The FTC recently updated its longstanding Negative Option Rule, now called the Rule Concerning Recurring Subscriptions and Other Negative Option Programs, to strengthen protections for consumers. This update is designed to curb misleading enrollment and billing practices in subscription models. For nonprofits with monthly giving programs, these new regulations are a timely reminder to ensure donor experiences are transparent and cancellation processes are straightforward.

How the New Rule Impacts Nonprofits with Monthly Giving Programs:

Nonprofits often rely on recurring donations for sustainable funding, so it’s crucial to understand how the FTC’s updates apply to monthly giving programs. With the new “Click to Cancel” rule and other requirements, nonprofits should review their recurring donation setup to maintain compliance and trust with their donors.

Here are the core updates, with insights on how they affect nonprofit organizations: 

Transparent Disclosures: Making Sure Donors Are Fully Informed

The updated rule mandates that all essential terms of a recurring program are presented to users clearly and conspicuously before sign-up. For nonprofits, this means ensuring donors know:

• The monthly donation amount and frequency of charges.
• Renewal terms and any conditions attached to promotional rates or trials, if applicable.
• Clear information on how they can manage or cancel their recurring gift.

Make this information easy to access and understand on your donation page, so donors feel informed and valued.

Proof of Consent: Ensuring Donors Know What They’re Signing Up For

Under the new rule, organizations must document that donors explicitly consented to the terms of the recurring gift. This protects both the donor and the nonprofit by ensuring that the donor is fully aware of the arrangement.

To comply:

• Obtain clear, documented proof of consent, such as an opt-in checkbox, electronic signature, or similar method.
• Retain this proof for at least three years to demonstrate compliance in case of any disputes.

For nonprofits using online donation forms, updating your form to capture and store this proof of consent can provide peace of mind and strengthen your program’s transparency.

“Click to Cancel”: Offering a Simple, User-Friendly Cancellation Process

One of the most impactful changes is the FTC’s “Click to Cancel” provision. This new rule emphasizes that canceling a recurring donation should be as easy as setting it up.

What this means for nonprofits:

• If donors signed up online, they should also have the option to cancel online—without needing to contact a representative.
• The cancellation process must be simple and easy to locate. Avoid making donors navigate multiple steps or menus to end their recurring gift. Consider utilizing a supporter hub for donors to opt-out directly online.
• If your monthly donors signed up by phone, you must answer cancellation requests during business hours and provide a straightforward process over the phone.

Making this process easy for donors can enhance trust in your organization, showing that you prioritize their experience and respect their preferences.

Compliance with State Laws: Additional Protections May Apply

While the FTC rule provides federal standards, some states may have even stricter consumer protection laws. Nonprofits should take the time to research any relevant state-specific regulations to ensure full compliance.

Avoiding Civil Penalties

Nonprofits should view these updates as an opportunity to strengthen donor relationships by offering a transparent and user-friendly experience. The rule will be fully in effect within 180 days, with some provisions beginning in as soon as 60 days. Taking proactive steps to align your monthly giving program with these guidelines can help your organization avoid potential penalties while demonstrating a commitment to ethical and transparent practices.

Key Takeaways

The FTC’s new guidelines provide an opportunity for nonprofits to bolster donor trust by emphasizing clear communication and simple cancellation processes in monthly giving programs. By ensuring that terms are transparent, consent is documented, and cancellation is straightforward, nonprofits can stay compliant and build lasting relationships with their supporters.

If your organization hasn’t already, consider auditing your monthly giving program to ensure it aligns with these updated standards. This proactive step can safeguard both your nonprofit and its donors, setting the stage for a positive, trust-based donor experience.

If you would like to build a supporter hub where donors can cancel their gifts online, please reach out. We’re happy to work with you to build a great user experience for your donors and ensure your organization is meeting these new regulations.