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Influencer Philanthropy and Social Media – What are the Rules, What are Best Practices?

*NOTE – links included herein are for informational purposes only. Neither the author nor the firm are in any way affiliated with any of the individuals or in any way endorse the influencers, their campaigns, or their beneficiaries*

In the run up to this year’s presidential election, author Shea Serrano published A Difficult Conversation, a guide to addressing the growing gap between the people who support Donald Trump and the people who do not. Priced at $0, it is a pay-what-you-want piece of art that, if you are familiar with Mr. Serrano’s Twitter feed, surprised no one. What is surprising is how much people voluntarily paid for the free e-book – at least $98,160.84 to date. In response, Mr. Serrano and his wife decided to donate all of the proceeds to the causes they believe in.

Mr. Serrano’s unexpected philanthropy fits a new pattern, for him and other social media celebrities. Celebrity philanthropy is not limited to the large televised “Live Aid” style fundraisers to raise awareness and funds for important causes.  While that model still exists, social media has created new avenues for small scale, targeted relief amplified by passionate digital followers.  In the early days of the COVID-19 pandemic,  influencers made cash payments to those impacted by shuttered businesses and missed paychecks. This new trend is getting increasing attention, including from at least one former President.

While charities continue to directly raise funds from their current donors, they are finding new supporters through partnerships with these “influencers” , i.e. the individuals who have a large active following of enthusiastic fans on social media.  Influencers have been working with charities for some time, and we’ve long known that consumers respond to them, in much the same way that celebrities shape consumer opinion in the for-profit world. What’s new is the way in which some influencers establish a relationship with their followers and charities; instead of entering into partnerships up front, social media and e-commerce allows influencers to raise large amounts of cash and distribute it to charities and directly to individuals without any extra infrastructure.

With innovations come new questions. In the case of influencer philanthropy, those questions tend to center on compliance. Influencers, and the charities they support, must take into account the social media platforms rules as well as local, state, and federal laws. In this article, I highlight some of the possible issues and considerations. I examine a few different fundraising strategies I’ve noticed. In each case, the considerations for charities may differ from those of influencers.  Some methods are straightforward, requiring little if any compliance considerations for influencers and charities. Methods involving partnerships with for-profit companies or cash giveaways by influencers can have tax and other compliance consequences.

Summary of Influencer Fundraising Models

There are a few ways that influencers try to do good. As described above, sometimes they publicize gifts after-the-fact, creating a halo effect for the influencer as well as spotlighting the charities or causes benefiting from the influencer’s gifts. For these after-the-fact gifts, there’s no pre-existing agreement between an influencer and the charity.  In fact, the charities or the individuals receiving gifts might not know that a gift is coming until they receive a check (or Venmo or CashApp or PayPal).

Another model that has emerged recently is the direct cash disbursement which is advertised in advance to the influencer’s followers. While these types of disbursements aren’t new, they became prominent in the early stage of the pandemic. Influencers told their followers that they had cash to give away– all followers had to do for a chance to receive some cash was comment on the influencer’s post and follow other Instagram accounts that had paid for the privilege of being part of the promotion. The influencer would, in turn, receive a payment from a social media marketing firm that set up the campaign.

A third method involves influencers asking their followers to send cash which the influencer will then distribute. The recipients of the cash vary – sometimes the funds are given to organizations, in other cases the money is given to individuals that the influencer deems worthy of support. At times the influencer will be specific about the organization or person that is the intended recipient, but many times the beneficiary is open-ended.

A fourth method involves for-profit charitable partnerships. For example, a dog-themed Instagram account raises awareness for a local shelter by telling their followers about a charitable sales promotion where the purchase of a particular dog food triggers a donation to the shelter. The influencer may be compensated by the for-profit, the nonprofit, or may receive no compensation at all, depending on the arrangement. Alternatively, an influencer might try to sell one of their own products (a book, for instance) and include a promise to donate some proceeds to charity.

Finally, some influencers simply attempt to drive traffic to individual fundraising campaigns that are already underway. One of Twitter’s most popular canine evaluation accounts, @dog_rates, highlights one or two fundraisers every Friday to support a dog and its humans. The influencer selects one campaign to highlight, driving small dollar donations from the account’s 8.8 million followers.

Compliance Issues

For each of the models described above, there are a few overarching compliance issues that influencers and charities need to consider. There may be tax consequences from their fundraising, for influencers, charities, or their donors. They must also review the terms and conditions for the sites on which they’re fundraising.

Platforms

The platforms’ rules are the first thing to review before launching a new fundraiser. Facebook, Twitter, and Instagram each publish specific rules governing promotions and fundraisers. In each case, some of each platform’s general guidelines will also apply to influencer fundraisers, such as the rules encouraging authenticity and discouraging fraud.

