(Washington, DC, May 5, 2003)—Today, the Supreme Court issued its ruling (PDF) in Madigan v. Telemarketing Associates, allowing states to pursue fraud charges against fundraisers who intentionally mislead donors while reaffirming its earlier decisions that high fundraising costs or failure to disclose the terms of fundraising contracts are not adequate measures of fraud.

“Charitable organizations—and the fundraisers they employ—should be held to the highest standards of transparency and accountability,” said Diana Aviv, president and CEO, Independent Sector. “The Court has provided clear direction to state charity officials that will allow them to pursue prosecutions of charitable fraud without imposing unconstitutional restrictions on the ability of charities to speak out and educate the public about important issues.”

Independent Sector had two core objectives when we filed our friend of the court brief,” said Diana Aviv. “First, we hoped the Court would not step back from its earlier rulings affirming that charitable solicitation speech is protected under the First Amendment. Second, in applying the rulings of the earlier cases, we hoped the Supreme Court would again stress that that the omission of fundraising contract terms alone could not constitute fraud. We are very pleased that the Court in its decision did not step back from both of these principles.”

Earlier this year, Independent Sector, together with 55 nonprofit organizations, filed an amicus brief asking the U.S. Supreme Court to protect charities’ rights and responsibilities to educate the public and build support around important issues. In today’s ruling, the Court determined that the legal record contained allegations that the fundraiser had made affirmatively false statements to mislead donors, and thus sent the case back to the lower court to determine whether those allegations are true. While the Court did not uphold the Illinois Court decision, as Independent Sector had urged it to do, its ruling nevertheless recognizes the principles Independent Sector espoused in its brief.

“This decision is consistent with Independent Sector’s brief,” Diana Aviv added. “We look forward to working with state attorneys general and the National Association of State Charity Officials NASCO to develop further guidance for charitable fundraisers and guidelines for when prosecutions of charitable fraud are appropriate to pursue under the terms of this new decision.”

Since its founding in 1980, Independent Sector has been a leader in donor education and in strengthening ethics and accountability among the nation’s nonprofit organizations. The organization serves as a forum for leading nonprofit organizations to share standards and codes of ethics. A compendium of the more than 60 codes of ethics and standards for nonprofit organizations is available as an online resource. IS recommends that all nonprofits adopt and abide by standards appropriate for their field, and that they conduct an annual ethics audit.

Background on Madigan v. Telemarketing Associates

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Independent Sector is a nonprofit, nonpartisan coalition of more than 700 national organizations, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to promote, strengthen, and advance the nonprofit and philanthropic community to foster private initiative for the public good.

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Phone: 202-467-6100
Website: www.IndependentSector.org
Email: info@IndependentSector.org