Challenge to Colorado Charitable Solicitations Act Could Decrease Trust in Nonprofits

The Charitable Solicitations Act helps organizations like Food Bank of the Rockies collect donations.
The Charitable Solicitations Act helps organizations like Food Bank of the Rockies collect donations. Caitlyn Barnett | Food Bank of the Rockies
The Food Bank of the Rockies provides food for people experiencing food insecurity across Colorado and Wyoming, partnering with other food distribution organizations and giving food directly to people in need.

To fund that work, it relies on donations, and Erin Pulling, president and CEO of the organization, says the Colorado Charitable Solicitations Act builds necessary trust for people to keep those donations coming.

“The Charitable Solicitations Act is good for our fundraising at Food Bank of the Rockies,” she says. “We are so dependent on the trust of the general public to fund our operations."

The need for philanthropic support from individuals has grown for the organization over the last few years, as the pandemic and inflation have caused more families to struggle with putting food on the table.

“The amount of money that we're spending on food has more than tripled in the last few years, so we need to fundraise more than ever,” Pulling says. “So that trust that we have with Coloradans making those gifts is incredibly important. If we had an additional challenge of eroding donor trust, that would make our work so much more challenging, and it would make our impact a lot less.”

Because of a legal challenge to the Charitable Solicitations Act, nonprofits are facing the possibility that their work will become even more difficult.

Based in Ohio, Infocision Management Corporation — a for-profit call center that nonprofits can hire to solicit donations — is suing Colorado Secretary of State Jena Griswold in the 10th U.S. Court of Appeals, alleging that the Charitable Solicitations Act is a violation of the First Amendment right to free speech after it prevented the company from operating in Colorado.

The CSA was invoked against Infocision because it stipulates that no one can act as a paid solicitor in Colorado while under an injunction from another state or the U.S. government. In 2018, Infocision and the Federal Trade Commission reached an agreement that the company would pay $250,000 to settle charges that its telemarketers had misled consumers. That came with a five-year injunction.

Also in 2018, Infocision tried to renew its registration as a paid solicitor in Colorado, and then-Secretary of State Wayne Williams denied the application, citing the injunction from the FTC. However, Infocision objected, and Williams’s office missed the deadline to deny its application, so it was allowed to continue operating in Colorado.

In 2019, when Infocision attempted to renew again, Griswold denied the application for the same reason. This time, Infocision sued.

In August 2022, a federal judge affirmed that the act had been applied correctly and didn’t limit freedom of speech, but Infocision appealed the decision again, continuing the legal fight.

The CSA has been around since the 1980s and was written with the intent of ensuring that those collecting donations for nonprofits weren’t deceiving the public, whether they worked for nonprofits or as paid solicitors like Infocision. The original version of the act didn’t have the enforcement mechanisms to prevent fraud, so in 2001, the legislature amended it.

“Prior to the Act, and particularly the 2001 Amendments, charitable donation abuse was rife — some paid solicitors pocketed over 80 percent of the funds raised, and other solicitors deceived Coloradoans into donating thousands to nonexistent charities,” reads an amicus brief filed on behalf of the Colorado Nonprofit Association in the case. “The Act, which requires solicitors and charities to disclose accurate financial data, ensures that charitable fraud and greedy solicitors can no longer run rampant.”

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Food Bank of the Rockies relies on donor trust, along with volunteer efforts from local companies that donate their time.
Caitlyn Barnett | Food Bank of the Rockies

Charities and solicitors must register with the Colorado Secretary of State’s Office. Then that office is charged with publishing financial information for all registrants “to assist the public in making informed decisions about charitable solicitation and to assist charitable organizations in making informed decisions about contracting with paid solicitors,” according to the act.

The act also specifies the provisions for charitable fraud and lays out penalties for those who commit it, including fines and registration revocation.

Paul Lhevine, president and CEO of the Colorado Nonprofit Association, says the act removes bad actors, allowing people to feel secure about their donations in Colorado. Lhevine adds that an average of 90 percent of donations earmarked for charities is collected through solicitors.

“What this act does is it promotes fair play.It promotes transparency. It prevents fraud,” Lhevine says. “Because what the nonprofits in the field do is so important to fill gaps for our societal needs, anything that detracts from contributions from people giving charitably to nonprofit organizations really hurts the entire state.”

Because of the importance of the act, the CNA and its members acted quickly to file the amicus brief for the case.

“We had very little time, and having been on a bunch of boards and having run a nonprofit directly, to turn something takes real time for them to go to their boards, discuss things, hash it out, and they turned it around so quickly,” says Tom Downey, director of Ireland Stapleton Pryor & Pascoe, the firm that wrote the brief.

Downey was on the CNA board for eight years, worked for the Children’s Museum of Denver, and ran the Business and Licensing Division of the Secretary of State’s Office, so rallying around the act is important to him.

Harshy Badhesha, an attorney who worked on the brief, says the main themes garnered from the 52 charitable organizations that signed on to the brief were that the act had helped them generate more donations and enabled them to contract with other companies that would take the smallest cut from those donations, increasing their revenue even more.

“Had we been given more time to write the brief, I have no doubt that that list of support would have just grown and grown and grown exponentially,” Lhevine says.

For Pulling, it was a no-brainer for Food Bank of the Rockies to sign on.

“Anytime that there's a story about, ‘Oh, this XYZ organization is fundraising, and only X amount actually goes to the cause,’ that hurts the entire nonprofit sector,” she says. “It's not the organizations that are hurt. Most importantly, it's the clients that we're serving, because it means that we are having less of an impact.”

It’s not burdensome for nonprofit organizations to fulfill the requirements of the act, Lhevine and Pulling say, but the impact is big.

“There's a lot of layers of harm that could happen from allowing these kinds of kind of unscrupulous solicitors to just sort of barrage people with possibly fraudulent charitable solicitations,” says Lidiana Rios, another attorney who worked on the amicus brief.

But Infocision argues that rather than preventing harm, the CSA prevents free speech, giving the secretary of state too much discretion because being registered is a prerequisite for doing business in the state. Infocision did not return requests for comment.

The Attorney General’s office’s appellate brief, filed on January 11, argues that the law does not give the Secretary of State discretion that would be outside the scope of the First Amendment.

“Rather, it requires her to deny the application of any person who has been enjoined from engaging in deceptive conduct related to charitable solicitations within the last five years,” the brief reads.

Additionally, the brief argues that the act is content-neutral, and judged based on the speaker’s history of illegal activity, not the subjects the speaker discusses. It fulfills a government interest in protecting the public from fraud.

“The law serves anticorruption and antifraud purposes and does not reflect disagreement with any speaker’s message,” the brief continues.

The brief also characterizes Infocision's case as moot. Should Infocision apply again, the case argues, it would be allowed to do so, because the federal injunction that prevented Infocision from registering in Colorado expired January 11, 2023.

The Attorney General's Office does not comment on pending litigation and declined to comment. The Secretary of State’s Office pointed Westword to the appellate briefing.

The nonprofit world will likely get its answers later in 2023 after oral arguments occur, for which a date has not yet been set.

“Fundraising is hard enough, and we're meeting such an increased need right now,” Pulling says. “We rise together to meet this tremendous need, and it's important that we have safeguards in place, like through the Charitable Solicitations Act, that build donors' trust in our work.”
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Catie Cheshire is a staff writer at Westword. After getting her undergraduate degree at Regis University, she went to Arizona State University for a master's degree. She missed everything about Denver -- from the less-intense sun to the food, the scenery and even the bus system. Now she's reunited with Denver and writing news for Westword.
Contact: Catie Cheshire

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