Amended by Stats. 1998, Ch. 445, Sec. 2. Effective January 1, 1999.
This article may be cited as the Supervision of Trustees and Fundraisers for Charitable Purposes Act.
Article 7 - Supervision of Trustees and Fundraisers for Charitable Purposes Act
California Government Code — §§ 12580-12599.10
Sections (29)
Repealed (in Sec. 1) and added by Stats. 2021, Ch. 616, Sec. 2. (AB 488) Effective January 1, 2022. Operative January 1, 2023, by its own provisions.
This article applies to all charitable corporations, unincorporated associations, trustees, and other legal entities holding property for charitable purposes, commercial fundraisers for charitable purposes, fundraising counsel for charitable purposes, commercial coventurers, charitable fundraising platforms, and platform charities over which the state or the Attorney General has enforcement or supervisory powers. This article shall not apply to any committee as defined in Section 82013 that is required to and does file any statement pursuant to Article 2 (commencing with Section 84200) of Chapter 4 of Title 9.
This section shall become operative on January 1, 2023.
Added by Stats. 1998, Ch. 445, Sec. 4. Effective January 1, 1999.
As used in this article, “solicitation” or “soliciting” 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:
(a)Any appeal is made for charitable purposes.
(b)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.
(c)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.
(d)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 solicitation is for the sole benefit of the actual active membership of the organization.
Amended by Stats. 2004, Ch. 919, Sec. 3. Effective January 1, 2005.
“Trustee” means (a) any individual, group of individuals, corporation, unincorporated association, or other legal entity holding property in trust pursuant to any charitable trust, (b) any corporation or unincorporated association which has accepted property to be used for a particular charitable purpose as distinguished from the general purposes of the corporation or unincorporated association, and (c) a corporation or unincorporated association formed for the administration of a charitable trust, pursuant to the directions of the settlor or at the instance
of the trustee.
Added by Stats. 1959, Ch. 1258.
“Charitable corporation” means any nonprofit corporation organized under the laws of this State for charitable or eleemosynary purposes and any similar foreign corporation doing business or holding property in this State for such purposes.
Amended by Stats. 2018, Ch. 92, Sec. 96. (SB 1289) Effective January 1, 2019.
The filing, registration, and reporting provisions of this article do not apply to the United States, any state, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or to any of their agencies or governmental subdivisions, to any religious corporation sole or other religious corporation or organization that holds property for religious purposes, or to any officer, director, or trustee thereof who holds property for like purposes, to a cemetery corporation regulated under Chapter 12 (commencing with Section 7600) of Division 3 of the Business and Professions Code, or to any committee as defined in Section 82013 that is required to and does file any statement pursuant to Article 2 (commencing with Section 84200) of Chapter 4 of Title 9, or to a charitable
corporation or unincorporated association organized and operated primarily as a religious organization, educational institution, hospital, or a health care service plan licensed pursuant to Section 1349 of the Health and Safety Code.
Amended by Stats. 2004, Ch. 919, Sec. 5. Effective January 1, 2005.
The Attorney General shall establish and maintain a register of charitable corporations, unincorporated associations, and trustees subject to this article and of the particular trust or other relationship under which they hold property for charitable purposes and, to that end, may conduct whatever investigation is necessary, and shall obtain from public records, court officers, taxing authorities, trustees, and other sources, whatever information, copies of instruments, reports, and records are needed for the establishment and maintenance of the
register.
Amended by Stats. 2006, Ch. 567, Sec. 18. Effective January 1, 2007.
(a)Every charitable corporation, unincorporated association, and trustee subject to this article shall file with the Attorney General an initial registration form, under oath, setting forth information and attaching documents prescribed in accordance with rules and regulations of the Attorney General, within 30 days after the corporation, unincorporated association, or trustee initially receives property. A trustee is not required to register as long as the charitable interest in a trust is a future interest, but shall do so within 30
days after any charitable interest in a trust becomes a present interest.
