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Add “No” to Your Negotiation Toolkit

Posted: June 7th, 2021

Imagine you want to sell life insurance to a client. As part of your pitch, you might say, “Don’t you want to make sure your loved ones are left with some financial peace of mind?” The client will probably answer, “Yes, of course.” With this response, the client is probably thinking that they know they need to put life insurance on their radar, but still aren’t ready to focus on it.

Now, what if you said this instead: “Is it a good idea to leave your loved ones with zero financial security if anything were to happen to you?” Suddenly, the client is horrified and responds with, “No, of course not!” Your question prompts them to think of horrible scenarios in which they are gone, and their loved ones have zero financial security. The client’s “no” response evoked more thought and emotion than the “yes” one. You are able to capture the client’s interest in the insurance you provide.

While “no” seems like it has a negative connotation and should be avoided during negotiation, the opposite is often true. The simple word “no” holds a great deal of power, and when utilized correctly, can be used to strategically maneuver your negotiation to a spot where you hold the control. Whether you’re talking about a critical business deal, trying to avoid litigation, or even negotiating with your business partner or a client, the goal is to change your mindset so that that “no” becomes a cue to break out different negotiation tools, rather than end the negotiation. Read on to find out three useful strategies to wield the answer “no” in your negotiation.

1. Ask “No” Questions

Sometimes people don’t like to say “yes” at first because it involves too much commitment. For example, if you get an email from a colleague asking you to attend a function, accepting the invitation involves a lot of steps. First you need to check your calendar. Then you want to find out how much it costs and see if you want to commit. Is the location far or annoying to get to? What if you get really busy at work that day? Will you be dreading the event for weeks to come? It’s far easier just to say no. Now, say you get an email asking, “Are you against attending the function next week?” Suddenly, you’re not being asked to commit to anything at all. It’s easy to respond now and say, “No, I’m not against it.”

Some more “no” questions include asking, “Do you disagree with this?” rather than “Do you agree with this?” and asking, “Is this a ridiculous idea?” rather than, “Is this a good idea?” By deliberately asking questions that seek a “no” reply, you’re setting the conversation up to keep going with further communication.

Another example is if two business partners are negotiating the breakup of their business. Imagine you’re one of the partners and you receive this email: “Are you willing to consider this option?” and the partner then proceeds to discuss that option. You’re going to need some time to think about it before replying. However, if you received a question like this: “Are you opposed to considering this option?” then it would be easy to reply quickly that day to say “No, I’m not opposed to potentially discussing it.” This way, you’ve given no commitment with your reply to consider the option – but the conversation can continue.

2. Hint at an Exaggerated Worst-Case Scenario

This strategy still involves asking a question and hoping for a “no,” but it involves making your counterpart think about the worst thing that can happen. For example, when you ask permission to do something hoping for a “yes” you might say: “Can I get that project to you tomorrow instead of today please?” This might get you a stern lecture on time management and deadlines.

However, what if you asked, “Would it be absolutely detrimental to the company if I handed in the project tomorrow?” Of course, with this question, you want them to say “no.” With the “no” question, you force your counterpart to think: Would it actually be detrimental for the company if I don’t get the project until tomorrow? I mean, not really…

So now, all because you asked a “no” question that forced the other person to think about the exaggerated consequences of what you’re asking – you get to hand in your project a day later.

3. “No” as a Correction

This strategy involves saying something that you think is false to confirm the truth with a “no” to gather information. For example, if a customer wants to negotiate their rate and you want to find out if they’ve reached out to other competitors, you could say, “You must have found someone else who says they can provide this service at a better rate.” Of course, you don’t want them to say “yes” here – you’re hoping for the “no” response as a correction to your false claim. If they respond with “no,” then you can be sure you’re still in the running, but there’s some underlying concern about the product or service you are providing. (And if they say yes, well, that’s helpful information too.)

After hearing the “no” correction following a false claim, you can gather information through active listening skills to assuage their fears and gain a new client (read more about how to do this here.) By using this strategy, the “no” can help you ascertain why the customer wanted to negotiate their rate in the first place.