Federal Trade Commission

In addition to the platforms, the Federal Trade Commission (FTC) has published guidelines on the appropriate disclosures for influencer behavior. While targeted primarily at influencers working with for-profit brands, the disclosure guidelines are helpful for all influencers interacting with US users. These recommendations include:

  • Tell users if you will receive any kind of financial, employment, personal, or other benefit in connection with a post
  • Ensure that disclosures are prominent
  • Use clear, simple language
  • Be honest

These types of disclosures are especially important if an influencer’s post involves any possible compensation for the influencer. For instance, if the influencer is selling an item and promises that a portion of the proceeds will go to charity, they should be clear how much will be donated (a percentage or flat amount per sale), how long the promotion runs, which charity will receive the donation(s), and if there’s a minimum guaranteed donation. If the influencer is being paid to help drive dollars or attention to a charity or fundraiser, they should include a disclosure to that effect so their followers understand their motivation.

Taxes

Influencers, charities, and individuals each need to consider the tax consequences of online fundraisers. Whenever influencers collect donations from their followers, they may need to report those donations as income. There are exceptions where the influencer is acting as the agent for the recipient, but the default rule is generally that income is taxable. If the influencer makes a donation directly to an individual rather than to a charity, the individual should be able to treat the income as a gift (and therefore not taxable) but should check with a professional to confirm. There may be ways to structure a campaign to ensure the recipient doesn’t have a big tax bill if the fundraiser is especially successful.

Next, some donors want to know if their donation is tax-deductible. Although small donors aren’t typically taking their tax bill into consideration when they decide to send $10 to an influencer, the influencer collecting donations should clarify whether donors will be eligible for a tax deduction. There are multiple ways to structure campaigns that may permit donations to be tax-deductible.

State Registrations

If an influencer is receiving any kind of compensation in exchange for raising money for a charity, they may have to register to solicit with one or more states. They could be considered either a professional fundraiser or a commercial co-venturer, depending on the arrangement. Each state treats paid fundraisers differently, so the influencer must be careful to check with counsel who understand what filing requirements apply.

Best Practices

Regardless of what rules apply, best practices for any kind of fundraiser are diligence and transparency. Influencers can be diligent by planning out their posts and fundraisers. The first step is to research the charity that the influencer seeks to support. As multiple organizations may have confusingly similar names, checking will help to avoid directing someone to the wrong organization! Unless the influencer has first-hand knowledge of the charity, they should also review the charity’s most recent financial filings to make sure it is healthy and can legally use the funds the influencer plans to raise.

The influencer should get in touch If they have identified a charity they want to support. The charity may agree to collaborate to increase the influencer’s reach or, at the least, capitalize on the attention the influencer will bring. The charity may also want to set some guidelines, either through a formal agreement or just through discussions, to make sure the influencer doesn’t do or say anything that would harm the charity’s reputation or tax status.

Finally, the influencer should value transparency by explaining exactly what they plan to do with the money they raise, including the timing for distribution, the intended recipients, and what is yet unknown.  It’s possible that the influencer won’t know in advance who will receive the cash they raise, but that’s not necessarily a problem. If the influencer sets some criteria, that at least should be shared with their followers.

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who we work with

Our clients are diverse nonprofit organizations with a broad range of missions, as well as for-profit companies in evolving areas such as social enterprise, corporate philanthropy, joint ventures, technology-driven fundraising, and impact investing.

A.B. Data
AB InBev Foundation
Absolut Company
American Committee for the Weizmann Institute of Science
American Diabetes Association
American Friends of the Hebrew University
American Parkinson Disease Association
Association of Fundraising Professionals
Avalon Consulting
Baton Rouge Area Foundation
Black Lives Matter Global Network Foundation
Bleeding Blue for Good Fund
Bradley Cooper’s One Family Foundation
BrightFocus Foundation
Brooks Brothers
Chadwick Boseman Foundation for the Arts
Changing Our World
Charity Defense Council
Christian Appalachian Project
Doctors of the World/ Medecins du Monde
Doctors Without Borders/ Medecins San Frontieres
Drug Policy Alliance
Duke University
Emory University
Estee Lauder Companies, Inc.
Feed The Children
Food For The Poor
Gerald R. Ford Presidential Foundation
Grameen Foundation USA
Hope for New York
International Campaign for Tibet
International Crisis Group
International Justice Mission
J. Crew Group
Johns Hopkins University
Lautman Maska Neill & Company
Lawyers Committee for Civil Rights Under Law
LSU Foundation

