Bristol Organizations

An Organization Made Up Of Organizations

Legal Issues Arising from Nonprofit Organizations’ Use of Social Media

By Megan C. Spratt

 

There is no denying that social media’s importance to organizations, including nonprofit organizations and associations, is growing exponentially.  Blogs, Listservs, YouTube.com, and social networks like Twitter and Facebook offer nonprofits a range of benefits, enabling them to market themselves in new ways, disseminate their messages and missions, educate users, connect with other nonprofits, recruit volunteers, solicit donations, and increase audience interaction.  These benefits, however, come with certain risks. 

In this two-part article, we touch upon some of the common legal issues associated with nonprofit organizations’ and associations’ use of social media and provide guidance on how to avoid them.  Specifically, in this first part, we analyze the intellectual property, insurance, and solicitation issues surrounding a nonprofit entity’s use of social media and the steps that can be taken to mitigate these risks.   

Intellectual Property
Because social media sites enable users to post comments and upload their own content, nonprofit organizations and associations should take steps to avoid allegations of copyright and trademark infringement.  This can be accomplished by monitoring content that is posted to the organization’s social media sites, whether by employees or users of the site.  Any third party content, including text, photos, trademarks, graphics, or other media content, that is posted on a social media site without the owner’s permission may constitute copyright and/or trademark infringement and should be removed from the site.  While some uses of copyrights or trademarks may constitute “fair use,” it is best to obtain permission.   

Nonprofit organizations and associations should also monitor the online use by others of their own trademarks, service marks, names, logos, and designs, as improper or unauthorized use will detract from the value, impact, and distinctiveness of the marks.

In addition, nonprofits should take precautions when using a person’s likeness on their social media sites.  Specifically, when posting photos or videos of someone, it is advisable to obtain a publicity release from that person, especially if the likeness is being used for a commercial purpose.

Insurance
Whenever a nonprofit organization utilizes social media as part of its business operations, it is recommended that the organization’s insurance policies (such as its directors and officers, media, and errors and omissions policies) be examined to ensure that coverage is up-to-date and extends to claims resulting from the use of social media.  If not, additional coverage that encompasses social media should be obtained from the nonprofit organization’s insurance agent or broker.   Of course, because it is impossible to obtain coverage that protects against all risk, it is also important to have in place a comprehensive social media policy (discussed further below) to minimize exposure that is not covered by its insurance policies. 

Endorsements and Testimonials
Nonprofits should be aware that the Federal Trade Commission’s recently updated Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Guides”) are applicable to “consumer” testimonials, such as reviews and recommendations that endorse a product or service on any social media site.  The Guides require disclosure of any connection between the endorser (which for a nonprofit organization could be an employee or member) and the advertiser, in this case the nonprofit. 

The Guides require advertisers to advise the consumer giving the testimonial that the connection has to be disclosed and to have procedures in place aimed at monitoring the consumer’s postings for compliance with the disclosure requirement.  Failure to comply with the Guides may result in liability for not only the advertiser, but also for the individual giving the testimonial.  So nonprofit organizations and associations should ensure proper disclosure in connection with any endorsement or testimonial.

Part Two….
  
Online Solicitations
Using websites to solicit charitable contributions is becoming increasingly popular.  But Section 501(c)(3) organizations need to be aware that state charitable solicitation laws may apply to both traditional and web-based fundraising, such as accepting donations through a website.  Moreover, states have different laws governing the solicitation of charitable contributions.  Generally, these laws mandate that charitable organizations register with a state agency prior to soliciting contributions from residents of the state.  This, of course, poses a problem, since soliciting contributions via the internet has the potential to reach donors in all fifty states.  Nonprofits may attempt to limit the geographic scope of donations they accept by, for example, posting disclaimers on their donation page stipulating that they only accept contributions from the states in which they are registered or removing states in which they are not registered from the pull down menu on their donation page.  On the other hand, compliance with all applicable laws is important and registration and reporting in all applicable states will be required for national fundraising campaigns. 