Think of a negotiation like a puzzle you need to solve that when put together, reveals a message. Questions that lead to “yes” answers right away can perhaps help you solve the puzzle quickly and easily; however, the message on the completed puzzle will be too zoomed in. You won’t be able to read it. “No” answers, however, lead to a completed puzzle that captures the whole message.

So, the next time you’re in a negotiation, you don’t have to dread hearing the answer “no.” In fact, you can purposefully seek the answer out using the strategies above to shake things up in a negotiation – giving you the edge you need to succeed.

Read more about using “no” in negotiation in former FBI top hostage negotiator Chris Voss’s book, Never Split the Difference: Negotiating As If Your Life Depended on It (HarperCollins 2016).

Biden Administration Rescinds Trump Era Independent Contractor Rule

Posted: May 14th, 2021

Tags: labor & employment

Whether a worker is classified as an employee or independent contractor is not just legal jargon: the distinction has real implications for employees and employers alike. Under the federal Fair Labor Standards Act (FLSA), employees are entitled to a guaranteed minimum wage, overtime pay, unemployment insurance benefits, and workers compensation. Independent contractors, however, are not entitled to these same benefits, nor are they eligible to join unions or entitled to coverage under worker safety protection regulations. In addition, employers are not responsible for an independent contractor’s benefits or employment taxes. So how does an employer appropriately classify workers?

Trump Rule

In January 2021, with two weeks left before a new administration would be sworn in, the U.S. Department of Labor (DOL) issued a “final rule” changing the standard distinguishing employees or independent contractors under the FLSA. However, on May 6, 2021 the DOL withdrew the “Trump-era test,” also known as the “Independent Contractor Rule,” from going into effect as planned. Under that standard, there would have been only two core factors for determining employee status under the FLSA, both of which narrowed the facts and considerations included in the analysis (and, according to the Department, favored the employer). The DOL under President Biden has announced that the Trump rule was inconsistent with the FLSA and would have had a disruptive effect on workers and businesses alike.

Moving Forward

While the “Trump rule” is now withdrawn, the DOL has not issued a new rule in its place. This means that the previous guidance from the DOL using the economic realities test consisting of a six-factor balancing test, based on Supreme Court precedent, will still be used to determine a worker’s classification. The six factors include (1) the nature and degree of the potential employer’s control; (2) the permanency of the worker’s relationship with the potential employer; (3) the amount of the worker’s investment in facilities, equipment, or helpers; (4) the amount of skill, initiative, judgment, or foresight required for the worker’s services; (5) the worker’s opportunities for profit or loss; and (6) the extent of integration of the worker’s services into the potential employer’s business. Read additional information about these factors, as well as New York State guidance, here.

“ABC” Test

While the DOL has not issued a new rule at this time, the Biden administration has expressed support for regulatory and legislative action that would expand the type of workers that are considered employees as opposed to independent contractors. Similar to California’s independent contractor rule, the Biden administration has outlined a federal independent contractor standard called an “ABC” test that the DOL may choose to adopt.

The standard begins with the presumption that the worker is an employee and then goes on to test that presumption under three factors:

whether the worker is free from the employer’s control over performance of the work;
whether the work is outside of the hiring party’s line of business, and
whether the worker is engaged in an independent trade.

All three factors must be met to rebut the presumption and to classify the worker as an independent contractor.

While the three factors considered under Biden’s ABC test are already included in the current analysis, the ABC test is stricter in that it requires all three to be met as opposed to the longstanding “economic realities” approach and judged based on a totality of the circumstances. The ABC test was adopted by the House of Representatives in March via the “Protecting the Right to Organize Act” (PRO), but there is no binding authority of a final rule.

Regardless of whether the new standard becomes legal authority, it is clear the current administration is pushing for a more worker-friendly approach to the independent contractor definition. Whether you are a worker seeking to ensure you receive the benefits to which you are entitled, or an employer needing clarification on how to properly classify workers, please contact us for guidance.