Marts & Lundy
Meyer Partners, LLC
Milken Institute
NAACP Foundation
National Alliance on Mental Illness (NAMI)
National Marrow Donor Program
National Park Foundation
Natural Resources Defense Council
North Carolina State University
North Shore Animal League
Operation Smile
PBS Foundation
Pernod Ricard USA
PetSmart Charities
PopSockets
Population Action International
Project ORBIS International
Public Interest Communication
Rails to Trails
Redeemer Presbyterian Church
Rockefeller Philanthropy Advisors
Save the Children Federation
Sesame Workshop
Simon Wiesenthal
SOS Children’s Villages – USA
Subaru of America
The Little Market
Touro University
United States Equestrian Team Foundation
United Way Worldwide
University of Connecticut
University of Virginia
Vote.org
Whitney Museum of American Art
World ORT
World Wildlife Fund
YWCA USA

A.B. Data
Absolut Company
American Committee for the Weizmann Institute of Science
American Diabetes Association
American Friends of the Hebrew University
American Parkinson Disease Association
American Rivers
Association of Fundraising Professionals
Baton Rouge Area Foundation
BrightFocus Foundation
Burger King McLamore Foundation
Cancer Care
Carnegie East House and James Lenox House Association
Center for Car Donations
Changing Our World
Charity Defense Council
Christian Appalachian Project
Coca-Cola Scholars Foundation
Convoy of Hope
Cornell University
Doctors Without Borders/ Medecins San Frontieres
Drug Policy Alliance
Duke University
Emory University
Feed The Children
Gerald R. Ford Presidential Foundation
Grameen Foundation USA
Helen Keller Services
Hope for New York
Human Rights Watch
Humane Society of US
Indiegogo
International Campaign for Tibet
International Crisis Group
International Justice Mission
Japanese American National Museum
Johns Hopkins University
Lane Bryant Charities
Lautman Maska Neill & Company
Lawyers Committee for Civil Rights Under Law
LSU Foundation
Mattel
Meyer Partners, LLC
Milken Institute
National Breast Cancer Coalition
National Marrow Donor Program
Natural Resources Defense Council
North Carolina State University
North Shore Animal League
Obama Foundation
Operation Smile
PBS Foundation
Pernod Ricard USA
PetSmart Charities
Population Action International
Project ORBIS International
Public Interest Communication
Rails to Trails
Redeemer Presbyterian Church
Rock and Roll Hall of Fame and Museum
Rockefeller Philanthropy Advisors
Sesame Workshop
Simon Wiesenthal
SOS Children’s Villages – USA
Steinhardt Foundation
Subaru of America
United States Equestrian Team Foundation
University of Montana Foundation
University of Nevada, Las Vegas Foundation
Whitney Museum of American Art
World ORT
World Wildlife Fund
YMCA USA
YWCA of New York City
YWCA USA

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Our attorneys’ recent contributions to the media and nonprofit sector publications.

news & events

Check out our attorneys’ recent contributions to the media and industry publications.

Secure Your Data – Seriously, AFP New York Chapter News
As Jon Dartley, a data privacy and security attorney at Perlman and Perlman says, “It is vital to have the appropriate legal terms in the contract to protect your interests.”  Find out what your liability limit is.  Have it in writing who bears the responsibility and cost of a data breach.  And, have the vendor agree on a specific timeframe within which they need to advise you of a data breach.

Warning: Don’t Cut Legal Corners When Mixing Social And Business Impact,  Forbes
Particularly striking is that (Karen) Wu believes this is the “first multi-state regulatory activity involving cause marketing in almost two decades.”

Is stealing, then giving back, OK?
Cliff Perlman lends his advice on theft within a nonprofit.

Buyer Beware: Negotiating Terms in Technology Agreements
Jon Dartley provides tips on negotiating contracts with technology vendors.

Four Ways Charitable Giving Could Change with a Tax Overhaul
Cliff Perlman remarks on the possible threat of a change to charitable deduction.

How To Deal With Residual Data, Nonprofit Times
Jon Dartley’s advice on addressing “data exhaust”.

Secure Your Data – Seriously, AFP New York Chapter News
As Jon Dartley, a data privacy and security attorney at Perlman and Perlman says, “It is vital to have the appropriate legal terms in the contract to protect your interests.”  Find out what your liability limit is.  Have it in writing who bears the responsibility and cost of a data breach.  And, have the vendor agree on a specific timeframe within which they need to advise you of a data breach.

Warning: Don’t Cut Legal Corners When Mixing Social And Business Impact,  Forbes
Particularly striking is that (Karen) Wu believes this is the “first multi-state regulatory activity involving cause marketing in almost two decades.”

Is stealing, then giving back, OK?
Cliff Perlman lends his advice on theft within a nonprofit.

Buyer Beware: Negotiating Terms in Technology Agreements
Jon Dartley provides tips on negotiating contracts with technology vendors.