(b)The Attorney General shall adopt rules and regulations as to the contents of the initial registration form and the manner of executing and filing that document or documents.
Amended by Stats. 2021, Ch. 50, Sec. 109. (AB 378) Effective January 1, 2022.
(a)Except as otherwise provided and except corporate trustees which are subject to the jurisdiction of the Commissioner of Financial Institutions of the State of California under Division 1 (commencing with Section 99) of the Financial Code or to the Comptroller of the Currency of the United States, every charitable corporation, unincorporated association, and trustee subject to this article shall, in addition to filing copies of the instruments previously required, file with the Attorney General periodic written reports, under oath, setting forth information as to the nature of the assets held for charitable purposes and the administration thereof by the corporation, unincorporated association, or trustee, in accordance with rules and regulations of the Attorney General.
(b)The Attorney General shall make rules and regulations as to the time for filing reports, the contents thereof, and the manner of executing and filing them. The Attorney General may classify trusts and other relationships concerning property held for a charitable purpose as to purpose, nature of assets, duration of the trust or other relationship, amount of assets, amounts to be devoted to charitable purposes, nature of trustee, or otherwise, and may establish different rules for the different classes as to time and nature of the reports required to the ends (1) that the Attorney General shall receive reasonably current, periodic reports as to all charitable trusts or other relationships of a similar nature, which will enable the Attorney General to ascertain whether they are being properly administered, and (2) that periodic reports shall not unreasonably add to the expense of the administration of charitable trusts and similar relationships.
The Attorney General may suspend the filing of reports as to a particular charitable trust or relationship for a reasonable, specifically designated time upon written application of the trustee filed with the Attorney General and after the Attorney General has filed in the register of charitable trusts a written statement that the interests of the beneficiaries will not be prejudiced thereby and that periodic reports are not required for proper supervision by the Attorney General’s office.
(c)A copy of an account filed by the trustee in any court having jurisdiction of the trust or other relationship, if the account substantially complies with the rules and regulations of the Attorney General, may be filed as a report required by this section.
(d)The first periodic written report, unless the filing thereof is suspended as herein provided, shall be filed not later than four
months and 15 days following the close of the first calendar or fiscal year in which property is initially received. If any part of the income or principal of a trust previously established is authorized or required to be applied to a charitable purpose at the time this article takes effect, the first report shall be filed at the close of the calendar or fiscal year in which it was registered with the Attorney General or not later than four months and 15 days following the close of the calendar or fiscal period.
(e)Every charitable corporation, unincorporated association, and trustee required to file reports with the Attorney General pursuant to this section that receives or accrues in any fiscal year gross revenue of two million dollars ($2,000,000) or more, exclusive of grants from, and contracts for services with, governmental entities for which the governmental entity requires an accounting of the funds received, shall do the
following:
(1)Prepare annual financial statements using generally accepted accounting principles that are audited by an independent certified public accountant in conformity with generally accepted auditing standards. For any nonaudit services performed by the firm conducting the audit, the firm and its individual auditors shall adhere to the standards for auditor independence set forth in the latest revision of the Government Auditing Standards, issued by the Comptroller General of the United States (the Yellow Book). The Attorney General may, by regulation, prescribe standards for auditor independence in the performance of nonaudit services, including standards different from those set forth in the Yellow Book. If a charitable corporation or unincorporated association that is required to prepare an annual financial statement pursuant to this subdivision is under the control of another organization, the controlling organization may prepare a
consolidated financial statement. The audited financial statements shall be available for inspection by the Attorney General and by members of the public no later than nine months after the close of the fiscal year to which the statements relate. A charity shall make its annual audited financial statements available to the public in the same manner that is prescribed for IRS Form 990 by the latest revision of Section 6104(d) of the Internal Revenue Code and associated regulations.