Take Control of Your Negotiation Using Active Listening Techniques

By: Joe Campolo, Esq. email

Tags: negotiation

Have you ever had a conversation with someone, and while they’re talking you say, “I see,” “Hmm,” or even “Interesting”… but when they’re finished, you ignore everything they said and go in with your pre-planned response? That’s called passive listening. The fact is, most people aren’t listening to understand – just to respond. You may think you’re showing that you’re engaged, but you won’t fool anyone for long. That’s where active listening comes in.

In negotiations, active listening can be used as a powerful tool to gather information. This requires an active mind, a degree of empathy, and listening with a goal in mind. Active listening is not simply nodding your head while your counterpart talks or just making great eye contact. Rather, it involves asking questions and providing feedback. If you can master active listening, you’ll be able to steer a negotiation to your advantage…if you would just actively listen!

Let’s break it down into three easy steps, then we’ll put it into practice:

Paraphrasing aka Mirroring

No, this isn’t the same type of mirroring where if someone scratches their head, you lift your hand up to do the same. This type of mirroring involves paraphrasing and repeating some of the words your adversary just said. Say the words as a question to keep the person talking. This makes the person feel like you’re truly listening to them and creates a connection.

Inquiry aka Asking Questions

Asking questions that start with “what” and “why” is a great way to make the person you’re negotiating with feel in control despite the fact that you’re the one who asked a calibrated question. Calibrated questions starting with words like “how” will make your counterpart stop and think about the question you just asked. This will help you gain insight into what they’re thinking and how you can entice them with an offer they can’t refuse.

Acknowledgment aka Tactical Empathy aka Labeling

Empathy involves the ability to understand and point out (but not necessarily agree with) the feelings that the person you’re negotiating with is feeling. When you acknowledge that person’s point of view, you can help win their trust. Additionally, by using emotion labels like “You seem angry” and “It sounds like you’re upset,” you can verbally observe and point out feelings that can help you gather even more information when your counterpart confirms or denies your emotion label.

Let’s talk about a real-life example. Suppose you’re a roofer and you have a client with a commercial property in the suburbs that refers you to repair/replace a business associate’s roof in the city. After some confusion finding the access door, you inspect the city roof and let the prospective client know your recommendation to replace the entire roof, as well as the proposed price.

Later, the prospective client calls you with some concerns, saying, “The fact that you didn’t initially know how to find the way onto the roof yesterday does not give us comfort that you know how to service roofs in this area. The reviews on your website look great, and our business partners loved the service your provided for them, but we’re not sure that redoing the entire roof is the way we want to go. We appreciate your recommendation, but if you won’t consider just doing roof patches, then we are prepared to find someone who will.”

Here’s how you as the roofer might respond using passive listening:

“We do service city roofs. The complex that you own just gave us a little bit of trouble, but no worries since we were able to access the roof eventually. And in terms of the patches, we highly recommend redoing the whole roof at once since we’re up there already. Patches will not last as long as redoing the whole roof.”

Here’s how you as the roofer might respond using active listening:

Paraphrase: “It sounds like your business associates were satisfied with the service we provided them a few months ago. But if I understand correctly, you need me to assure you that we are experienced at working on city roofs? You’re also concerned about our recommendation to replace the whole roof versus doing patches? Have I captured your main points?”

Inquire: “You mentioned that you don’t know if you want to redo the whole roof? Help me understand how to you came this conclusion. Let’s talk about the cost efficiency of replacing the whole roof at once to last longer as opposed to doing patches that would be less efficient.”

Acknowledge: “It seems like you’re upset that we had difficulty finding our way up to the roof yesterday and you think that this reflects a lack of experience in the city. While we primarily fix suburban area roofs, we can assure you that we’re well qualified to fix city roofs and do it all the time.”

The roofer’s response using passive listening would most likely not have resulted in the roofer nailing the job. They failed to address the concerns of the clients and responded with a standard answer.

On the other hand, the response using active listening would have divulged key information. By using the three-step approach of paraphrasing, inquiring, and acknowledging, the roofer could have found out, for example, that the potential client wanted to do patches instead of the whole roof because the client was not expecting to do business in the building long-term and wanted only a temporary solution. With this information, the roofer could have tailored their recommendation differently and gained a new client.

