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AB-1539 Charitable organizations.(2019-2020)

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Date Published: 02/22/2019 09:00 PM
AB1539:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 1539


Introduced by Assembly Member Irwin

February 22, 2019


An act to amend Section 12599.6 of, and to add Section 12599.9 to, the Government Code, relating to charitable organizations.


LEGISLATIVE COUNSEL'S DIGEST


AB 1539, as introduced, Irwin. Charitable organizations.
The Supervision of Trustees and Fundraisers for Charitable Purposes Act governs charitable corporations, unincorporated associations, trustees, commercial fundraisers, fundraising counsel, commercial coventurers, and other legal entities holding or soliciting property for charitable purposes of which the state or the Attorney General has enforcement and supervisory powers. Existing law makes a person who violates the act with intent to deceive or defraud a charity or individual liable for a specified civil penalty. Existing law prohibits certain acts and practices in the planning, conduct, or execution of any solicitation or charitable sales promotion, including misrepresenting or misleading anyone in any manner to believe that any other person sponsors, endorses, or approves a charitable solicitation or charitable sales promotion if that person has not given consent in writing to the use of that person’s name, or representing that any part of the contribution will be given or donated to any other charitable organization, unless that organization has consented in writing to the use of its name before the solicitation. Existing law requires every charitable corporation, unincorporated association and trustee subject to the act to file, under oath, periodic written reports setting forth information as to the nature of assets held for charitable purposes, among other information.
This bill would require a charitable organization to obtain the written consent of another charitable organization before using its name in a solicitation through means of the internet, unless the soliciting organization meets specified requirements, including conspicuously disclosing that the recipient charitable organization has not provided consent for the solicitation and has no association with the soliciting charitable organization, among other requirements. The bill would require a charitable organization soliciting pursuant to those provisions to file an annual report, under oath, that contains specified information with the Attorney General’s Registry of Charitable Trusts. By expanding the crime of perjury, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 12599.6 of the Government Code is amended to read:

12599.6.
 (a) Charitable organizations and commercial fundraisers for charitable purposes shall not misrepresent the purpose of the charitable organization or the nature or purpose or beneficiary of a solicitation. A misrepresentation may be accomplished by words or conduct or failure to disclose a material fact.
(b) A charitable organization must establish and exercise control over its fundraising activities conducted for its benefit, including approval of all written contracts and agreements, and must ensure that fundraising activities are conducted without coercion.
(c) A charitable organization shall not enter into any contract or agreement with, or employ, any commercial fundraiser for charitable purposes or fundraising counsel for charitable purposes unless that commercial fundraiser or fundraising counsel is registered with the Attorney General’s Registry of Charitable Trusts or, if not registered, agrees to register prior to the commencement of any solicitation.
(d) A charitable organization shall not enter into any contract or agreement with, or raise any funds for, any charitable organization required to be registered pursuant to this act unless that charitable organization is registered with the Attorney General’s Registry of Charitable Trusts or, if not registered, agrees to register prior to the commencement of the solicitation.
(e) Each contribution in the control or custody of a commercial fundraiser for charitable purposes shall in its entirety and within five working days of receipt (1) be deposited in an account at a bank or other federally insured financial institution that is solely in the name of the charitable organization on whose behalf the contribution was solicited and over which the charitable organization has sole control of withdrawals or, (2) be delivered to the charitable organization in person, by Express Mail, or by another method of delivery providing for overnight delivery.
(f) Regardless of injury, the following acts and practices are prohibited in the planning, conduct, or execution of any solicitation or charitable sales promotion:
(1) Operating in violation of, or failing to comply with, any of the requirements of this act or regulations or orders of the Attorney General, or soliciting contributions after registration with the Attorney General’s Registry of Charitable Trusts has expired or has been suspended or revoked.
(2) Using any unfair or deceptive acts or practices or engaging in any fraudulent conduct that creates a likelihood of confusion or misunderstanding.
(3) Using any name, symbol, emblem, statement, or other material stating, suggesting, or implying to a reasonable person that the contribution is to or for the benefit of a particular charitable organization when that is not the fact.
(4) Misrepresenting or misleading anyone in any manner to believe that the person on whose behalf a solicitation or charitable sales promotion is being conducted is a charitable organization or that the proceeds of the solicitation or charitable sales promotion will be used for charitable purposes when that is not the fact.
(5) (A) Misrepresenting or misleading anyone in any manner to believe that any other person sponsors, endorses, or approves a charitable solicitation or charitable sales promotion when that person has not given consent in writing to the use of the person’s name for these purposes.
(B) Notwithstanding subparagraph (A), written consent is not required if the requirements of paragraph (1) of subdivision (a) of Section 12599.9 are satisfied.
(6) Misrepresenting or misleading anyone in any manner to believe that goods or services have endorsement, sponsorship, approval, characteristics, ingredients, uses, benefits, or qualities that they do not have or that a person has endorsement, sponsorship, approval, status, or affiliation that the person does not have.
(7) Using or exploiting the fact of registration with the Attorney General’s Registry of Charitable Trusts so as to lead any person to believe that the registration in any manner constitutes an endorsement or approval by the Attorney General. The use of the following statement is not prohibited:

