CASL’s rules apply to any person that sends commercial electronic messages to members of the public including charities and other not for profit organizations. The indiscriminate targeting of everyone from real spam culprits to genuine commercial communications is one of the reasons that Terrance Corcoran from the Financial Post recently called Canada’s new anti-spam law “a Monty-Python-esque farce”.
CASL, in its present form, should never have targeted charities or not for profit organizations. According to some, CASL punishes charities for no good reason.
To lessen the burden, in the GIC Regulations, the Government created an exemption for CEMs sent by or on behalf of a registered charity, as defined under the Income Tax Act, where the primary purpose of the CEMs is to raise funds for the charity.
Charities were concerned about how the exception would be interpreted. To obtain clarification, Imagine Canada met with officials from Industry Canada and the CRTC. This resulted in an updated CASL CRTC FAQ being released on July 4, 2014 which addresses how CASL and the new exemption will apply to charities.
The FAQ says the following:
Does section 6 of CASL apply to messages sent by registered charities?
Yes, section 6 of CASL applies to registered charities when sending commercial electronic messages (CEMs). However, there is an exemption under section 3(g) of the Governor-in-Council Regulations for CEMs sent by or on behalf of a registered charity, as defined under the Income Tax Act, where the primary purpose of the CEMs is to raise funds for the charity.
Given that legitimate messages sent by registered charities raising funds are exempt under the Act, the CRTC will focus on messages sent by those attempting to circumvent the rules under the guise of a registered charity.
What are some examples where (a) raising funds is the primary purpose of a CEM? (b) raising funds is not the primary purpose of a CEM?
1. Where the primary purpose is raising funds:
Example 1: A CEM, sent by or on behalf of a charity, which promotes an event and/or the sale of tickets for an event – such as a dinner, golf tournament, theatrical production or concert or other fundraising event – where the proceeds from ticket sales flow to the registered charity.
Example 2: A registered charity sends, by e-mail, a newsletter which provides information about the charity’s activities or an upcoming campaign, and does not contain any material that seeks to encourage the recipient to participate in a commercial activity, then the message would not be a CEM for the purpose of CASL.
Example 3: A registered charity sends, by e-mail, a newsletter which provides information about the charity’s activities or an upcoming campaign, but which also contains a section which solicits donations and may also mention corporate sponsors who supported the charity (but does not encourage the recipient to participate in a commercial activity with that sponsor). While this message may be considered a CEM under CASL, the primary purpose of the message may be viewed as raising funds; therefore, the exemption in the GiC Regulations would apply.
2. Where the primary purpose is not raising funds:
Example: A registered charity sends, by e-mail, a newsletter which provides information about the charity’s activities or about a particular social issue. If this e-mail also advertizes the corporate sponsors of a charity’s event and encourages the recipient to participate in a commercial activity with that sponsor, then section 6 of the CASL may apply without any exemption. The primary purpose of the message may not be to raise funds for the charity.
Can registered charities rely on implied consent to send CEMs?
Yes, consent under CASL is implied if you have an existing business relationship or an existing non-business relationship with the recipient.
An existing non-business relationship, as defined under CASL, is created when a person makes a donation or gift to the registered charity, or performs volunteer work or attends a meeting organized by the charity. A registered charity would have implied consent to send CEMs to this person for two years following the event that starts the relationship (e.g. gift or donation made).
Also, under the section 66 transitional provision, consent to send CEMs is implied for a period of 36 months beginning July 1, 2014, where there is an existing business or non-business relationship that includes the communication of CEMs. During the transitional period, the definition of existing non-business relationship is not subject to the limitation period of 2 years mentioned above. Note however, that this three-year period of implied consent will end if the recipient indicates that they no longer consent to receiving CEMs.
CASL is a real burden on charities and it is useful that the CRTC provided guidance on how it intends charities to be treated under CASL. It is also good that the CRTC intends to construe the exemption broadly.
Unfortunately, the FAQ does not have the force law and is not binding, for example, in court proceedings. Further, it is clear from the FAQ that many legitimate charitable activities will still be covered by CASL including ad supported newsletters that encourage recipients to engage in a commercial activity with a sponsor of the charity. This could diminish corporate sponsorships and affiliate programs with charities.
Moreover, the express and implied takeaways from the FAQ are that fundraising by other not for profit organizations, and there are a lot of them, would be considered CEMs by the CRTC. So would ad-supported newsletters sent by not for profit organizations. This could also hurt sponsorships and affiliate relationships that not for profit organizations rely on.
The transitional provisions described by the CRTC also pose a considerable hardship to charities. They can rely on the existing non-business relationship (ENBR) to send CEMs to persons who in the past have made donations or gifts. However, they have to cease sending ad supported newsletters and other CEMs not covered by the new exemption to those person who had only given implied consents recognized under PIPEDA. Because these consents are not grandfathered under CASL, if the charity’s databases cannot differentiate which of its intended recipients qualify for the ENBR and which do not, it may have to purge its databases to remove many individuals who may still want to hear from the charity. Ironically, the other choice available to charities is to reduce their ad supported content and to load up all of their electronic messages with pleas for charitable donations to try and fall within the new exemption.
The transitional provisions are even harsher for other non-charitable not for profit organizations. Since they do not qualify for the ENBR exemption in the transitional provision, they may have to drop many more people from their ad supported newsletters and loading up their messages with pleas for donations appears to be illegal according to the CRTC FAQ.
For more information about CASL, see, CASL: the unofficial FAQ, regulatory impact statement, and compliance guideline.