Will CASL Hurt Charities? Let Us Count The Ways

Charities, including hospitals, universities, orchestras and other similar not-for-profit organizations will be hard hit by Canada’s new anti-spam legislation, known as CASL, when it comes into effect later in 2013. They will face a diminished ability to communicate with their supporters including donors, patients, volunteers, alumni and other beneficiaries thereby leading, inevitably, to reduced funding and support even as administrative burdens and costs go up.

The key problem is that CASL’s reach is very wide, and it therefore catches all sorts of electronic messages that organizations will want to send, even those that don’t seem particularly commercial in nature. The problem arises from the definition of “commercial electronic message” or CEM. To qualify as a CEM the message must, as one of its purposes (however minor), “encourage participation in a commercial activity”. This very broad categorization encompasses many, many activities. 

One might think that a message that includes a simple description of a charity’s activities and a request for a donation could not be a CEM because there is no notion of encouraging participation in a commercial activity. But think again. Many charities provide inducements to donate, such as newsletters, magazines, discounts on goods and services, picturesque calendars, invitations to lectures, advance notification of events, meetings with important people, naming rights for facilities, etc.  While some inducements will be of modest value, some, such as a lunch with a celebrity, will be quite valuable and lead to very substantial donations as a result. And remember, they all have some value, or else they would not be offered. Thus, a request for a charitable donation that may well seek to benefit the charity as its primary objective, can also exhibit elements of a commercial transaction between the donor and the charity. If this ancillary transaction is found to be sufficiently commercial to be construed as “commercial activity” under CASL, then the donation request could well become tainted as a CEM.     

Even if the donation request came with no accompanying inducement, a charity would still have to be careful not to run afoul of CASL. For example, if the donation hyperlink in the message takes the reader to a charity website that, in addition to enabling donations, also refers to the sale of goods and services or offers the names and hyperlinks of supporting merchants, that might well risk turning an otherwise innocuous message into a CEM under CASL.   

Although the foregoing discussion focuses on charities and donors, parallel issues arise in the relationships between hospitals and patients and between universities and their alumni, and between all of these types of non-profit organizations and their volunteers and other supporters and beneficiaries.

Charities can of course take some comfort in the 2-year window of implied consent to send CEMs after the purchase of goods or services or the making of a charitable donation or furnishing of volunteer work. Yet this may be much less comfort than it seems.  Donors to charities, patients of hospitals, alumni of universities will often be sent charity newsletters, medical alerts and alumni newsletters for many years before a response, such as the making of a further donation, the purchase of a new medical device or test kit or the attendance at an alumni dinner, actually takes place. A 2-year cut-off would therefore damage the ability of such organizations to continue to communicate with their supporters on an ongoing basis.

The more practical problem is that many organizations will have difficulty knowing which names in their messaging databases fit the definitions of “existing business relationships” or “existing non-business relationships” so as to be eligible for the 2-year window reprieve. Indeed, in some cases, the names may not meet either definition. They may also not have adequate information to establish the dates for the 2-year window. For example, it is almost inconceivable that a charity will have complete records of who has performed volunteer work and when, yet the performance of volunteer work is a trigger that starts the 2-year clock (as is attending a meeting organized by the charity).  Because organizations had no pressing need to record such CASL-relevant data, their databases of messaging names will need careful review – which will be costly – and it is inevitable that organizations will purge valuable names simply because they cannot be confidently slotted into an eligibility category.

The suggested solution to this problem is for charities to obtain explicit consent to continue sending such messages. That entails a campaign (or multiple campaigns) to contact message recipients and ask them for consent. Not only is this costly for these organizations (which will much prefer to devote their limited resources to achieving their primary mission rather than fussing with CASL) and annoying for the message recipients, but a sizeable number of recipients will never respond. Moreover, once CASL becomes law, the very act of asking for consent will be constrained under CASL because that too can be construed as sending a CEM in many circumstances (yes, really!).   Thus, inevitably, the messaging list will diminish. With less ongoing communication, the institution sending the messages will see reduced support from its natural base of supporters.

It doesn’t have to be this way. Other countries have developed anti-spam laws with either more targeted prohibitions, meaning that message senders of all sorts are not unduly burdened (the USA), and/or have instituted carve-outs for charities and certain other not-for-profit organizations (Australia). But Canada has so far rejected these approaches and seems determined to move forward with the stiffest anti-spam law in the world regardless of the negative consequences for Canadian charities, including hospitals, universities, orchestras and other similar not-for-profit organizations.

For more information about CASL, see, CASL: the unofficial FAQ, regulatory impact statement, and compliance guideline. _______________________________________

 Lorne Salzman is a lawyer in private practice in Toronto, with a focus on communications law and competition law. He has spoken and written about CASL and its implications. See lornesalzman.com  

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