Muddy Waters: Cross Currents in Fundraising and Its Control – 1907–1954

Abstract

During the first half of the 20th century, many of the techniques of modern fundraising were developed. During these decades, fundraising demonstrated its potential for supporting important community goals, financing efforts to combat dread diseases, and initiating change in public policies. In this same span of years, community leaders, journalists, and policy makers became increasingly concerned with growing opportunities for inefficient or even downright dishonest fundraising. Local governments, federated fundraising organizers, and nonprofit charity ratings agencies attempted to forestall abuses of the public's generosity. Further, during the Second World War, the federal government imposed significant controls on fundraising for war-related activities. The year 1954 saw the passage of new laws in two states that anticipated the most common form of charitable solicitations regulation in the second half of the century, a form that is widespread today. This paper traces developments from the end of the 19th century to show how the ground was prepared for post-war efforts by state governments to regulate charitable fundraising.

Does Mandatory Disclosure Matter? The Case of Nonprofit Fundraising

“…Individual U.S. states have long sought to regulate how organizations raise money (Barber, 2012, 2013, 2017; Steinberg, 1997). Although the details vary, in most states, a charity seeking to raise money must register with the state and comply with local rules governing charitable solicitations.…”

Local Regulation of Charitable Solicitation

“…Historically in the US regulation of individual solicitation (i.e., begging) has taken place in various forms for centuries (Quigley, 1996(Quigley, , 1997. However, regulation of organizational solicitation is a more recent occurrence given that this type of solicitation was far less common in the United States until the twentieth century (Barber, 2011(Barber, , 2017Cutlip, 1990;Hopkins, 1980). As professional fundraising became more common and concerns about fraud and excessive costs emerged, local restrictions were put in place (Cutlip, 1990).…”

“…Despite these few attempts to regulate charitable solicitation at the federal level, the federal government has mostly taken a hands-off approach to dealing with charitable solicitation (Fishman, 2015). For example, the pressures of World War II led to national regulation concerning charities that sought relief related to the war (Barber, 2017). And, in the 1990s, the IRS attempted to revoke the tax-exempt status of an organization that spent an excessive amount (in the IRS's view) on fundraising.…”

Leading and lagging indicators in fundraising management: A Canadian case study

“…Pressures to manage ratios, measured within single years, also have the potential to cause organizations to prefer short‐term results. These challenges may be addressed by some organizations in a less‐nuanced manner than they deal with other financial matters because most major fundraising tactics and management tools, along with public and regulatory attention on overheads, date back to the middle of the 20th century and do not reflect actual efficiency or effectiveness (Barber, 2017; Cleveland, 2019; Coupet & Haynie, 2018; Mitchell & Calabrese, 2019) while the techniques for managing other organizational revenues and expenses have continued to evolve. Recent scholarly work has looked at how charities make decisions between different sources of funding (Bem et al, 2019; Rebetak & Bartosova, 2020; Shon et al, 2019; Yermack, 2017), but little looks at how fundraising as a source of revenue is managed internally.…”