Trade Association Settles FTC Charges of Misleading Advertising

Associations are as responsible for the advertising claims they make about services and products as for profit industry.  While many association "products" are training, peer professional networking, legislative advocacy, etc., some nonprofits also have services or products they sell to the general public.  Once they cross that line, they need to make sure they can support any statements about those products or risk the Federal Trade Commission stepping in.  See below.  Bunnie

Trade Association Settles FTC Charges of Misleading Advertising


by Jonathan L. Pompan, Esq., Venable LLP, Washington, D.C.

On January 26, 2010, the Federal Trade Commission (“FTC”) announced it had entered into a voluntary settlement, subject to final approval, with the Indoor Tanning Association (the “ITA”) over allegations that the ITA made misleading representations in its advertising and marketing for indoor tanning. Under the consent order, the ITA is restricted in the claims it may make in its future advertising, must send a notice to its members and recipients of its advertising materials, and must adopt a record keeping program.

The proposed order is significant in several respects. First, it makes clear an association’s obligation to adhere to advertising and marketing law. Second, the order illustrates how an association’s own advertising claims can result in obligations to disclose material risks. The FTC accused the ITA of failing to disclose facts related to health and safety risks that would be material to consumers in their purchase or use of the advertised product in light of the representations made. Third, the order focuses on point-of-sale and other consumer-facing advertising by the association that falls squarely in the commercial realm. The order does not cover representations made in non-commercial settings or contexts, such as communications to legislative or executive bodies.

Many associations advertise and market to develop and defend markets important to their membership. To help minimize legal risk, trade association staff should be well-educated in advertising and marketing law to ensure that their advertising claims are truthful and not misleading. In addition, claims must be substantiated, particularly when they concern health, safety or performance.

Association staff and legal counsel should consider the following pointers:

• Sellers are responsible for claims they make about their products and services. Third parties – such as advertising agencies or website designers – also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

• Stick to claims that can be supported. The type of evidence needed will depend on the product, the claims, and what experts believe necessary.

• Avoid disclaimers and disclosures that are difficult to notice, read or hear. However, a disclaimer cannot remedy a false or deceptive claim.

• Product and service demonstrations should show how the product will perform under normal use.

• FTC guidance suggests that association endorsements “must be reached by a process sufficient to ensure that the endorsement fairly reflects the collective judgment of the organization.”

• Certain regulated products and services trigger specific laws (e.g., Textile and Wool Acts, various consumer financial products and services) and regulations. Moreover, certain forms of advertising are subject to specific guidance (e.g., FTC Guide on Environmental Advertising, FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising).

• Competitors may challenge advertising claims under self-regulatory programs, such as the Council of Better Business Bureau’s National Advertising Division, as well as under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).

• Obtain appropriate insurance for advertising and marketing activity.

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Jonathan L. Pompan, an attorney in the Washington, DC office of Venable LLP, represents nonprofit organizations and others in regulated industries in a wide variety of areas, including advertising and marketing law compliance, as well as in connection with Federal Trade Commission and state investigations and law enforcement actions. Prior to joining Venable, Mr. Pompan was an in-house counsel at a trade association where he reviewed advertising and marketing in advance of publication. For more information, please contact Mr. Pompan at 202.344.4383 or jlpompan@venable.com.

For more information about this and related industry topics, see www.venable.com/associations/publications.




This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided in response to a specific fact situation.

Micromanagement: Board Style

One of the biggest complaints I hear from executive directors and board members alike is about board “micromanagement.” Executive directors are driven crazy by it and fellow board members feel their time is being wasted, in board meetings or retreats, when boards engage in the minute details of organizational operations.

Recently an executive director of a million dollar a year nonprofit revealed that he had a $500 limit on his signing authority. $500 doesn’t get you a lot and if you have to go to the executive committee or full board for every expense over $500 you’ll be spending a lot of your time asking for permission. A basic brochure print job can easily run over that limit. A copier contract will certainly top that limit. Heck, coast to coast airfare could force you to seek board permission.

Some boards want to approve every press release the executive issues, resulting in several edits, rewrites, etc. Other boards involve themselves in what kind of paper the organization uses, issuing edicts on “green” content percentages or which manufacturer the organization will purchase paper from.