“The official registration and financial information regarding (insert the legal name of the charity as registered with the Registry of Charitable Trusts) can be obtained from the Attorney General’s Web site website at http://caag.state.ca.us/charities/. Registration does not imply endorsement.”

(8) Representing directly or by implication that a charitable organization will receive an amount greater than the actual net proceeds reasonably estimated to be retained by the charity for its use.
(9) With respect to solicitations by commercial fundraisers for charitable purposes on behalf of law enforcement personnel, firefighters, or other persons who protect the public safety, issuing, offering, giving, delivering, or distributing any honorary membership cards, courtesy cards, or similar cards, or any stickers, emblems, plates, or other items that could be used for display on a motor vehicle, and that suggest affiliation with, or endorsement by any public safety personnel or a group comprising such personnel.
(10) (A) Soliciting for advertising to appear in a for-profit publication that relates to, purports to relate to, or that could reasonably be construed to relate to, any charitable purpose without making the following disclosures at the time of solicitation:
(i) The publication is a for-profit, commercial enterprise.
(ii) The true name of the solicitor and the fact that the solicitor is a professional solicitor.
(iii) The publication is not affiliated with or sponsored by any charitable organization.
(B) Where a sale of advertising has been made, the solicitor, prior to accepting any money for the sale, shall make to the purchaser the disclosures required by subparagraph (A) in written form and in conspicuous type.
(11) (A) Representing that any part of the contributions solicited by a charitable organization will be given or donated to any other charitable organization unless that organization has consented in writing to the use of its name prior to the solicitation. The written consent shall be signed by one authorized officer, director, or trustee of the charitable organization.
(B) Notwithstanding subparagraph (A), written consent is not required if the requirements of paragraph (1) of subdivision (a) of Section 12599.9 are satisfied.
(12) Representing that tickets to events will be donated for use by another, unless all of the following requirements have been met:
(A) The charitable organization or commercial fundraiser has commitments, in writing, from charitable organizations stating that they will accept donated tickets and specifying the number of tickets they are willing to accept.
(B) The donated tickets will not, when combined with other ticket donations, exceed either of the following:
(i) The number of ticket commitments the charitable organization or commercial fundraiser has received from charitable organizations.
(ii) The total attendance capacity of the site of the event.
(g) A person shall not knowingly submit for filing on behalf of any charitable organization any statement, report, financial statement, attachment, or other information to be filed with the Attorney General that contains information, a statement, or an omission that is false or misleading.
(h) A ticket commitment from a charitable organization alone, as described in clause (i) of subparagraph (B) of paragraph (12) of subdivision (f), does not constitute written consent to use of the organization’s name in the solicitation campaign.

SEC. 2.

 Section 12599.9 is added to the Government Code, to read:

12599.9.
 (a) (1) A charitable organization shall obtain the written consent of another charitable organization before using its name in a solicitation through means of the internet. The written consent shall be signed by one authorized officer, director, or trustee of the charitable organization.
(2) Notwithstanding paragraph (1), written consent is not needed if all of the following requirements are met:
(A) The soliciting charitable organization offers only a database or list of recipient charitable organizations that may receive contributions and provides only the recipient charitable organization’s name and other public information provided by the recipient charitable organization to the Internal Revenue Service, the Attorney General’s Registry of Charitable Trusts, or other federal or state government agencies.
(B) The soliciting charitable organization excludes recipient charitable organizations that are not in good standing with the Internal Revenue Service, and, where applicable, the Franchise Tax Board or the Attorney General’s Registry of Charitable Trusts.
(C) The soliciting charitable organization conspicuously discloses that the recipient charitable organization can request removal from the database or list, which shall be implemented within five days of a request.
(D) The soliciting charitable organization conspicuously discloses that the recipient charitable organization has not provided consent for the solicitation and has no association with the soliciting charitable organization.
(E) The soliciting charitable organization conspicuously discloses the fees taken by the soliciting charitable organization from the contribution designated for the recipient charitable organization.
(F) The soliciting charitable organization conspicuously discloses the circumstances in which the recipient charitable organization may not receive the contribution.
(G) The soliciting charitable organization makes all reasonable efforts to ensure that the donation reaches the recipient charitable organization and provides a confirmation to the donor when it does and seeks one or more alternative organizations from the donor if the originally selected recipient charitable organization cannot receive the contribution.
(H) The soliciting charitable organization provides to the recipient charitable organization the contribution and an accounting of any fees imposed for processing the contribution within 60 days of its receipt of the contribution, if the originally selected recipient charitable organization cannot receive the contribution, to an alternative organization within 30 days of receiving an alternative recommendation from the donor, or, if no alternative recommendation is made within 30 days, to an alternative organization of the soliciting charitable organization’s choice in an exercise of its variance powers, within 30 days of exercising the variance power.
(I) Until contributions are disbursed to the recipient charitable organization, the soliciting charitable organization holds contributions in trust for the recipient charitable organization in a separate bank account.
(J) If the originally selected or alternative recipient charitable organization requests donor name or contact information, the soliciting charitable organization provides the information for donors who consented to share their information without imposing any fees or requiring the recipient charitable organization to provide consent for other solicitations.
(b) A charitable organization soliciting through means of the internet pursuant to subdivision (a) shall file an annual report, under oath, with the Attorney General’s Registry of Charitable Trusts. The Attorney General may require additional information in the annual report in a manner consistent with the procedures set forth in Section 12586 and may charge fees as provided in Sections 12587 and 12587.1. The annual report shall include at least the following information:
(1) The gross amount raised.
(2) The name, address, and other identifying information of all recipient charitable organizations and the amounts each received.
(3) The dates on which the contributions were released to the recipient charitable organizations.
(4) The name, address, and other identifying information for any commercial fundraiser for charitable purposes who assisted in the solicitation, along with copies of contracts with commercial fundraisers for charitable purposes that comply with Sections 12599 and 12599.3.
(5) The name, address, and other identifying information for any fundraising counsel for charitable purposes who assisted in the solicitation, along with copies of contracts with fundraising counsel for charitable purposes that comply with Section 12599.1.
(6) The name, address and other identifying information for any commercial coventurer who assisted in the solicitation, along with copies of contracts as provided by Section 12599.2.
(7) The name, address, and other identifying information for any other for-profit entity that assisted in the solicitation, along with copies of contracts relating to the entity’s role in assisting with the solicitation.
(8) An accounting of all fees charged by the soliciting charitable organization.
(9) An accounting of all costs involved in the solicitation.
(c) A charitable organization may retain a for-profit legal entity, including a commercial fundraiser for charitable purposes, fundraising counsel for charitable purposes, or a commercial coventurer to assist with solicitations set forth in subdivision (a) if the applicable requirements of Sections 12599 to 12599.7, inclusive, are met. Any for-profit legal entity assisting with solicitations shall also comply with the requirements applicable to soliciting charitable organizations in subparagraphs (C) to (F), inclusive, of paragraph (2) of subdivision (a). Donor information obtained through solicitations set forth in subdivision (b) belongs exclusively to the soliciting charitable organization and any recipient charitable organization, and, unless the donor expressly consents, shall not be disclosed or otherwise used to benefit the retained commercial fundraiser for charitable purposes, fundraising counsel for charitable purposes, commercial coventurer, or any third party for any purpose other than assisting the soliciting charitable organization.
(d) For purposes of this section, “good standing” means the charitable organization’s tax-exempt status has not been revoked by the Internal Revenue Service, the organization has not been revoked by the Franchise Tax Board where applicable, the organization is registered with the Attorney General’s Registry of Charitable Trusts where applicable, and the organization’s required reportings are deemed current by the Attorney General’s Registry of Charitable Trusts.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.