(2)If it is a corporation, have an audit committee appointed by the board of directors. The audit committee may include persons who are not members of the board of directors, but the member or members of the audit committee shall not include any members of the staff, including the president or chief executive officer and the treasurer or chief financial officer. If the corporation has a finance committee, it must be separate from the audit committee. Members of the
finance committee may serve on the audit committee; however, the chairperson of the audit committee may not be a member of the finance committee and members of the finance committee shall constitute less than one-half of the membership of the audit committee. Members of the audit committee shall not receive any compensation from the corporation in excess of the compensation, if any, received by members of the board of directors for service on the board and shall not have a material financial interest in any entity doing business with the corporation. Subject to the supervision of the board of directors, the audit committee shall be responsible for recommending to the board of directors the retention and termination of the independent auditor and may negotiate the independent auditor’s compensation, on behalf of the board of directors. The audit committee shall confer with the auditor to satisfy its members that the financial affairs of the corporation are in order, shall review and determine whether to
accept the audit, shall ensure that any nonaudit services performed by the auditing firm conform with standards for auditor independence referred to in paragraph (1), and shall approve performance of nonaudit services by the auditing firm. If the charitable corporation that is required to have an audit committee pursuant to this subdivision is under the control of another corporation, the audit committee may be part of the board of directors of the controlling corporation.
(f)If, independent of the audit requirement set forth in paragraph (1) of subdivision (e), a charitable corporation, unincorporated association, or trustee required to file reports with the Attorney General pursuant to this section prepares financial statements that are audited by a certified public accountant, the audited financial statements shall be available for inspection by the Attorney General and shall be made available to members of the public in conformity with
paragraph (1) of subdivision (e).
(g)The board of directors of a charitable corporation or unincorporated association, or an authorized committee of the board, and the trustee or trustees of a charitable trust shall review and approve the compensation, including benefits, of the president or chief executive officer and the treasurer or chief financial officer to ensure that it is just and reasonable. This review and approval shall occur initially upon the hiring of the officer, whenever the term of employment, if any, of the officer is renewed or extended, and whenever the officer’s compensation is modified. Separate review and approval shall not be required if a modification of compensation extends to substantially all employees. If a charitable corporation is affiliated with other charitable corporations, the requirements of this section shall be satisfied if review and approval is obtained from the board, or an authorized committee of the
board, of the charitable corporation that makes retention and compensation decisions regarding a particular individual.
Repealed (in Sec. 3) and added by Stats. 2021, Ch. 616, Sec. 4. (AB 488) Effective January 1, 2022. Operative January 1, 2023, by its own provisions.
In addition to a registration fee, a charitable corporation or trustee, commercial fundraiser, fundraising counsel, coventurer, charitable fundraising platform, or platform charity may be assessed a late fee or an additional fee of twenty-five dollars ($25) for each month or part of the month after the date on which the registration statement and financial report were due to be filed or after the period of extension granted for the filing, if the charitable corporation or trustee, commercial fundraiser, fundraising counsel, coventurer, charitable fundraising platform, or platform charity does any of the following:
(a)Exists and operates in California without being registered.
(b)Solicits contributions in California without being registered or, if applicable, bonded.
(c)Fails to file its first report no later than four months and 15 days following the close of each calendar or fiscal year and has not requested an extension of time to file the annual report.
(d)Fails to file its subsequent annual report no later than four months and 15 days following the close of each calendar or fiscal year subsequent to the filing of the first report and has not requested an extension of time to file the annual report.
(e)Fails to file its annual registration/renewal form within the time specified by the Attorney General irrespective of other report filing requirements.
(f)Fails to correct the deficiencies in its
registration or annual report within 10 days of receipt of written notice of those deficiencies.
This section shall become operative on January 1, 2023.
Added by Stats. 2000, Ch. 475, Sec. 2. Effective January 1, 2001.
