novel ways for 23 charities to solicit contributions and for donors to 24 provide such contributions. Today’s donors do not all 25 respond to a direct-mail appeal and send in a paper 8 1 check, although some of us still do. They may be moved 2 by an online video or contribute through a crowd-funding 3 platform. And afterwards, donors may share their 4 experiences with friends and family through social media 5 platforms. 6 To help us learn about and better navigate the 7 current and future state of charitable giving, today we 8 will hear from an array of panelists offering different 9 perspectives and expertise: academics, technologists, 10 marketing professionals, members of the charitable 11 sector, state law enforcers, charity watchdogs, and 12 intermediaries. 13 The panelists will discuss a broad range of 14 topics that include the challenges law enforcers and 15 regulators face in effectively preventing charity fraud 16 in a time of great change; what data tells us about 17 charitable giving practices; what claims motivate donors 18 to give; what are the evolving ways that charities 19 solicit and that donors give; and, finally, what will the 20 future be like for charitable solicitations. 21 These topics are all critically important for 22 the FTC, NASCO, and everyone joining us here today, and 23 we can’t wait to get started. Before we do, though, it 24 is my pleasure to introduce Colorado Attorney General, 25 Cynthia Coffman -- it’s very early this morning. Since 9 1 she took office in January 2015, Attorney General Coffman 2 has been a champion for consumer protection and charity 3 issues. She serves on the NAAG Special Charities 4 Committee and has done so since it was established in 5 December 2015. 6 General Coffman’s office has an innovative 7 consumer outreach campaign, including its Stop Fraud 8 Colorado website that provides comprehensive information 9 to help potential donors avoid fraud and deception when 10 they are giving to charity. General Coffman’s legal 11 career began more than 25 years ago in the Georgia 12 Attorney General’s Office. As a courtroom attorney, she 13 defended the state’s Juvenile Justice System and Public 14 Health Department. 15 Later working as an attorney for the 1996 16 Centennial Olympic Games in Atlanta, she acted as the 17 primary liaison with the victims and their families 18 following the domestic terror attack in Centennial 19 Olympic Park. 20 General Coffman began her tenure in the 21 Colorado Department of Law in 2005, when she was 22 appointed Chief Deputy Attorney General. She served in 23 this role for ten years. While performing as Chief 24 Deputy, Colorado Law Week recognized General Coffman’s 25 accomplishments by naming her the best public sector 10 1 lawyer in September of 2012. 2 So without further ado, I’m pleased to announce 3 Colorado Attorney General Cynthia Coffman. 4 (Applause.) 5 MS. COFFMAN: Well, thank you, Tom, for the 6 introduction.