Using mirroring, calibrated questions, tactical empathy, and labeling, you too can gather information to guide a negotiation. Using active listening to understand the goals of your counterpart could be the difference between a recipe for control of the situation and a recipe for disaster. So, the next time you find yourself listening to a person and coming up with your own rebuttals right away, try slowing down, making a few observations, and asking a few questions. You might find yourself with the understanding of your counterpart that you need to succeed in that negotiation. For more information on active listening, check out the Harvard Program on Negotiation article, “Negotiation Skills for Win-Win Negotiations” here and read up on passive vs. active listening in the Social Engineer blog here.

What Does Legalization of Marijuana in New York Mean for Employees & Employers?

Posted: April 12th, 2021

By: Vincent Costa, Esq. email

Tags: cannabis, labor & employment

With the legalization of recreational marijuana in New York State, employers and employees alike might be wondering to what extent an employer can tell employees to “Keep Off the Grass.”

Before we tackle employment-related issues raised by the legislation, here is a summary of the main provisions of the new law:

Permitted Use

In New York State, adults 21 and over will be able to possess up to three ounces of marijuana but unable to sell it until a retail system is set up
Adults 21 and over will be allowed to smoke marijuana in any public place where smoking is allowed
Restrictions will be placed on smoking cannabis in restaurants, schools, and the workplace
Eventually, adults 21 and over will be able to cultivate six plants for personal use at home
Municipalities will be able to impose regulations and create restrictions such as banning the retail sale of marijuana

Criminal Regulation

People with marijuana-related convictions that are no longer criminalized will have their records automatically expunged
Police will not be allowed to use the smell of marijuana to justify vehicle searches
Driving while under the influence of marijuana will still be illegal

Tax Structure

Medical marijuana taxes will remain unchanged
Recreational marijuana will have a 13% tax rate with 9% allocated to the state and 4% to localities

As New York State joins the 15 other states (as of this writing) that have legalized the adult use of marijuana, a major question is what the impact the new legislation will have on the workplace.

Can Employers Still Drug Test for Marijuana? How Does the Law Impact the Hiring Process?

Currently, even with the new legislation, there is no law that bans marijuana from drug testing in New York State as a whole. However, New York City has already showcased its less rigid stance on marijuana drug testing. As of May 2020, NYC banned most employers from requiring job applicants to submit to a marijuana drug test as a condition of employment with the exception of positions in law enforcement, transportation and construction. Now that marijuana is legal, it’s possible that New York State could follow NYC’s lead and ban marijuana testing as well.

While employers might still be able to drug test for marijuana, an amendment to Section 201-d of the New York Labor Law explains that employers may not refuse to hire, employ, discharge, or otherwise discriminate against someone who uses cannabis lawfully while off-duty and off-premises. Therefore, despite it being legal for employers to test for marijuana, a positive marijuana test does not necessarily equate to workplace “impairment.” Workplace “impairment” would permit an employer to take adverse action. The legislation defines being “impaired” by cannabis use when an employee “manifests specific articulable symptoms while working that decrease or lessen the employee’s performance of the duties or tasks of the employee’s job position.”

It is important to note that while New York has legalized the possession and use of recreational marijuana, under federal law, marijuana is still illegal. If that sounds confusing, that’s because it is. While the new law requires that employers follow state law when it comes to marijuana, it also provides that an employer is exempt from following the nondiscrimination provisions of the marijuana legislation if complying would result in the loss of a federal contract or federal funding.

Can Employers Control Employee Use of Marijuana Outside of Working Hours?

While the law on testing for marijuana in the workplace is still unsettled, employers will still be able to ban it from the workplace and use being high on the job as basis for termination. However, while employers can prohibit the use or possession of marijuana on-site or during work hours, they cannot control what an employee does or does not do outside of working hours. So employers cannot prohibit employees from smoking pot outside of working hours, nor can they discriminate against employees who do so.