All fines, penalties, attorney’s fees, if any, as authorized by law, and costs of investigation paid to the Attorney General pursuant to Section 12598 shall be used by the Department of Justice solely for the administration of the Attorney General’s charitable trust enforcement responsibilities.
Amended by Stats. 2023, Ch. 478, Sec. 27. (AB 1756) Effective January 1, 2024.
The Attorney General may make additional rules and regulations necessary for the administration of this article, provided that any assessment of an annual registration or renewal fee from charitable trustees and corporations, commercial fundraisers, fundraising counsel, commercial coventurers, charitable fundraising platforms, and platform charities subject to this article, authorized by statute or regulation, shall be used by the Department of Justice solely to operate and maintain the Attorney General’s Registry of Charities and Fundraisers and provide public access via internet website to reports filed with the Attorney General.
Amended by Stats. 2023, Ch. 478, Sec. 28. (AB 1756) Effective January 1, 2024.
(a)The Registry of Charities and Fundraisers Fund is hereby established in the State Treasury, to be administered by the Department of Justice.
(b)Notwithstanding any other law, all registration fees, registration renewal fees, and late fees or other fees paid to the Department of Justice pursuant to this article, former Section 2850 of the Probate Code, or Section 320.5 of the Penal Code, shall be deposited in the Registry of Charities and Fundraisers Fund.
(c)Moneys in the fund, upon appropriation by the Legislature, shall be used by the Attorney General to operate and maintain the Attorney General’s Registry of
Charities and Fundraisers and provide public access via the internet to reports filed with the Attorney General.
(d)Moneys in the fund, upon appropriation by the Legislature, shall be used by the Attorney General to enforce the registration and reporting provisions.
Amended by Stats. 2017, Ch. 561, Sec. 79. (AB 1516) Effective January 1, 2018.
The Attorney General may investigate transactions and relationships of corporations and trustees subject to this article for the purpose of ascertaining whether or not the purposes of the corporation or trust are being carried out in accordance with the terms and provisions of the articles of incorporation or other instrument. The Attorney General may require any agent, trustee, fiduciary, beneficiary, institution, association, or corporation, or other person to appear, at a named time and place, in the county designated by the Attorney General, where the person resides or is found, to give information under oath and to produce books, memoranda, papers, documents of title, and evidence of assets, liabilities, receipts, or disbursements in the possession or control of the person ordered to
appear.
Amended by Stats. 2017, Ch. 561, Sec. 80. (AB 1516) Effective January 1, 2018.
When the Attorney General requires the attendance of any person, as provided in Section 12588, the Attorney General shall issue an order setting forth the time when and the place where attendance is required and shall cause the same to be delivered to or sent by registered mail to the person at least 14 days before the date fixed for attendance. Such order shall have the same force and effect as a subpoena and, upon application of the Attorney General, obedience to the order may be enforced by the superior court in the county where the person receiving it resides or is found, in the same manner as though the notice were a subpoena. The court, after hearing, for cause, and upon application of any person aggrieved by the order, shall have the right to alter, amend, revise, suspend or postpone all or any part of
its provisions.
Repealed and added by Stats. 1959, Ch. 1258.
Subject to reasonable rules and regulations adopted by the Attorney General, the register, copies of instruments, and the reports filed with the Attorney General shall be open to public inspection. The Attorney General shall withhold from public inspection any instrument so filed whose content is not exclusively for charitable purposes.
Amended by Stats. 2017, Ch. 561, Sec. 81. (AB 1516) Effective January 1, 2018.
The Attorney General may institute appropriate proceedings to secure compliance with this article and to invoke the jurisdiction of the court. The powers and duties of the Attorney General provided in this article are in addition to the Attorney General’s existing powers and duties. This article does not impair or restrict the jurisdiction of any court with respect to any of the matters covered by it, except that a court shall not have jurisdiction to modify or terminate any trust of property for charitable purposes unless the Attorney General is a party to the proceedings.
