Newsletters

Non Profit Report - September 2011

Date: September 12, 2011

U.S. Embargoes Can Impact Certification Programs
by: Jefferson C. Glassie
 
The United States imposes embargoes against several countries, including most prominently Cuba, Iran, Sudan, and Burma.  These sanctions programs, administered by the Office of Foreign Assets Control (OFAC), are very broad and essentially prohibit any business dealings by U.S. persons and organizations with those countries, though the Cuban sanctions are the most restrictive.  There is, however, a general exception under the law for transmission of information, which applies to many nonprofit organization and association activities. 

First, it is important to recognize that the Cuban sanctions are very broad and do not allow U.S. nonprofit organizations or associations to do business in Cuba, or to enroll members from Cuba, accept dues payments from Cuban nationals, sell or distribute publications to Cuba, permit those in Cuba to participate in the production of scholarly articles and publications, or become certified.  Further, the Cuba sanctions also prevent certification of a Cuban national even if he or she is not in Cuba.

Putting aside the Cuban rules, the general approach for the other embargoed countries is this:  OFAC has issued rulings providing that U.S. nonprofit organizations and associations may enroll members from embargoed countries (other than Cuba), accept dues payments from in-country members, sell and distribute publications into those countries, and allow those in embargoed countries to participate in the production of scholarly articles and publications.  These are all considered permissible for purposes of the U.S. sanctions programs applicable to those embargoed countries.

However, it is not permissible for a U.S. organization to provide services to the embargoed countries.  Significantly, OFAC considers professional certification to be a service.  Thus, as a general rule, people in an embargoed country may not take certification exams or be credentialed by a U.S. organization

However, nationals of an embargoed country who are outside the country may hold a U.S. certification.  It would be permissible, for example, for certificants who are Iranian nationals but outside Iran to hold a U.S. credential.  They can also permissibly pay renewal fees and take renewal exams, again as long as they are not in the embargoed country when the fees are paid or the exam is taken.

If a national of an embargoed country obtains certification while outside the country, then returns to the country, there is no need to rescind the person’s certification.
 
Recertification by examination can also be an issue.  If the required renewal exam is administered outside the embargoed country, that would be permissible.   It would be a problem, however, under the sanctions if recertification or exam fees were paid from inside the embargoed country or by/through a person or bank on the Specially Designated Nationals (SDN) list. 

In sum, with the exception of Cuba, nationals of an embargoed country may take a professional certification exam and hold the credential as long as they were outside the embargoed country when the exam was administered and the credential was granted. They may pay for the exam/certification using funds from outside the embargoed country, but not from within the embargoed country or an SDN bank. 

If payment is a problem, under certain circumstances it may be possible to waive the fees or obtain a license from OFAC to make a special exception to authorize payment.

This is a very sensitive area, however, and extreme caution and particular legal review are advisable.


Legal Issues Arising from Nonprofit Organizations’ Use of Social Media
A two-part article
by: Megan C. Spratt
 
There is no denying that social media’s importance to organizations, including nonprofit organizations and associations, is growing exponentially.  Blogs, Listservs, YouTube.com, and social networks like Twitter and Facebook offer nonprofits a range of benefits, enabling them to market themselves in new ways, disseminate their messages and missions, educate users, connect with other nonprofits, recruit volunteers, solicit donations, and increase audience interaction.  These benefits, however, come with certain risks. 

In this two-part article, we touch upon some of the common legal issues associated with nonprofit organizations’ and associations’ use of social media and provide guidance on how to avoid them.  Specifically, in this first part, we analyze the intellectual property, insurance, and solicitation issues surrounding a nonprofit entity’s use of social media and the steps that can be taken to mitigate these risks.   

Intellectual Property
Because social media sites enable users to post comments and upload their own content, nonprofit organizations and associations should take steps to avoid allegations of copyright and trademark infringement.  This can be accomplished by monitoring content that is posted to the organization’s social media sites, whether by employees or users of the site.  Any third party content, including text, photos, trademarks, graphics, or other media content, that is posted on a social media site without the owner’s permission may constitute copyright and/or trademark infringement and should be removed from the site.  While some uses of copyrights or trademarks may constitute “fair use,” it is best to obtain permission.   

Nonprofit organizations and associations should also monitor the online use by others of their own trademarks, service marks, names, logos, and designs, as improper or unauthorized use will detract from the value, impact, and distinctiveness of the marks.

