Bill Text: CA AB2077 | 2013-2014 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Charitable organizations: enforcement.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-09-19 - Chaptered by Secretary of State - Chapter 465, Statutes of 2014. [AB2077 Detail]
Download: California-2013-AB2077-Amended.html
Bill Title: Charitable organizations: enforcement.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-09-19 - Chaptered by Secretary of State - Chapter 465, Statutes of 2014. [AB2077 Detail]
Download: California-2013-AB2077-Amended.html
BILL NUMBER: AB 2077 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 28, 2014
INTRODUCED BY Assembly Member Allen
FEBRUARY 20, 2014
An act to amend Section 17510.2 of the Business and
Professions 12599 of the Government Code,
relating to charitable solicitations.
LEGISLATIVE COUNSEL'S DIGEST
AB 2077, as amended, Allen. Charitable solicitations.
solicitations: commercial fundraisers.
The Supervision of Trustees and Fundraisers for Charitable
Purposes Act requires a commercial fundraiser for charitable
purposes, prior to soliciting any funds, assets, or property in
California for charitable purposes, or prior to receiving and
controlling any funds, assets, or property as a result of a
solicitation in this state for charitable purposes, register with the
Attorney General's Registry of Charitable Trusts. That act also
requires a commercial fundraiser for charitable purposes to file with
the Attorney General's Registry of Charitable Trusts a notice that
sets forth specified information not less than 10 working days prior
to the commencement of each solicitation campaign, event, or service.
This bill would instead require a commercial fundraiser for
charitable purposes to file with the Attorney General's Registry of
Charitable Trusts that notice not less than 15 working days prior to
the commencement of each solicitation campaign, event, or service.
Existing law requires the solicitor or seller of a solicitation
for charitable purposes to comply with specified requirements prior
to making that solicitation. Existing law defines the term
"solicitation for charitable purposes" to mean any request, plea,
entreaty, demand, or invitation, or attempt thereof, to give money or
property, in connection with which, among other things, any
statement is made to the effect that the gift or any part thereof
will go to, or be used for, any charitable purpose or organization.
This bill would make a technical, nonsubstantive change to this
provision.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12599 of the
Government Code is amended to read:
12599. (a) "Commercial fundraiser for charitable purposes" means
any individual, corporation, unincorporated association, or other
legal entity who for compensation does any of the following:
(1) Solicits funds, assets, or property in this state for
charitable purposes.
(2) As a result of a solicitation of funds, assets, or property in
this state for charitable purposes, receives or controls the funds,
assets, or property solicited for charitable purposes.
(3) Employs, procures, or engages any compensated person to
solicit, receive, or control funds, assets, or property for
charitable purposes.
A commercial fundraiser for charitable purposes shall include any
person, association of persons, corporation, or other entity that
obtains a majority of its inventory for sale by the purchase,
receipt, or control for resale to the general public, of salvageable
personal property solicited by an organization qualified to solicit
donations pursuant to Section 148.3 of the Welfare and Institutions
Code.
A commercial fundraiser for charitable purposes shall not include
a "trustee" as defined in Section 12582 or 12583, a "charitable
corporation" as defined in Section 12582.1, or any employee thereof.
A commercial fundraiser for charitable purposes shall not include an
individual who is employed by or under the control of a commercial
fundraiser for charitable purposes registered with the Attorney
General. A commercial fundraiser for charitable purposes shall not
include any federally insured financial institution that holds as a
depository funds received as a result of a solicitation for
charitable purposes.
As used in this section, "charitable purposes" includes any
solicitation in which the name of any organization of law enforcement
personnel, firefighters, or other persons who protect the public
safety is used or referred to as an inducement for transferring any
funds, assets, or property, unless the only expressed or implied
purpose of the solicitation is for the sole benefit of the actual
active membership of the organization.