Amended by Stats. 2023, Ch. 478, Sec. 29. (AB 1756) Effective January 1, 2024.
(a)Any person who violates any provision of this article with intent to deceive or defraud any charity or individual is liable for a civil penalty not exceeding ten thousand dollars ($10,000).
(b)The Attorney General may issue a cease and desist order whenever the Attorney General finds that any entity or person that is subject to the provisions of this article pursuant to Section 12581, or its agent, servant, or employee, has committed an act that would constitute a violation of, or is operating in violation of, this article, or its implementing regulations, or an order issued by the Attorney General, including, but not limited to, all of the following:
(1)Has refused or failed, after notice, to produce any records of the organization or to disclose any information required to be disclosed under this article or Chapter 4 (commencing with Section 300) of Division 1 of Title 11 of the California Code of Regulations.
(2)Has made a material false statement in an application, statement, or report required to be filed under this article or Chapter 4 (commencing with Section 300) of Division 1 of Title 11 of the California Code of Regulations.
(3)Has failed to file a financial report, or has filed an incomplete financial report, that is required by this article or Chapter 4 (commencing with Section 300) of Division 1 of Title 11 of the California Code of Regulations.
(4)Has engaged in any act prohibited pursuant to Section 12599.6.
(c)The Attorney General may impose a penalty on any person or entity, not to exceed one thousand dollars ($1,000) per act or omission, for each act or omission that constitutes a violation of this article or Chapter 4 (commencing with Section 300) of Division 1 of Title 11 of the California Code of Regulations. At least 5 days before imposing that penalty, the Attorney General shall provide notice to the person or entity that committed the violation by certified mail to the address of record at the Registry of Charities and Fundraisers. Penalties shall accrue, commencing on the fifth day after notice is given, at a rate of one hundred dollars ($100) per day for each day until that person or entity corrects that violation.
Penalties shall stop accruing as of the date set forth in the written notice provided by the Attorney General that the violation or omission subject to penalties has been corrected or remedied.
(d)If the Attorney General assesses penalties under this section, the Attorney General may suspend the registration of that person or entity in accordance with the procedures set forth in Section 999.6 of Title 11 of the California Code of Regulations. Registration shall be automatically suspended until the fine is paid and no registration shall be renewed until the fine is paid.
(e)Any person or entity that the Attorney General has filed an action against pursuant to this section may request a hearing to review that action in accordance with the procedures set forth in Chapter 15
(commencing with Section 999.1) of Division 1 of Title 11 of the California Code of Regulations and rules adopted by the Attorney General. Any request for hearing shall be made within 30 days after the Attorney General has served the person with notice of the action. That notice shall be deemed effective upon mailing.
(f)The Attorney General may apply to a superior court of the State of California for relief, and the court may issue a temporary injunction or a permanent injunction to restrain violations of this chapter, appoint a receiver, order restitution or an accounting, or grant other relief as may be appropriate to ensure the due application of charitable funds. Those proceedings shall be brought in the name of the state.
(g)All penalties paid to the Attorney General pursuant
to this section shall be used by the Department of Justice in accordance with the provisions of Section 12586.2.
(h)Any offense committed under this article involving a solicitation may be deemed to have been committed at either the place at which the solicitation was initiated or at the place where the solicitation was received.
(i)Any person who violates only subdivision (c), (d), (e), or (f) of Section 12586.1 shall not be liable for a civil penalty under subdivision (b) if the person (1) has not received reasonable notice of the violation and (2) has not been given a reasonable opportunity to correct the violation. The Attorney General shall notify in writing a person who violates only subdivision (c), (d), (e), or (f) of Section 12586.1 that they have 30 days to
correct the violation.
(j)The recovery of a civil penalty pursuant to this section precludes assessment of a late fee pursuant to Section 12586.1 for the same offense.
Amended by Stats. 2021, Ch. 50, Sec. 110. (AB 378) Effective January 1, 2022.