Four Ways Charitable Giving Could Change with a Tax Overhaul
Cliff Perlman remarks on the possible threat of a change to charitable deduction.

How To Deal With Residual Data, Nonprofit Times
Jon Dartley’s advice on addressing “data exhaust”.

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perlman & perlman philanthropic sector law firm blue and green logo

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silk lanterns

who we work with

Our clients are diverse nonprofit organizations with a broad range of missions, as well as for-profit companies in evolving areas such as social enterprise, corporate philanthropy, joint ventures, technology-driven fundraising, and impact investing.

who we work with

Our clients are diverse nonprofit organizations with a broad range of missions, as well as for-profit companies in evolving areas such as social enterprise, corporate philanthropy, joint ventures, technology-driven fundraising, and impact investing.

A.B. Data
AB InBev Foundation
Absolut Company
American Committee for the Weizmann Institute of Science
American Diabetes Association
American Friends of the Hebrew University
American Parkinson Disease Association
Association of Fundraising Professionals
Avalon Consulting
Baton Rouge Area Foundation
Black Lives Matter Global Network Foundation
Bleeding Blue for Good Fund
Bradley Cooper’s One Family Foundation
BrightFocus Foundation
Brooks Brothers
Chadwick Boseman Foundation for the Arts
Changing Our World
Charity Defense Council
Christian Appalachian Project
Doctors of the World/ Medecins du Monde
Doctors Without Borders/ Medecins San Frontieres
Drug Policy Alliance
Duke University
Emory University
Estee Lauder Companies, Inc.
Feed The Children
Food For The Poor
Gerald R. Ford Presidential Foundation
Grameen Foundation USA
Hope for New York
International Campaign for Tibet
International Crisis Group
International Justice Mission
J. Crew Group
Johns Hopkins University
Lautman Maska Neill & Company
Lawyers Committee for Civil Rights Under Law
LSU Foundation

Marts & Lundy
Meyer Partners, LLC
Milken Institute
NAACP Foundation
National Alliance on Mental Illness (NAMI)
National Marrow Donor Program
National Park Foundation
Natural Resources Defense Council
North Carolina State University
North Shore Animal League
Operation Smile
PBS Foundation
Pernod Ricard USA
PetSmart Charities
PopSockets
Population Action International
Project ORBIS International
Public Interest Communication
Rails to Trails
Redeemer Presbyterian Church
Rockefeller Philanthropy Advisors
Save the Children Federation
Sesame Workshop
Simon Wiesenthal
SOS Children’s Villages – USA
Subaru of America
The Little Market
Touro University
United States Equestrian Team Foundation
United Way Worldwide
University of Connecticut
University of Virginia
Vote.org
Whitney Museum of American Art
World ORT
World Wildlife Fund
YWCA USA

A.B. Data
Absolut Company
American Committee for the Weizmann Institute of Science
American Diabetes Association
American Friends of the Hebrew University
American Parkinson Disease Association
American Rivers
Association of Fundraising Professionals
Baton Rouge Area Foundation
BrightFocus Foundation
Burger King McLamore Foundation
Cancer Care
Carnegie East House and James Lenox House Association
Center for Car Donations
Changing Our World
Charity Defense Council
Christian Appalachian Project
Coca-Cola Scholars Foundation
Convoy of Hope
Cornell University
Doctors Without Borders/ Medecins San Frontieres
Drug Policy Alliance
Duke University
Emory University
Feed The Children
Gerald R. Ford Presidential Foundation
Grameen Foundation USA
Helen Keller Services
Hope for New York
Human Rights Watch
Humane Society of US
Indiegogo
International Campaign for Tibet
International Crisis Group
International Justice Mission
Japanese American National Museum
Johns Hopkins University
Lane Bryant Charities
LSU Foundation
Mattel
Meyer Partners, LLC
Milken Institute
National Breast Cancer Coalition
National Marrow Donor Program
Natural Resources Defense Council
North Carolina State University
North Shore Animal League
Obama Foundation
Operation Smile
PBS Foundation
Pernod Ricard USA
PetSmart Charities
Population Action International
Project ORBIS International
Public Interest Communication
Rails to Trails
Redeemer Presbyterian Church
Rock and Roll Hall of Fame and Museum
Rockefeller Philanthropy Advisors
Sesame Workshop
Simon Wiesenthal
SOS Children’s Villages – USA
Steinhardt Foundation
Subaru of America
United States Equestrian Team Foundation
University of Montana Foundation
University of Nevada, Las Vegas Foundation
Whitney Museum of American Art
World ORT
World Wildlife Fund
YMCA USA
YWCA of New York City
YWCA USA
Lautman Maska Neill & Company
Lawyers Committee for Civil Rights Under Law

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