(b) A commercial fundraiser for charitable purposes shall, prior
to soliciting any funds, assets, or property, including salvageable
personal property, in California for charitable purposes, or prior to
receiving and controlling any funds, assets, or property, including
salvageable personal property, as a result of a solicitation in this
state for charitable purposes, register with the Attorney General's
Registry of Charitable Trusts on a registration form provided by the
Attorney General. Renewals of registration shall be filed with the
Registry of Charitable Trusts by January 15 of each calendar year in
which the commercial fundraiser for charitable purposes does business
and shall be effective for one year. A registration or renewal fee
of two hundred dollars ($200) shall be required for registration of a
commercial fundraiser for charitable purposes, and shall be payable
by certified or cashier's check to the Attorney General's Registry of
Charitable Trusts at the time of registration or renewal. The
Attorney General may adjust the annual registration or renewal fee,
or means of payment, as needed pursuant to this section. The Attorney
General's Registry of Charitable Trusts may grant extensions of time
to file annual registration as required, pursuant to subdivision (b)
of Section 12586. No separate fee shall be charged by the Attorney
General for electronic registration, electronic renewal, or
electronic repayment of fees.
(c) A commercial fundraiser for charitable purposes shall file
with the Attorney General's Registry of Charitable Trusts an annual
financial report on a form provided by the Attorney General,
accounting for all funds collected pursuant to any solicitation for
charitable purposes during the preceding calendar year. The annual
financial report shall be filed with the Attorney General's Registry
of Charitable Trusts no later than 30 days after the close of the
preceding calendar year.
(d) The contents of the forms for annual registration and annual
financial reporting by commercial fundraisers for charitable purposes
shall be established by the Attorney General in a manner consistent
with the procedures set forth in subdivisions (a) and (b) of Section
12586. The annual financial report shall require a detailed, itemized
accounting of funds, assets, or property, solicited for charitable
purposes on behalf of each charitable organization exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code or for
each charitable purpose during the accounting period, and shall
include, among other data, the following information for funds,
assets, or property, solicited by the commercial fundraiser for
charitable purposes:
(1) Total revenue.
(2) The fee or commission charged by the commercial fundraiser for
charitable purposes.
(3) Salaries paid by the commercial fundraiser for charitable
purposes to its officers and employees.
(4) Fundraising expenses.
(5) Distributions to the identified charitable organization or
purpose.
(6) The names and addresses of any director, officer, or employee
of the commercial fundraiser for charitable purposes who is a
director, officer, or employee of any charitable organization listed
in the annual financial report.
(e) A commercial fundraiser for charitable purposes that obtains a
majority of its inventory for sale by the purchase, receipt, or
control for resale to the general public, of salvageable personal
property solicited by an organization qualified to solicit donations
pursuant to Section 148.3 of the Welfare and Institutions Code shall
file with the Attorney General's Registry of Charitable Trusts, and
not with the sheriff of any county, an annual financial report on a
form provided by the Attorney General that is separate and distinct
from forms filed by other commercial fundraisers for charitable
purposes pursuant to subdivisions (c) and (d).
(f) It shall be unlawful for any commercial fundraiser for
charitable purposes to solicit funds in this state for charitable
purposes unless the commercial fundraiser for charitable purposes has
complied with the registration or annual renewal and financial
reporting requirements of this article. Failure to comply with these
registration or annual renewal and financial reporting requirements
shall be grounds for injunction against solicitation in this state
for charitable purposes and other civil remedies provided by law.
(g) A commercial fundraiser for charitable purposes is a
constructive trustee for charitable purposes as to all funds
collected pursuant to solicitation for charitable purposes and shall
account to the Attorney General for all funds. A commercial
fundraiser for charitable purposes is subject to the Attorney General'
s supervision and enforcement over charitable funds and assets to the
same extent as a trustee for charitable purposes under this article.
(h) Not less than 10 15 working days
prior to the commencement of each solicitation campaign, event, or
service, or not later than commencement of solicitation for
solicitations to aid victims of emergency hardship or disasters, a
commercial fundraiser for charitable purposes shall file with the
Attorney General's Registry of Charitable Trusts a notice on a form
prescribed by the Attorney General that sets forth all of the
following:
(1) The name, address, and telephone number of the commercial
fundraiser for charitable purposes.
(2) The name, address, and telephone number of the charitable
organization with whom the commercial fundraiser has contracted.
(3) The fundraising methods to be used.
(4) The projected dates when performance under the contract will
commence and terminate.
(5) The name, address, and telephone number of the person
responsible for directing and supervising the work of the commercial
fundraiser under the contract.
(i) There shall be a written contract between a commercial
fundraiser for charitable purposes and a charitable organization for
each solicitation campaign, event, or service, that shall be signed
by the authorized contracting officer for the commercial fundraiser
and by an official of the charitable organization who is authorized
to sign by the organization's governing body. The contract shall be
available for inspection by the Attorney General and shall contain
all of the following provisions:
(1) The legal name and address of the charitable organization as
registered with the Registry of Charitable Trusts, unless the
charitable organization is exempt from registration.