In any case in which the Attorney General has authority to institute an action or proceeding under this article, the Attorney General may accept an assurance of voluntary compliance through which any person alleged to be engaged in any method, act, or practice in violation of this article agrees to discontinue that method, act, or practice. The assurance may, among other terms, include a stipulation of a voluntary payment by the person of the cost of the investigation or of an amount to be held in escrow pending the outcome of an action or as restitution to aggrieved persons, or both. The assurance of voluntary compliance shall not be considered an admission of a violation for any purpose. The assurance of compliance shall be in writing and shall be filed with a superior court in this state for approval and
if approved shall thereafter be filed with the clerk of the court. Matters closed may at any time be reopened by the court for further proceedings in the public interest. In the event of an alleged violation, the Attorney General may, in the Attorney General’s discretion, either initiate contempt proceedings or proceed as if the assurance of voluntary compliance has not been accepted.
Repealed and added by Stats. 1959, Ch. 1258.
This article shall apply regardless of any contrary provisions of any instrument.
Amended by Stats. 2021, Ch. 50, Sec. 111. (AB 378) Effective January 1, 2022.
Every person who offers for probate any instrument which establishes a testamentary trust of property for charitable purposes or who records in any county or city and county any inter vivos transfer of property for charitable purposes shall furnish a copy of the document to the Attorney General. The custodian of the records of a court having jurisdiction of probate matters or of charitable trusts shall furnish copies of papers, records, and files of the custodian’s office relating to the subject of this article as the Attorney General requires.
Repealed and added by Stats. 1959, Ch. 1258.
Every officer, agency, board, or commission of this State receiving applications for exemption from taxation of any corporation, charitable trust or similar relationship in which the corporation or trustee is subject to this article shall annually file with the Attorney General a list of all applications received during the year.
Repealed and added by Stats. 1959, Ch. 1258.
This act shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it.
Amended by Stats. 2015, Ch. 299, Sec. 3. (AB 556) Effective January 1, 2016.
(a)A civil action brought by the Attorney General against trustees or other persons holding property in trust for charitable purposes or against any charitable corporation or any director or officer thereof to enforce a charitable trust or to impress property with a trust for charitable purposes or to recover property or the proceeds thereof for and on behalf of any charitable trust or corporation, may be brought at any time within 10 years after the cause of action accrued.
(b)A civil action brought by the Attorney General for a violation of this article, pursuant to Section 2223 or 2224 of the Civil Code, or pursuant to Division 2 (commencing
with Section 5000) of Title 1 of the Corporations Code, may be brought at any time within 10 years after the cause of action accrued.
(c)Notwithstanding Section 12581, the Attorney General may bring a civil action against a person who aids or abets a violation of this article, Section 2223 or 2224 of the Civil Code, or Article 3 (commencing with Section 5230) of Chapter 2 of Part 2 of Division 2 of Title 1 of the Corporations Code, at any time within 10 years after the cause of action accrued.
Added by Stats. 1969, Ch. 490.
In any proceeding brought by the Attorney General to secure compliance with the provisions of Sections 12584 to 12587, inclusive, or any regulation issued pursuant thereto, the judgment, if in favor of the state, shall provide that the person having the responsibility or duty to comply with such provisions on behalf of any charitable trust or charitable corporation, shall pay the reasonable expense necessarily incurred by the state in the investigation and prosecution of such action.
Repealed (in Sec. 7) and added by Stats. 2021, Ch. 616, Sec. 8. (AB 488) Effective January 1, 2022. Operative January 1, 2023, by its own provisions.
(a)The primary responsibility for supervising charitable trusts in California, for ensuring compliance with trusts and articles of incorporation, and for protection of assets held by charitable trusts and public benefit corporations, resides in the Attorney General. The Attorney General has broad powers under common law and California statutory law to carry out these charitable trust enforcement responsibilities. These powers include, but are not limited to, charitable trust enforcement actions under all of the following:
(1)This article.