The craziest thing I ever saw was a frustrated executive who had been asked by the board to account for every minute of his time and his plan for every minute of his time for the coming year. What should have been a broad work plan with achievable goals resulted in a day by day projection (for 365 days) of what projects he and his staff was going to work on. When I flipped through it all I could think of was how toxic the executive/board relationship had become.

One executive I knew could never take a real vacation; he was expected to be on committee and board conference calls even though he was supposed to be on vacation with his family. In another instance, a treasurer wanted to re-open an audited financial statement because he found a $10 discrepancy. Thank goodness the accountants convinced the treasurer that in order to remedy the $10 discrepancy it would cost the organization about $1,500 in accounting fees.

Then there are the boards who insist upon approving every hiring decision down to the receptionist at the front desk. Or the boards that want a presence at every meeting the executive has with other organizations. And the boards that want the executive to “clock in” and “clock out.”

Micromanagement is never good, whether it’s a board micromanaging an executive or the executive micromanaging staff. Micromanagement is literally saying “we don’t trust you to do the job right.”

I firmly believe that when an organization hires an executive they should hire the best talent they can find and once done, trust that person to be professional, competent and capable. And if that person proves to be none of those things, then it is the board’s prerogative to fire them. But to hire an executive and then treat them like an errant child who needs constant oversight is demoralizing to the executive and to the organization.

What is the job of the board? Two things: setting policy and fundraising. Unfortunately in the nonprofit sector most boards do both of those things badly.

Setting policy means determining goals for the organization and then leaving it up the executive how he or she will reach those goals. For example, a board may say that they want a 15% growth in membership over a twenty-four month period. Now it is up to the executive to figure out how to achieve that membership goal. Or a board may say it wants the organization to offer new services such as specific types of membership training, then it is up to the executive to determine how that training will be delivered.

On the second topic of board fundraising, this is probably the area I hear the most complaints about from executives, because most boards don’t do any fundraising. They talk about fundraising, they promise to raise money, they come up with grandiose schemes for bringing money through the door, but rarely to never do they actually execute the plan or deliver on their promises. Recently an executive told me of a special fundraising event in which only one of his board members actually bothered to show up, even though the event was the board’s idea.

If you are a board member I want you to take a long hard look at how the board manages the executive. Has the board hired the best and the brightest and is the board allowing that person to do his or her job? Or is the board way too involved in the day to day operations of the organization? Ask yourself at the next board meeting which things the board is micromanaging. If the board makes a decision, is that a policy decision or is it telling the executive how to do his or her job?

There is no doubt that when boards stop micromanaging, executives can shine and relationships can improve all the way around.

Firing High Maintenance Volunteers

I love coming across material that has resounding implications for nonprofit management.  Thomas McKee writes an article about a subject that preplexes us all...how do you "fire" a volunteer?  In terms of management discomfort, firing a volunteer has to rank at the top.  But the truth is, from time to time, you have to do it.  As I was discussing this article with a friend he told me of an instance in which a volunteer made outrageous promises on behalf of the organization, and he had to spend an extraordinary amount of time cleaning up the mess as well as the embarassment.  I hope you enjoy and take to heart Thomas' article.  Bunnie

How to Fire Volunteers and Move On
by Thomas W. McKee

In every workshop on volunteer management I am asked the question, "How do you fire a volunteer?" Volunteers don't get paid. Why would I want to fire them? Couldn't we just let them continue doing what they want to do when they want to?

Unfortunately, it isn't that simple. Volunteer roles are very important to the mission of the organization, and if the job isn't getting done or if the volunteer is lowering the morale of the other volunteers, we have a responsibility to correct the situation. It could be that the reason we want to get rid of a high maintenance volunteer is because they are not fulfilling their responsibilities, or it could be that they are just impossible to work with. However, before we make that decision, we need to make sure that we have taken every performance-coaching step to correct the situation. Performance coaching, the one-on-one meetings that happen between the manager and the volunteer, may provide an opportunity to resolve our concerns. Some organizations, like the California State Railroad Museum, have formal performance reviews for all volunteers and regular performance management meetings.

