by Putnam Barber pbarber@tess.org
Using the Internet, a person in Chantilly, Va., can explore how to help reduce suffering in Cambodia through the World-Wide Web site of an international relief agency located--as if it mattered--in Finland. While exploring the charity's Web site, the person could become interested in the relief agency's good works and decide--with the click of a computer mouse--to make a contribution to the organization via credit card.
In all probability, officials at the Finnish charity will not have heard of Chantilly, Va.--much less have registered with the state or local authorities there to solicit funds.
The rapid rise of on-line communication poses a serious challenge to our established system of regulating charitable contributions. Indeed, any attempt to extend state or local solicitation laws to the Internet is irrational and unenforceable--irrational because the creator of a Web page can neither predict nor control the locations from which the site will be viewed, and unenforceable because there is no practical way to determine who created a Web page or where he or she may be located.
But abuses still need to be controlled. In fact, the risks of abuse grow ever greater with the rapid increase in the number of Internet users and the speedy development of tools to make commercial transactions--like credit-card donations--quick, familiar, and secure. If cyber-scams succeed in diverting money from legitimate charities, cynicism and anger among potential donors will grow and a new and cost-effective way for charities to gain support for their important work will be lost.
The potential for abuse of on-line charitable appeals should spark renewed voluntary efforts to create effective protections for donors and legitimate charities. An excellent model for controlling the damage that can be done by dishonest fund raising already exists: the voluntary "seal of approval" system used by evangelical non-profit organizations.
Nearly 20 years old, the Evangelical Council for Financial Accountability (its Web address is http://www.ecfa.org ) evaluates the financial integrity of about 850 organizations and helps them explain their charitable, religious, missionary, social, and educational works. Every council member subscribes to a stiff code of responsible stewardship, undergoes an annual independent audit, submits regular reports (which generally are more extensive than the reports required by states), and pays $275 to $6,400 in yearly dues.
In return, council members receive the right to use the council's seal in their fund-raising appeals. The seal assures any potential donor that high ethical and financial standards are being met by an organization.
In an age of sometimes unscrupulous telemarketing, evangelical organizations-which operate globally and do religious work that is, constitutionally, beyond the reach of secular regulation-were forced to act for themselves to preserve their credibility. The solution they found could serve as a regulatory model for the secular non-profit world.
Thus far, the current state-enforced regulatory scheme has limited the damage done by dishonest fund raisers and charities. Occasional cases of improper, unethical, and illegal activity still surface, but forceful prosecution of egregious cases has kept such abuse to a minimum.
But with the explosion in the use of the Internet to buy products, pay bills, manage investments, and make donations, among other financial transactions, the non-profit world needs a self-generated ``Internet Council for Financial Accountability'' that builds on the two decades of experience of the evangelical organizations. The key to success is collegial cooperation among peers so as to offer protections to the public that exceed, both practically and ethically, those that are possible under state and local regulation alone.
If a significant proportion of fund-raising organizations participate, the existence of a financial-accountability council might even bolster general public confidence in non-profit organizations. It certainly can help to free on-line charitable solicitation from the suspicions that today limit it as a significant resource for charities.
The Internet council would be a powerful ally for the government officials and agencies that act against perpetrators of fraud. Ideally, such an organization would receive the support of the National Association of State Charities Officials and the National Association of Attorneys General. But to be truly effective, it will have to be home grown, a product of collaboration among the non-profit organizations that have the most to lose-and the most to gain.
Putnam Barber is president of the Evergreen State Society, a Seattle organization that works to strengthen civic institutions. The society's World-Wide Web address is http://www.tess.org .