California Attorney General Rob Bonta recently announced his sponsorship of proposed legislation to regulate online fundraising in California conducted on charitable platforms such as GoFundMe, Facebook, Amazon Smile, Fundly, and others.
Introduced in February, Assembly Bill 488 – known as the Supervision of Trustees and Fundraisers for Charitable Purposes Act – would establish that charitable fundraising platforms and platform charities are trustees for charitable purposes subject to the Attorney General’s supervision.
The bill would define “charitable fundraising platform” to mean certain legal entities that use the Internet to provide a website, service, or other platform to persons in this state, and perform, permit, or otherwise enable certain acts of solicitation to occur. A “platform charity” would be defined to mean a trustee or charitable corporation as defined under the act that facilitates described acts of solicitation on a charitable fundraising platform.
If the bill becomes law, it would go into effect on January 1, 2023, and put the following provisions into effect:
Registration. Charitable fundraising platforms and platform charities would be required to submit an annual registration with the California AG’s Registry of Charitable Trusts. The AG would set registration and renewal fees.
Annual reports. Charitable fundraising platforms and platform charities would be required to file annual reports via a form to be provided by the AG’s Office.
Consent. Charitable fundraising platforms and platform charities would be required to obtain written consent to use a charity’s name in a solicitation. If specific requirements are met, written consent would not be required for certain acts of solicitation.
Good standing. Charitable fundraising platforms and platform charities would be limited to working only with charities in good standing – i.e., those whose tax-exempt status has not been revoked by the IRS or the Franchise Tax Board, or those not prohibited from operating or soliciting in California by the AG’s Office.
Disclosure. Charitable fundraising platforms and platform charities would be required to provide potential donors with prescribed disclosures in order to prevent deception or confusion.
Solicitations. Charitable fundraising platforms and platform charities would be required to remove any charity from its solicitation list if requested to do so by the charity in writing. In addition, charitable fundraising platforms and platform charities cannot make consent to solicitations a requirement for accepting a donation.
Accounting. Charitable fundraising platforms and platform charities would be required to hold donations in a separate account and ensure donations are sent promptly to the recipient charities with an accounting for any processing fees imposed. They must also provide tax donation receipts to donors promptly.
Enforcement. Failure of charitable fundraising platforms and platform charities to register, renew registration, or file annual reports will result in monetary penalties. Late fees would also be imposed for failing to register, renew registration, or file an annual report when due. The AG would also be entitled to recover costs, including attorneys’ fees, from defendants named in a charitable trust enforcement action.
The Church Law Center of California assists nonprofits with organization, governance, and risk management. We can help your nonprofit craft policies so it is in a better position to address problems as they arise. To find out how we can help your nonprofit, call us today at (949) 245-3177 or reach out to us through our contact page.