(2) A statement of the charitable purpose for which the
solicitation campaign, event, or service is being conducted.
(3) A statement of the respective obligations of the commercial
fundraiser and the charitable organization.
(4) If the commercial fundraiser is to be paid a fixed fee, a
statement of the fee to be paid to the commercial fundraiser and a
good faith estimate of what percentage the fee will constitute of the
total contributions received. The contract shall clearly disclose
the assumptions upon which the estimate is based, and the stated
assumptions shall be based upon all of the relevant facts known to
the commercial fundraiser regarding the solicitation to be conducted
by the commercial fundraiser.
(5) If a percentage fee is to be paid to the commercial
fundraiser, a statement of the percentage of the total contributions
received that will be remitted to or retained by the charitable
organization, or, if the solicitation involves the sale of goods or
services or the sale of admissions to a fundraising event, the
percentage of the purchase price that will be remitted to the
charitable organization. The stated percentage shall be calculated by
subtracting from contributions received and sales receipts not only
the commercial fundraiser's fee, but also any additional amounts that
the charitable organization is obligated to pay as fundraising
costs.
(6) The effective and termination dates of the contract and the
date solicitation activity is to commence within the state.
(7) A provision that requires that each contribution in the
control or custody of the commercial fundraiser shall in its entirety
and within five working days of its receipt comply with either of
the following:
(A) Be deposited in an account at a bank or other federally
insured financial institution that is solely in the name of the
charitable organization and over which the charitable organization
has sole control of withdrawals.
(B) Be delivered to the charitable organization in person, by
United States express mail, or by another method of delivery
providing for overnight delivery.
(8) A statement that the charitable organization exercises control
and approval over the content and frequency of any solicitation.
(9) If the commercial fundraiser proposes to make any payment in
cash or in kind to any person or legal entity to secure any person's
attendance at, or sponsorship, approval, or endorsement of, a charity
fundraising event, the maximum dollar amount of those payments shall
be set forth in the contract. "Charity fundraising event" means any
gathering of persons, including, but not limited to, a party,
banquet, concert, or show, that is held for the purpose or claimed
purpose of raising funds for any charitable purpose or organization.
(10) A provision that includes all of the following statements:
(A) The charitable organization has the right to cancel the
contract without cost, penalty, or liability for a period of 10 days
following the date on which the contract is executed.
(B) The charitable organization may cancel the contract by serving
a written notice of cancellation on the commercial fundraiser.
(C) If mailed, service shall be by certified mail, return receipt
requested, and cancellation shall be deemed effective upon the
expiration of five calendar days from the date of mailing.
(D) Any funds collected after effective notice that the contract
has been canceled shall be deemed to be held in trust for the benefit
of the charitable organization without deduction for costs or
expenses of any nature.
(E) The charitable organization shall be entitled to recover all
funds collected after the date of cancellation.
(11) A provision that includes all of the following statements:
(A) Following the initial 10-day cancellation period, the
charitable organization may terminate the contract by giving 30 days'
written notice.
(B) If mailed, service of the notice shall be by certified mail,
return receipt requested, and shall be deemed effective upon the
expiration of five calendar days from the date of mailing.
(C) In the event of termination under this subdivision, the
charitable organization shall be liable for services provided by the
commercial fundraiser up to 30 days after the effective service of
the notice.
(12) A provision that, following the initial 10-day cancellation
period, the charitable organization may terminate the contract at any
time upon written notice, without payment or compensation of any
kind to the commercial fundraiser, if the commercial fundraiser or
its agents, employees, or representatives do any of the following:
(A) Make any material misrepresentations in the course of
solicitations or with respect to the charitable organization.
(B) Are found by the charitable organization to have been
convicted of a crime arising from the conduct of a solicitation for a
charitable organization or purpose punishable as a misdemeanor or a
felony.
(C) Otherwise conduct fundraising activities in a manner that
causes or could cause public disparagement of the charitable
organization's good name or good will.
(13) Any other information required by the regulations of the
Attorney General.