In addition, nonprofits should take precautions when using a person’s likeness on their social media sites.  Specifically, when posting photos or videos of someone, it is advisable to obtain a publicity release from that person, especially if the likeness is being used for a commercial purpose.

Insurance
Whenever a nonprofit organization utilizes social media as part of its business operations, it is recommended that the organization’s insurance policies (such as its directors and officers, media, and errors and omissions policies) be examined to ensure that coverage is up-to-date and extends to claims resulting from the use of social media.  If not, additional coverage that encompasses social media should be obtained from the nonprofit organization’s insurance agent or broker.   Of course, because it is impossible to obtain coverage that protects against all risk, it is also important to have in place a comprehensive social media policy (discussed further below) to minimize exposure that is not covered by its insurance policies. 

Endorsements and Testimonials
Nonprofits should be aware that the Federal Trade Commission’s recently updated Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Guides”) are applicable to “consumer” testimonials, such as reviews and recommendations that endorse a product or service on any social media site.  The Guides require disclosure of any connection between the endorser (which for a nonprofit organization could be an employee or member) and the advertiser, in this case the nonprofit.
 
The Guides require advertisers to advise the consumer giving the testimonial that the connection has to be disclosed and to have procedures in place aimed at monitoring the consumer’s postings for compliance with the disclosure requirement.  Failure to comply with the Guides may result in liability for not only the advertiser, but also for the individual giving the testimonial.  So nonprofit organizations and associations should ensure proper disclosure in connection with any endorsement or testimonial.
  
Online Solicitations
Using websites to solicit charitable contributions is becoming increasingly popular.  But Section 501(c)(3) organizations need to be aware that state charitable solicitation laws may apply to both traditional and web-based fundraising, such as accepting donations through a website.  Moreover, states have different laws governing the solicitation of charitable contributions.  Generally, these laws mandate that charitable organizations register with a state agency prior to soliciting contributions from residents of the state.  This, of course, poses a problem, since soliciting contributions via the internet has the potential to reach donors in all fifty states.  Nonprofits may attempt to limit the geographic scope of donations they accept by, for example, posting disclaimers on their donation page stipulating that they only accept contributions from the states in which they are registered or removing states in which they are not registered from the pull down menu on their donation page.  On the other hand, compliance with all applicable laws is important and registration and reporting in all applicable states will be required for national fundraising campaigns.
 
In part two, we will continue to examine social media from a legal standpoint by discussing employees’ use of social media as well as what to include in a social media terms of use policy.  To be continued in our next issue…


Announcements

  • At the Annual Meeting of ASAE (American Society of Association Executives) in St. Louis, WTP was represented by Eileen Johnson, Jeff Glassie, Jon May, and Stephen Schaefer. Eileen is Chair of ASAE's Legal Section Council, and Stephen is a member of the Council. Jeff is a member of the International Section Council, and Jon is a member of the Ethics Committee. The WTP attorneys attended section/committee meetings, as well as educational programs and networking events.
  • WTP has launched a new industry group to advise clients on the legal issues related to cyber security and the protection of online data. The industry group was featured in the Friday, August 5th edition of the Baltimore Business Journal. Cyber security and online data protection issues impact nonprofit organizations as much as for-profit companies: membership lists and credit card information can be hacked or computer networks disrupted. Please contact one of the attorneys in WTP's Nonprofit Organizations and Associations Group for more information. 
  • On September 16, 2011, Eileen Johnson will be co-presenting a session on "Social Media and New Technology: The Rewards – and Legal Risks – for Associations" at the ASAE Annual Association Law Symposium in Washington, D.C. 
  • Jeff Glassie will be co-presenting a session, "Is Your Association Doing All it Can to Protect its intellectual Property (IP) in the Electronic Age?" at the ASAE Annual Association Law Symposium. 
  • Jon May will be a co-presenter at the General Closing Session "Lightning Round" at the ASAE Annual Association Law Symposium. 
  • WTP is co-sponsoring the 5 pm Networking Reception at the ASAE Annual Association Law Symposium. 
  • On September 20, 2011, Eileen Johnson will be speaking on mergers and separations at the 2011 Risk Management and Finance Summit for Nonprofits hosted by the Nonprofit Risk Management Center.