What Kind of Workplace Policies Can Employers Set?

While some may welcome the scent of marijuana in the air at an outdoor concert, the same scent may not be as well received in the office. So employers should take advantage of the opportunity to update their employee handbooks and spell out the consequences of using marijuana during working hours – typically, in a manner that resembles the consequences of alcohol use. Similar to how an employer can set an alcohol-free policy where employees are not allowed to be intoxicated on the job, they can do the same for marijuana and prohibit being “impaired” by cannabis use. If an employer mandates a drug-free policy in their handbook, that means they might not only require that employees stay off the grass, but also keep it off of workplace premises.

Additionally, employers can set policies for marijuana usage during lunch and break times. Employers should clearly communicate with employees to ensure they are aware of their employer’s drug-related policies, as well as train and advise managers on the policy changes.

New York’s approach to navigating the legalization of marijuana will be a constantly evolving topic over the next several months and even years. If you have any questions about specific guidelines, situations, or need a policy revision for your business, please contact our Labor and Employment Department at (631) 738-9100.

Can a City or Town be Held Responsible for the Actions of its Snowplow Drivers?

Posted: April 2nd, 2021

By: Scott Middleton, Esq. email

Tags: municipal, negligence

Spring is finally here, and now that the last of the snow from the recent snowstorms has melted after being piled high, we can finally see the grass again. Although snowplows may be in hibernation until next year, you may wonder: did any municipalities face liability for snowplow accidents during this past messy winter? While rare, snowplow accidents happen. But can a municipality be held responsible for the actions of its driver/employee? The answer is generally, not very often.

In most instances a snowplow operator “actually engaged in work on the highway” is exempt from the rules of the road and may only be held liable for damages caused by an act done and reckless disregard for the safety of others.[1] The claimant/plaintiff must establish that the “operator acted in conscious disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow.” This type of municipal law makes it difficult to prove an accident was the operator’s fault.

In this case, an employee of the Village of Great Neck Estates was operating a Village-owned snowplow. While in reverse, the snowplow was involved in an accident with a pedestrian walking in the street. The plaintiff later sued the employee and the Village for personal injuries. The court held that the employee did not act with “reckless disregard for the safety of others” since the employee testified that he had the beeping alert of the snowplow activated, was traveling at a low speed, and had the snowplow lights on. Additionally, the employee testified that he was looking in the snowplow’s mirrors while traveling backward but did not see the pedestrian behind the snowplow. In this instance, the plaintiff was unable to prove that the operator acted in “conscious disregard of a known or obvious risk.”

Contrast those facts with the long resolved Neddo case from 1949, where an automobile collided with a snow scraper on a highway in New York.[2] In this case, the state was ultimately found liable for failing to have proper lighting on a snow scraper. Likewise, in the 1982 Cherico case, New York City was held liable after a car accident when a snowplow-equipped truck caused an accumulation of ice and snow to fly over a guard rail and smash a driver’s windshield.[3] In that case, an engineer testified that that the snowplow operator did not follow the proper method of snow removal, which would have been to push the snow off the roadway onto the right shoulder instead of into the center.

If a municipality is served with a Notice of Claim for a vehicular accident involving a snowplow, it should be treated like any other claim and forwarded to the insurance carrier or third-party adjuster. Realize, however, that only in rare circumstances will a municipality be held responsible for the actions of its snowplow operators.

At CMM, we know that navigating municipal law on your own can be a challenge. If we can be of any assistance or you need a municipal law attorney on your side, please feel free to contact us at (631) 738-9100.

[1] Kaffash v. Village of Great Neck Estates, 190 A.D.3d 709 (2d Dep’t 2021).

[2] Neddo v. State of New York, 300 N.Y. 533 (1949).

[3] Cherico v. City of New York, 88 A.D.2d 889 (1^st Dep’t 1982).