If the volunteer manager has developed very specific job descriptions and expectations, the manager can talk to the volunteer when those expectations are not being met. All of these alternatives are both easier to implement and managerially smarter than making a decision to terminate a volunteer. They recognize that there are many reasons why a person may be behaving inappropriately, and that some of these reasons have answers other than separating that person from the program. We strongly urge that you to consider each of these alternatives before deciding to fire any volunteer. The goals of performance-coaching are to get the project back on target. If the volunteer does not do the job, it is time to find a replacement.

Before you have the firing meeting, be sure to check out the legal ramifications of such a decision.

Legal Issues

It is not outside the realm of possibility that a terminated volunteer could sue you and your organization. Even if no one sues, carefully following a clearly defined process will assure everyone in the organization that people were treated fairly. Emotional and unexpected dismissals could cause upheaval in your organization. Legal issues are never simple, and every nonprofit agency is unique. Always check with your organization's lawyer before making any legal decisions. Many liability concerns can be avoided by carefully screening volunteers before they get involved.

In addition to job descriptions you would be well advised to develop a volunteer manual that clearly outlines the duties and responsibilities of your volunteers. This is especially important if you do face the need to terminate someone. The more documentation you have, with conditions and policies for termination, the safer you will be. To be doubly safe, be sure to distribute the policies to new volunteers. Some organizations even have the volunteers sign a letter of agreement outlining the expectations on the part of the organization and the volunteer. Board members are handled a different way since their service (and termination of such) is covered by the bylaws of the organization. Terminating a board member is a matter for the board as a whole to act according to the bylaws.

Legal Justification

There are two legal justifications for firing a volunteer. The first is simply that the goal of an organization is to deliver quality service to the members and/or clients. The organization must have policies and practices, which call for the volunteer to be accountable for the highest levels of performance. If the volunteer is a barrier to that delivery, then the agency has a legal obligation to take some sort of action. But these expectations of quality service and the service required by both paid and volunteer staff need to be spelled out in a policy manual.

A second legal justification has to do with giving significance (value) to volunteer service. By allowing just any quality of service for the volunteer, the organization conveys the impression that the volunteer work done is irrelevant and insignificant. An organization that does not care enough to enforce quality of volunteer work communicates to other volunteers that their volunteer work is insignificant.

Developing a System for Making Firing Decisions

If you do, however, encounter a situation in which none of the performance coaching alternatives work, it is helpful to have in place a system for dealing with problems. Some agencies have been sued by terminated volunteers, and many agencies have encountered political and community relations problems. The system that follows is designed to help the volunteer manager both in making and in justifying the decision to terminate a volunteer. Essentially, it has three parts:

Part I: Communication of Clear Expectations

The first stage of the system is development and clear communication of position expectations. The organization needs a set of official policies regarding volunteer personnel issues. It is especially important to have policies on probation, suspension, and termination. The organization sets in place a planned orientation program with very specific examples of the requirements and unacceptable behavior. The specific position charter must outline the objective of the position (i.e. - attend 8 of the 10 board meetings).

Part II: Investigation

The assumption behind part II is that the volunteer manager has tried all of the suggestions in performance coaching (listening, coaching, training, etc.) and nothing seems to be working. Those volunteers whose performance is unsatisfactory are told of their deficiency, counseled on improving their work, and then re-evaluated. Failure to conform to the quality standard over time becomes grounds for termination. The investigation is the collection of the data to make sure that the volunteer is truly not fulfilling the job requirements. Part of the investigation is to make sure that the volunteer manager has done a fair job of enforcing the system to all volunteers. This is not only to be fair to the person being fired, but also to make sure that you are not putting yourself in the position for litigation. In cases where the wrongful performance is not incremental but is substantial in nature such as inappropriate relations with a client or breach of confidentiality then what is needed is some "proof" that the volunteer did in fact commit the wrong-doing. This might be testimony of other volunteers, staff, or the client.

During the coaching and investigation period, it is very important to document, document, document. The manager should keep a personnel file on the volunteer and keep write up a brief summary page on each meeting. A summary page would be:

Performance Coaching Meeting:

Manager: Jon Jackson


Volunteer: Lucky Smith


Discussion: I talked with Lucky about not showing up for his volunteer shift at the information desk on June 5, July 6, and August 14th. He said he had a family emergency in June, was on vacation in July, and just forgot in August. He was sorry and would try to do better. We talked about him getting a replacement when he could not make it. He said he would.

