FCC Proposes to Liberalize Rules Against Noncommercial Stations Fundraising For Third-Party Non-Profit Groups

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The FCC has adopted a Notice of Proposed Rulemaking suggesting, with significant limitations, a liberalization of its rules that prohibit noncommercial broadcasters from raising funds for an entity other than the station itself if the fundraising suspends or alters normal programming of the station. As we've written before, the FCC prohibits noncommercial broadcasters from raising funds for charities and other non-profit organizations through telethons or other special programming.  The prohibition has been in place for some time, and was reaffirmed by the FCC's orders in the early 1980s which established the basic rules that still today govern most noncommercial fundraising and sales activities. 

The prohibition on third-party fundraising reflected the Commission's concern that educational stations are "licensed to provide a noncommercial broadcast service, not to serve as a fund-raising operation for other entities by broadcasting material that is akin to regular advertising."  Doing too much fundraising for these third parties, in the Commission's view when the rule was adopted, would distract stations from their principal mission of service to the public.   While the Communications Act was changed in the early 1980s to allow noncommercial broadcasters to accept paid promotional spots for nonprofit groups, the FCC did not change the rule on third-party fundraising that disrupts normal programming.  In the NPRM just adopted, the Commission recites that they still believe the justification for the rule to be true, even though noncommercial stations can now run what is essentially paid advertising for nonprofit organizations, as long as those spots are incorporated into the normal programming of the stations. What the Commission now proposes is a limited degree of liberalization of the third-party fundraising prohibition, subject to many conditions set forth below.

The NPRM adopts a very protective, almost paternalistic, view of noncommercial stations.  It suggests that any liberalization of the prohibition on third-party fundraising be approached very cautiously, with significant limitations.  While the waivers of the rules that have been granted many times in the last few years to allow for relief efforts for major disasters of "historical proportion" have shown that such fundraising can be conducted without significant harm, the FCC asks many questions about limitations that it thinks should remain in place even if the absolute prohibition is lifted, seemingly not trusting stations to police themselves.  The FCC asks questions including the following:

  • Should any relaxation apply just to stations that are not funded by CPB?  The National Religious Broadcasters Association requested the change in the rules.  The Commission states that some CPB-funded stations were concerned about a liberalization of the prohibition, as they do not want to be in a position of choosing between competing organizations who may be worthy recipients of funds raised by a station
  • Should only particular types of nonprofits be allowed to be the beneficiaries of the fundraising - suggesting that only 501(c)(3) tax-exempt charities be able to receive such funds
  • Does the FCC need to insure that the fundraising is consistent with the mission of the noncommercial broadcaster?
  • Should fundraising be limited only to local nonprofit organizations?
  • How much flexibility should be allowed?
    • The Commission suggests a limit on third-party fundraising of 1% of a station's airtime 
  • Should the station be required to collect all of the donations that are raised, or can they promote contributions directly to the third party?
  • Should stations be required to produce all third-party fundraising messages themselves, as opposed to being able to air programming containing fundraising messages that is provided by the charity itself?
  • Will audiences find such appeals confusing?
    • Should a specific type of disclosure be required so audiences are informed that funds will be given to third-parties?
    • How often should such a disclosure be aired?  Just at the beginning and end of the appeal, or more often?
  • Should stations electing to do third-party fundraising have to notify the FCC of the fact that they are doing such fundraising?
    • Should they have to file reports with the FCC about the fundraising, e.g. who the funds were raised for and how much was collected, and what interruptions to normal programming were incurred
  • Should there be a public file obligation with respect to such fundraising?
  • Should there be a license renewal certification with respect to such fundraising?

Obviously, the FCC seem to, at best, be reluctantly moving into the approval of third-party fundraising by noncommercial stations.  Comments on these proposal will be due 30 days after these proposals are published in the Federal Register, and replies due 30 days later.  There are certain to be many issues raised about the FCC's proposals