To Post or Not to Post? Social Media and the Workplace

Posted: March 22nd, 2021

By: Vincent Costa, Esq. email

Tags: labor & employment

Many people believe that the First Amendment grants them the right of unrestricted free speech, including on social media. But employees are often surprised to learn that the First Amendment protects specifically from government intrusion on free speech – it does not apply to intrusion on free speech by private employers. So, can an employer place limits on what an employee posts on their personal social media accounts? Read on to learn about the sometimes-complicated relationship between social media and the workplace.

Social Media Posts and Policies

New York is an at-will employment state, which means that an employee can be fired at any time without warning or reason.[1] Some states, however – including New York – protect employees (both public and private) from being fired due to their political or recreational activities outside of work (including social media posts). But the law has exceptions, including that it does not protect employees’ off-duty conduct that creates a material conflict of interest related to the employer’s business interest.[2]

To protect a company’s business interest, the company may create a social media policy regarding what employees cannot do on social media. Such a policy would allow an employer to fire an employee if they breach the policy, as long as the policy provisions do not violate the National Labor Relations Act (“NLRA”). Section 7 of the NLRA guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”[3] Federal law also protects an employee’s right to engage in not only union activity, but “protected concerted” activity as well.

The National Labor Relations Board (“NLRB”) states that using social media can be a form of “protected concerted” activity. An employee has the right to address work-related issues and share information about pay, benefits, and working conditions with coworkers on Facebook, Twitter, and other social media platforms. However, some aspects of work are not “protected concerted” activity. Such activity is not protected if an employee says things about their employer that are egregiously offensive or knowingly and deliberately false, or if an employee publicly disparages their employer’s products or services without relating such complaints to any labor controversy.[4]

Recent NLRB Decisions

In a 2017 case, the NLRB created a two-step process called the “Boeing Test” (named for Boeing as a party to the case) for evaluating whether facially lawful workplace policies (such as a social media policy) unlawfully interfere with employees’ rights.[5] Step one is to determine whether the workplace policy reasonably interferes with the employees’ rights under Section 7 of the NLRA. If the policy does interfere, then the next step is to determine the employer’s justifications for the policy and balance those justifications against the interference with the employees’ rights.

The NLRB used the “Boeing Test” in a 2020 case, Bemis Company. In this case, the NLRB upheld a company’s social media policy.[6] Specifically, the NLRB found that the policy, when read in its entirety, “makes clear that to safeguard the reputation and interests of the company, employees referring to the company on social media must be respectful and professional, must not disclose proprietary information, must respect their coworkers, and must not harass, disrupt, or interfere with another person’s work or create an intimidating, offensive, or hostile work environment.”[7]

Specific Issues for Public Employees

Unlike private employees, public employees do have a limited First Amendment free speech protection. Yet this only applies when all three of the following criteria are met:

They are speaking as a private citizen;
Their speech pertains to a matter of public concern, such as a social, political, or community matter; and
Their interest in speaking freely outweighs the public employer’s interest in efficiently fulfilling its public services.

If all these criteria are not met, a public employee can be legally fired for their social media posts. For example, a police officer, who is employed by the government, can be fired for making controversial posts related to racial and social issues because the police officer’s interest in speaking freely does not outweigh the department’s interest in efficiently fulfilling its public service.

Whether you are an employee facing pushback from your employer regarding social media or an employer considering a social media policy, please contact us for guidance.

[1] An employer in New York, whether public or private, cannot fire an employee due to an act of illegal retaliation or discrimination based on race, creed, national origin, age, disability, gender, sexual orientation, marital status, political or recreational activities outside of work, legal use of consumable products outside of work, membership in a union, or making a complaint to the employer. See NYS Human Rights Law; NYS Labor Law Section 201-d; NYS Labor Law Section 215.

[2] NYS Labor Law Section 201-D.

[3] Codified as 29 U.S.C. § 157; Interfering with Employee Rights, NLRB, https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law/interfering-with-employee-rights-section-7-8a1 (last visited Mar. 18, 2021).

[4] Social Media, NLRB, https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law/employees/social-media-0 (last visited Mar. 18, 2021).

[5] Boeing Co., 365 NLRB No. 154 (2017)

[6] Bemis Co., 370 NLRB No. 7 (Aug. 7, 2020)

[7] Id.