Sounds great, except in September Lucky didn't show up again. You called him the next day to set up a meeting with Lucky to terminate his position.

The documentation also demonstrates that the volunteer manager do a fair job of enforcing the system. It requires equal and fair application of the rules (no playing favorites), appropriate penalties (graduated to the severity of the offense) and, if possible, a review process, so that the decision does not look like a personal one.

You will note that the above processes mirror the common personnel practices for paid staff. They are, in fact the same, and they should be, since evaluating either paid or unpaid staff should follow the same rules.

The advantages of this system are two-fold. First, they assist the volunteer manager in making the right decision, and in feeling comfortable about making that decision. The system is fair to both the volunteer and the agency if properly followed and tends to produce 'correct' answers. It also allows the volunteer manager to divert to a less drastic solution as appropriate.

Second, the system helps develop a case for firing that can be utilized to explain the decision to others, whether internally or externally. In practice, in fact, an odd side effect of this systematic approach is that many problem volunteers decide to voluntarily resign rather than face the inevitable and seemingly inexorable conclusion of the process.

Part III: The Firing Meeting

Regardless of the system utilized to reach the decision to terminate, someone has to actually convey that decision to the volunteer. This will never be a pleasant experience, but here are some tips that may help:

Conduct the meeting in a private setting. This will preserve the dignity of the volunteer and perhaps of yourself.

Be specific. Some managers are so vague that the volunteer walks out of the meeting wondering if he or she was fired or offered a job. The volunteer manager may tell Steve that his work with kids was fantastic. The inner city young people loved him and they would love to put him on full-time staff. Then the manager says that the staff were concerned because Steve tended to be late, and he often didn't show up.

Words like "tended" and "often" are vague, especially when couched between phrases such as "fantastic" and "love to have him on full-time staff." What the manager needed to say was, "Steve, in spite of your rapport with our inner-city young people, we just cannot depend on you. On September 10th, 17th and 24th, you did not show up and we were counting on you. I talked to you about this and you said you agreed that if you could not make the commitment to be there each week, we would need to replace you. We have found someone to replace you and are taking you off of our volunteer team."

Don't negotiate—just state your decision. The purpose of the meeting is simply, and only, to communicate to the volunteer that they have not met the specifics of the performance expectations and they are no longer going to be needed. You are going to find a replacement. If they have a uniform or keys, you need to collect them immediately. If the volunteer wants to vent, let them vent, but just listen—don't become defensive and try to defend. Since many non-profit organizations have a social mission, and we truly care about people, we are tempted to counsel this person. That is not the purpose of this meeting. Any attempt to counsel can send a mixed message.

Follow-up. Send a follow-up letter (sample below) to the volunteer stating your appreciation and anything positive that you can say; however, state the decision to terminate the volunteer letter of agreement. Inform the staff and other volunteers on the team of the decision. Be sure to keep the details confidential. The volunteer will usually tell the details.

Sample Letter:


Dear Lucky Smith,


Thank you for your interest and involvement in CCC and the time you spent volunteering as a receptionist at our information booth. This is such an important position as we make many public contacts. Your outgoing personality and winsome way with people was a real asset to us.


We are so disappointed that your schedule did not allow you to keep the requirements of the position charter, as outlined in our volunteer personnel manual. As mentioned in our meeting on September 26, 2002, we need to seek a replacement for your position and terminate our letter of agreement.


I trust that when your schedule changes, and you feel that you can meet the requirements of this position, we can once again have you be a part of our volunteer team.


Sincerely,


Jon Jackson
Volunteer Manager

Firing a volunteer is difficult. Let me emphasize again that firing is only the last result, and I only consider it when the continued involvement of the volunteer is having a negative impact with the members of the organization, our clients, or our public.

Have I ever had to fire a volunteer? Yes, but not a highly involved volunteer. I did all I could to salvage the dignity and resources of the highly involved volunteer, who was a high maintenance volunteer. Sometimes I went home and complained a lot to my wife about this person, but we made it work. However, I have fired high maintenance volunteers who did nothing and did not fulfill their commitments, and I really didn't lose any sleep over it. Don't waste your time with Lucky Smiths who don't show up. Move on.

