Earlier this month, the Canadian Radio-television and Telecommunications Commission (CRTC) published a list of Frequently Asked Questions (FAQ) in respect of Canada’s Anti-Spam Legislation (CASL). Many of CASL’s “anti-spam” provisions came into force on July 1, 2014. Registered charities will want to take note in particular of the CRTC’s comments interpreting the scope of the exemption provided for registered charities sending commercial electronic messages (CEM) for the primary purpose of raising funds for the charity.
Below is a summary of the information provided in the CRTC’s FAQ with respect to CASL’s application to registered charities:
1. CASL applies to the activities of registered charities. However, the Regulations to the Act contain an exemption from the consent and content requirements under CASL where a registered charity sends a CEM with the primary purpose of raising funds for the charity.
2. The “primary purpose” of a CEM means “the main reason or purpose of the CEM”. The message may contain secondary or additional purposes; however the “principal purpose” must be to raise funds for the charity.
3. Some examples of CEMs in which the “primary purpose” is raising funds for a registered charity would include the following:
(a) a CEM promoting an event and/or the sale of tickets for an event (i.e. dinner, golf tournament, etc.) where the proceeds of the event flow to the charity;
(b) a CEM which provides information about an upcoming campaign, but which does not encourage the recipient to participate in a commercial activity; and
(c) a CEM which includes a solicitation for donations or mentions corporate sponsors, but does not encourage the recipient to participate in a commercial activity with that sponsor.
4. The CRTC states that the “primary purpose of raising funds” exemption does not include the sending of a CEM which, amongst other things, advertises the corporate sponsors of a charity’s event and encourages the recipient to engage in a commercial activity with the sponsor.
5. Registered charities may rely on implied consent to send CEMs. Such implied consent is subject to the prescribed time limitations under the Act.
While we welcome any guidance from the CRTC with respect to its interpretation of CASL’s application to the non-profit sector, the emphasized phrases above highlight several areas of uncertainty contained in CRTC’s FAQ and in particular its interpretation of the “primary purpose of raising funds” exemption.
First, the CRTC provides little guidance on what constitutes a “commercial activity” under CASL in the context of a registered charity or non-profit organization. This is relevant to determining whether a given message constitutes a CEM. On the basis of the definition of CEM in the legislation, it appears that a gift or donation is not considered a commercial activity, with the result that an electronic message soliciting a donation would not be considered a CEM on that basis alone. It would be helpful for the CRTC to provide confirmation of this interpretation. This issue, and the scope of the meaning of CEM, is critical in enabling charities and non-profit organizations to assess their compliance requirements.
Second, the CRTC’s comments suggest that charities may send messages which “mention” corporate sponsors, but which do not “advertise” corporate sponsors. The CRTC’s comments do not draw a clear distinction between “mentioning” and “advertising” in this context.
Lastly, and further to the second point, the CRTC does not explain what “encourages” means for the purpose of discerning whether a CEM “encourages the recipient to engage in a commercial activity with the sponsor”. There are various instances where charities enter into arrangements with for-profit organizations in an attempt to raise funds. Cause-related marketing is one example. Under a cause-related marketing arrangement, a charity may send out messages that advise recipients that a portion of all sale proceeds of a certain for-profit organization will go to the charity. Does this amount to “encouraging” commercial activity with a sponsor, such that the exemption for raising funds does not apply, or is the charity’s message still for the “primary purpose of raising funds”? It is unclear how the CRTC would analyse such a message or how a charity can know what side of the line it is on. We hope that the CRTC will issue further guidance on this issue.
We will continue to keep our readers apprised of any further guidance that the CRTC may release with respect to CASL’s application to registered charities and non-profit organizations.