Professional Fundraiser Contracts in New York

Posted: March 2nd, 2021

By: Christine Malafi, Esq. email

Tags: corporate, nonprofit

New York is one of the leading bases for charitable nonprofits nationally. Two million New York taxpayers reported giving $42.5 billion to charities in 2017.[1] Raising money has its own costs, however. Many charities use professional for-profit fundraisers as outside contractors to increase donations. Fundraisers play a crucial role in educating the public about and furthering a charity’s mission. Whether you are part of a nonprofit organization seeking to outsource fundraising, or a fundraiser for charities yourself, read on to learn about fundraising contracts and the costs and regulations related to fundraising in New York.

Giving by the Numbers

The New York Attorney General’s Charities Bureau is responsible for supervising charitable organizations to protect donors and beneficiaries of those charities from unscrupulous practices in the solicitation and management of charitable assets. Fundraising professionals who contact donors in the state are required by New York law to register annually and file fundraising contracts with the Attorney General’s Office. Depending on the nature of the activities, financial reports may also have to be filed. Additionally, the Association of Fundraising Professionals publishes a Code of Ethical Standards to foster and promote high ethical behavior in the fundraising profession.[2]

The Charities Bureau publishes an annual report called Pennies for Charity, which identifies trends in the charitable sector and shows the amounts retained by the actual charities, as opposed to professional fundraisers. The 2020 report includes data from 824 fundraising campaigns conducted in 2019 by professional fundraisers in New York; those campaigns raised over 1.2 billion dollars, but not all that money went to charities, or their intended beneficiaries.

More than $364 million was retained by professional fundraisers, while charities received $918 million (28% to 72% of funds raised, respectively). In 31% of campaigns, charities received less than 50% of funds raised. In 17% of campaigns, expenses exceeded revenue, which cost charities about $17 million. Since 2016, the percent of funds given to fundraisers has decreased from 33% to 28%.

Fundraising Contracts

Professional fundraisers are hired for many reasons, including due to inadequate staff available to raise funds and insufficient expertise to conduct fundraising campaigns. Further, retaining a professional fundraiser may be a means by which to get more people involved in a cause or mission. No matter the reason for hiring a professional fundraiser, it is important to learn about the fundraiser’s prior experience, reporting, and ethics before signing a fundraising contract.

To make the success of a fundraising campaign more probable, and to assist in avoiding problems that may result from hiring an inexperienced, non-compliant fundraiser, an organization should:

Check to make sure it is properly registered with the Charities Bureau and is current in its annual financial filings
Check with the Charities Bureau to see if the fundraiser is registered and has filed the required contracts and financial reports
Find out which other charities the fundraiser represented
Request copies of the fundraiser’s contracts with other charities and copies of the fundraiser’s financial reports
Ask the fundraiser for a list of references and contact those charities where the fundraiser worked

New York law requires that all fundraising contracts must be in writing and include no less than provisions as follows:

Within five days of receipt, all funds solicited by a fundraiser must be deposited in a bank account exclusively controlled by the charity
The charity has the right to cancel without penalty within fifteen days after the fundraiser has filed with the Attorney General
Descriptions of the services to be provided by the fundraiser and the financial terms of the contract must be clear
Names, addresses, and registration numbers of both parties

Other areas relevant to the engagement should be addressed as well. Like any business contract, the terms of the fundraising agreement must be drafted, reviewed, discussed, and negotiated completely before signing.

Whether you are a professional fundraiser or are considering hiring a professional fundraiser, please contact us for guidance.

Thank you to Daniel Axelrod for his research and writing assistance with this article.

[1] 2017 is the most recent year available to find tax return statistics.

[2] See https://afpglobal.org/ethicsmain/standards-guidelines (visited 3/2/2021). Specifically, it provides, in part, that members shall not accept compensation or enter into a contract that is based on a percentage of contributions, not accept finder’s fees or contingent fees, be permitted to accept performance-based compensation, and neither offer nor accept payments for the purpose of influencing the selection of products or services.