(j) It shall be unlawful for a commercial fundraiser for
charitable purposes to not disclose the percentage of total
fundraising expenses of the fundraiser upon receiving a written or
oral request from a person solicited for a contribution for a
charitable purpose. "Percentage of total fundraising expenses," as
used in this section, means the ratio of the total expenses of the
fundraiser to the total revenue received by the fundraiser for the
charitable purpose for which funds are being solicited, as reported
on the most recent financial report filed with the Attorney General's
Registry of Charitable Trusts. A commercial fundraiser shall
disclose this information in writing within five working days from
receipt of a request by mail or facsimile. A commercial fundraiser
shall orally disclose this information immediately upon a request
made in person or in a telephone conversation and shall follow this
response with a written disclosure within five working days. Failure
to comply with the requirements of this subdivision shall be grounds
for an injunction against solicitation in this state for charitable
purposes and other civil remedies provided by law.
(k) If the Attorney General issues a report to the public
containing information obtained from registration forms or financial
report forms filed by commercial fundraisers for charitable purposes,
there shall be a separate section concerning commercial fundraisers
for charitable purposes that obtain a majority of their inventory for
sale by the purchase, receipt, or control for resale to the general
public, of salvageable personal property solicited by an organization
qualified to solicit donations pursuant to Section 148.3 of the
Welfare and Institutions Code. The report shall include an
explanation of the distinctions between these thrift store operations
and other types of commercial fundraising.
( l ) No person may act as a commercial fundraiser for
charitable purposes if that person, any officer or director of that
person's business, any person with a controlling interest in the
business, or any person the commercial fundraiser employs, engages,
or procures to solicit for compensation, has been convicted by a
court of any state or the United States of a crime arising from the
conduct of a solicitation for a charitable organization or purpose
punishable as a misdemeanor or felony.
(m) A commercial fundraiser for charitable purposes shall not
solicit in the state on behalf of a charitable organization unless
that charitable organization is registered or is exempt from
registration with the Attorney General's Registry of Charitable
Trusts.
(n) If any provision of this section or the application thereof to
any person or circumstances is held invalid, that invalidity shall
not affect any other provision or application of this section that
can be given effect without the invalid provision or application, and
to this end the provisions of this section are severable.
SECTION 1. Section 17510.2 of the Business and
Professions Code is amended to read:
17510.2. (a) As used in this article, "solicitation for
charitable purposes," means any request, plea, entreaty, demand, or
invitation, or attempt thereof, to give money or property, in
connection with which any of the following applies:
(1) Any appeal is made for charitable purposes.
(2) The name of any charity, philanthropic or charitable
organization is used or referred to in any such appeal as an
inducement for making any such gift.
(3) Any statement is made to the effect that the gift or any part
thereof will go to or be used for any charitable purpose or
organization.
(4) The name of any organization of law enforcement personnel,
firefighters, or any other persons who protect the public safety is
used or referred to as an inducement for transferring any money or
property, unless the only expressed or implied purpose of the
solicitation is for the sole benefit of the actual active membership
of the organization.
(b) As used in this article, "sales solicitation for charitable
purposes" means the sale of, offer to sell, or attempt to sell any
advertisement, advertising space, book, card, chance, coupon device,
magazine subscription, membership, merchandise, ticket of admission
or any other thing or service in connection with which any of the
following applies:
(1) Any appeal is made for charitable purposes.
(2) The name of any charity, philanthropic or charitable
organization is used or referred to in any such appeal as an
inducement for making any such sale.
(3) Any statement is made to the effect that the whole or any part
of the proceeds from the sale will go to or be used for any
charitable purpose or organization.
(4) The name of any organization of law enforcement personnel,
firefighters, or other persons who protect the public safety is used
or referred to as an inducement for transferring any money or
property, unless the only expressed or implied purpose of the sales
solicitation is for the sole benefit of the actual active membership
of the organization.
(c) A solicitation for charitable purposes, or a sale, offer or
attempt to sell for charitable purposes, shall include the making or
disseminating or causing to be made or disseminated before the public
in this state, in any newspaper or other publication, or any
advertising device, or by public outcry or proclamation, or in any
other manner or means whatsoever any such solicitation.
(d) For purposes of this article, "charity" shall include any
person who, or any nonprofit community organization, fraternal,
benevolent, educational, philanthropic, or service organization, or
governmental employee organization which, solicits or obtains
contributions solicited from the public for charitable purposes or
holds any assets for charitable purposes.