Tom McKee is a leading volunteer management speaker, trainer and consultant. You can reach Tom at (916) 987-0359 or e-mail Tom@VolunteerPower.com. Other articles and free resources are available at http://www.volunteerpower.com/

©2010 Volunteerpower.com

Social Media IS Effective for Nonprofits and Small Business

I always enjoy the insights of Debra Askanese of Community Organizer 2.0.  And this article is a great one to give the naysayers in your membership or on your board of directors who may not be using social media tools and may not understand why you should be using Twitter or Facebook to market your nonprofit.  One thing Debra points out, which I have heard elsewhere, is that fundraising using social media is not that successful.  However, that being said, I think social media helps you identify potential donors or members and also helps you keep in touch with those potential donors or members.  It's also a great way to educate people about what it is you do. Bunnie

Social Media IS Effective for Nonprofits and Small Business
by Debra Askanese, Community Organizer 2.0

Two new data sets about the value of social media came across my laptop recently: Idealware’s “ Using Social Media to Meet Nonprofit Goals” survey of nonprofit staffers using social media, and the State of Small Business report from Network Solutions and the Center for Excellence in Service.


The results are so similar to the nonprofit survey results that the conclusion is hard to ignore: social media actually is an effective tool for customer retention and attraction.

Social media is actually perceived by those doing it to work! In particular, the top benefits are seen as reaching new audiences and enhancing existing customer/audience relationships.

Here are some highlights from the Idealware survey of 459 nonprofit staffers using social media:

1. Nonprofits believe that social media is helping them to enhance relations with their existing audience and reach new audiences through the top platforms.

Most organizations feel that most social media channels are effective for enhancing existing relationships and reaching new supporters. The least effective platforms are MySpace and Linkedin. Blogs, video-sharing, Twitter, and Facebook are felt to be the most effective tools. The surprise to me is that video-sharing is perceived as highly effective for enhancing relationships.

2. Most nonprofits are using a combination of Facebook, Twitter, video-sharing and blogs to reach out and enrich relationships online. The data shows that there isn’t a relationship between the size of the organization and the number of channels it is using. The responses show that, in general, nonprofits are using and regularly updating one to three social media channels.

I’m not surprised that Facebook is the most popular channel used, but I am surprised that 56% of nonprofits are using Twitter and 80% of them update Twitter regularly. Two other points to consider: the blog is not dead (45% of nonprofits have one) and video sharing sites once again prove to be popular (49% have them).

Conclusions: Nonprofits are finding value in Twitter, Facebook is widely adopted and “known to work.” These platforms must be seen as engagement tools to be taken seriously at this point. The blog, though time consuming, is the long form to express your message and enhance relationships with existing supporters. Video-sharing is the crouching tiger. Regularly maintaining one to three platforms is an industry standard.

3. Nonprofits are not yet satisfied with the results of social network fundraising. I don’t think this is any big surprise, as both social network donors and donation strategies are still in their infancy. The survey reveals that, of all the social networks, 41% of respondants believe that Facebook is most effective for raising money. (And that is the highest percentage of approval of any network channel.) I suspect respondents mention Facebook because it has an affiliated fundraising platform, Causes, that is simple to use and easily accessible. Let’s see what next year’s survey results bring: I’m guessing that they will bring higher satisfaction and a stronger sense of nonprofit social network fundraising effectiveness.

This is also the only platform where Linkedin is rated on par with Twitter, video-sharing, and blogging, at 30% effeciveness. The Idealware study remarks that this is surprising, but I don’t find it surprising at all: Linkedin is an incredibly effective channel for targeted donor research and deeper interaction with potential donors and foundations within Linkedin Groups.

Here’s one more set of similar survey results: the performance of social media tactics for US small businesses in December 2009.

According to “The State of Small Business” report, small businesses are also using social media to successfully attract new customers, increase awareness, and stay engaged with existing customers.

Two data sets, two different user groups, same results: social media is effective for reaching new customers and strengthening existing relationships. Irrefutable evidence of the power of engagement.

Read more of Debra's thoughts on all things marketing at http://www.communityorganizer20.com/