New Policies Allowing Legal Surrogacy in New York

Posted: February 24th, 2021

By: Christine Malafi, Esq. email

Tags: corporate, healthcare

Many people are surprised to find out that before February 15, 2021, surrogacy was not legally permitted in New York. Surrogacy has just become legal under New York State’s Child-Parent Security Act, which has New York join every other state (except Louisiana and Michigan) in legalizing surrogacy. The Act legalizes and regulates contracts related to gestational surrogacy in New York, and requires that surrogacy contracts contain no less than the following items:

Compensation: The base compensation and additional expenses for the surrogate must be placed in escrow with an independent agent.
Custody: The surrogate must agree to the embryo transfer and to give birth to the child. Additionally, both the surrogate and their spouse, if applicable, agree to concede legal custody to the intended parents immediately upon birth of the child.
Intended Parent Requirements: At least one intended parent must be a US citizen or lawful permanent resident and must have been a New York State resident for at least six months.
Legal Counsel: Both the surrogate and intended parents must be represented throughout the contractual process by independent legal counsel.
Medical Expenses: The intended parents must cover the medical expenses of the surrogate and child.
Surrogate Requirements: The surrogate must be US citizen or lawful permanent resident; at least 21 years of age; have successfully completed a medical evaluation; must not have previously provided the egg used to conceive a child; and must give informed consent.
Will: A will designating a guardian for the child must be executed.

Additionally, the statute includes the Surrogate’s Bill of Rights that includes a list of the surrogate’s substantive rights. These rights, which cannot be waived, include the right to:

make all health and welfare decisions regarding the pregnancy
independent legal counsel, of their own choosing, paid for by the intended parents
a health insurance policy paid for by the intended parents throughout the duration of the pregnancy and extending one year after the pregnancy
obtain counseling and disability insurance paid for by the intended parents
a life insurance policy paid for by the intended parents that takes effect prior to treatment and extends for one year after the pregnancy
walk away from an agreement prior to pregnancy without penalty

Other subjects which should be addressed in the agreement include:

Conception: How conception will occur (i.e. whose gametes will be used, are the embryos to be fresh or frozen, how many embryos will be transferred per attempt, and how many attempts will the parties make).
Death: What occurs if the intended parents die or become seriously disabled during the surrogacy process (how should the gestational carrier proceed)?
Governing Law: Indicate the specific state whose laws will govern the surrogacy arrangement and if a dispute arises, how will it be handled (i.e. in which court will the action commence or will there be mediation before a court action).
Parental Rights: Clearly define how the parentage will be addressed (i.e. how will the intended parents be established as the legal parents and how the gestational carrier will be relieved of all rights regarding the child).
Payment of Expenses: Spell out the methods and types of payments associated with surrogacy.
Termination of Pregnancy: Parties must agree on the possibility of termination of pregnancy. This is allowed when the pregnancy puts the carrier’s life in danger, but the contract should provide remedies when the carrier aborts (or refuses to abort) contrary to the wishes of the intended parents.

These topics are not an exhaustive list, and before any medical processes can begin, the entire contract must be finalized, even if the parents already have a friendly relationship with their intended surrogate.

Surrogacy agreements clearly involve the most important family decisions one could make. Although surrogacy is inherently a personal decision between loved ones, surrogacy agreements are still complex business contracts that must be given substantial thought. Like any business contract, the terms of the surrogacy agreement must be drafted, reviewed, discussed, and negotiated.

Whether you are considering expanding your family via gestational surrogacy, or are interested in becoming a surrogate, please contact us for guidance.

Business Unusual 2020 Inspirational Video Montage

Posted: October 29th, 2020

This spring, Joe Campolo and Peter Klein launched a weekly webinar to help lead the business community through the pandemic by sharing insight with industry experts, nonprofit leaders, elected officials, and business owners about how to move forward most productively. Check out this uplifting video featuring highlights from Business Unusual’s 2020 season. Thank you to all our guests and viewers for an unforgettable and positive experience!

Find your favorite episode here.