Social Media Terms of Use
Nonprofit organizations and associations should have a policy in place governing the use of their social media by third parties, such as non-employees, members, donors, and the general public, as well as a system in place to monitor such use.  Specifically, nonprofit organizations and associations should be diligent in removing third party postings which could constitute defamation, misrepresentation, tortious interference with business relations, or other torts.  Third party users should also be expressly prohibited from disclosing proprietary, confidential, or legally privileged information, and from posting comments that violate the antitrust laws.  To address these and other similar issues with respect to monitoring, we have developed a set of sample guidelines for third party users of nonprofit organization and association social networking tools.  More information on defamation and antitrust issues follows.   

Defamation
Defamation is a “false written or oral statement that damages another’s reputation.”  (The term libel is used to refer to a defamatory written statement, and the term slander is used to refer to a defamatory oral statement.)  While the law on defamation is virtually the same in both traditional and online media, the liability risk is potentially higher in the electronic and social media context because users often post information instantaneously without thinking through the consequences of their postings; the internet offers a myriad of opportunities to comment on a person or business; and the postings can be read and accessed by people all over the world.


The consequences can be severe: there have been numerous lawsuits alleging defamation based on online content.  To avoid being the target of such a lawsuit, users of social media should be reminded that libel and slander can cause irreparable damage to the reputation of a person or business, and that postings about a business or person made as statements of fact, if proven to be false, could form the basis of a defamation suit.  Users should also be aware that posts ostensibly made on an anonymous basis still may not protect the identity of the poster because users can be traced using IP addresses.           

Antitrust
In addition, nonprofits and particularly membership associations should be on the lookout for comments that may run afoul of the antitrust laws, such as postings on salaries, pricing, allocation of territorial divisions, boycotts (i.e., concerted refusals to deal or do business with others) and bid rigging.  Such discussions pose a real danger, since associations by definition bring competitors together.  The comments need not rise to an express agreement to restrict competition; the antitrust laws can be violated simply through informal communications that involve an implied understanding among the parties to hinder competition.  Therefore, if, in the course of monitoring social media, discussions that may potentially violate the antitrust laws are detected, action should be taken immediately to halt such discussions and remind users of the organization’s policy on the use of its social media by third parties.

Social Media in the Workplace

Social media has both advantages and disadvantages in the nonprofit organization workplace.  A principal advantage of employee use of social media is that it can be an effective marketing and public relations tool for the nonprofit organization.  Moreover, social media can effectively be used as a recruiting tool; many employers find social media helpful in gleaning valuable information on candidates, such as integrity and personality.  Conversely, a potential drawback is that the use of social media by employees may facilitate the disclosure of confidential or proprietary information concerning the nonprofit, such as business plans or financial and membership data. 

Generally, it is acceptable to investigate potential employees through their use of social media, so long as the nonprofit has legitimate access to the site and job applicants are warned that their social media pages may be searched.  But nonprofit organizations should ensure that the review of potential employees’ social media use does not lead to claims by applicants that they were discriminated against based on legally protected characteristics, such as race/color, disability, national origin, religion, age, pregnancy, and, in some states, sexual orientation.  That is, the nonprofit employer should be able to prove that such protected characteristics were not a factor in the hiring/employment decision.  

In addition, a comprehensive social media policy that provides specific guidance to employees on what conduct is and is not permissible should be developed, implemented, and monitored.  The policy should be tailored to the nonprofit organization’s specific needs (as opposed to adopting a generic template) and may include provisions that:

  • restrict the use of social media unrelated to work during business hours or while using the organization’s resources
  • prohibit the disclosure of confidential and proprietary information about the nonprofit organization on social media sites
  • outline protocols for social media use when evaluating job applicants, and
  • prohibit harassment and discrimination of coworkers, employers, and members on social media sites. 

It is recommended that the policy state that the employer may monitor all uses of workplace electronic equipment, including use of social media.  The policy should be distributed to all employees and all employees should be required to acknowledge and agree to comply with the policy.  Reminders about the policy should be provided to employees on a regular basis.   Managers should be trained on the content of the policy, and nonprofit organizations should strive to enforce the policy consistently.  Finally, it may be appropriate for the board of the nonprofit organization or association to periodically review and update the policy in light of the rapidly developing nature of social media (for example, once per year).


In summary, social media can be a great communications tool for nonprofit organizations and associations.  There are some potential legal risks, but they can be managed and should not ultimately dissuade nonprofits from using social media to help fulfill their missions.


To return to the Bristol Organizations Non Profit Newsletter............ Click Here