(2)Title 8 (commencing with Section 2223) of Part 4 of Division 3 of the Civil Code.
(3)Division 2 (commencing with Section 5000) of Title 1 of the Corporations Code.
(4)Sections 8111, 11703, 15004, 15409, 15680 to 15685, inclusive, 16060 to 16062, inclusive, 16064, and 17200 to 17210, inclusive, of the Probate Code.
(5)Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code, and Sections 17500 and 17535 of the Business and Professions Code.
(6)Sections 319, 326.5, and 532d of the Penal Code.
(b)The Attorney General shall be entitled to recover from defendants named in a charitable trust enforcement action all reasonable attorney’s fees and actual costs incurred in conducting that action, including, but not limited to, the
costs of auditors, consultants, and experts employed or retained to assist with the investigation, preparation, and presentation in court of the charitable trust enforcement action.
(c)Attorney’s fees and costs shall be recovered by the Attorney General pursuant to court order. When awarding attorney’s fees and costs, the court shall order that the attorney’s fees and costs be paid by the charitable organization and the individuals named as defendants in or otherwise subject to the action, in a manner that the court finds to be equitable and fair.
(d)Upon a finding by the court that a lawsuit filed by the Attorney General was frivolous or brought in bad faith, the court may award the defendant charity the costs of that action.
(e)(1) The Attorney General may refuse to register or may revoke
or suspend the registration of a charitable corporation or trustee, commercial fundraiser, fundraising counsel, coventurer, charitable fundraising platform, or platform charity whenever the Attorney General finds that the charitable corporation or trustee, commercial fundraiser, fundraising counsel, coventurer, charitable fundraising platform, or platform charity has violated or is operating in violation of any provision of this article.
(2)All actions of the Attorney General shall be taken subject to the rights authorized pursuant to Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2.
(f)This section shall become operative on January 1, 2023.
Amended by Stats. 2023, Ch. 478, Sec. 30. (AB 1756) Effective January 1, 2024.
(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.
(4)Plans, manages, advises, counsels, consults, or prepares material for, or with respect to, the solicitation in this state of funds, assets, or property for charitable purposes, but is disqualified as a fundraising counsel for charitable purposes pursuant to subdivision (a) of Section 12599.1.
(5)Uses the internet to provide an internet website, service, or other platform to persons in this state, and performs, permits, or otherwise enables acts of solicitation to occur as specified in paragraph (1) of subdivision (a) of Section 12599.9, but is disqualified as a charitable fundraising platform pursuant to subparagraph (D) of paragraph (2) of subdivision (a) of Section 12599.9.
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 a “charitable fundraising platform” as defined in paragraph (1) of subdivision (a) of Section 12599.9, that is not disqualified as a charitable fundraising platform pursuant to subparagraph (D) of paragraph (2) of subdivision (a) of
Section 12599.9. 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, or an escrow agent or caging company that receives or controls funds received as a result of a solicitation for charitable purposes. For purposes of this section, a caging company is a business that receives contributions, processes donor mail, and deposits all contributions to an account under the sole control of the charitable organization.
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 Charities and Fundraisers on a registration form provided by the Attorney General.
Renewals of registration shall be filed with the Registry of Charities and Fundraisers 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 Charities and Fundraisers 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 Charities and Fundraisers 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 Charities and Fundraisers 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 Charities and Fundraisers 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 Charities and Fundraisers, 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 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 Charities and Fundraisers 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 Attorney General’s Registry of Charities and Fundraisers, 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 Charities and Fundraisers. 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 Charities and Fundraisers.
(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.
Amended by Stats. 2023, Ch. 478, Sec. 31. (AB 1756) Effective January 1, 2024.
(a)“Fundraising counsel for charitable purposes” is defined as any individual, corporation, unincorporated association, or other legal entity who is described by all of the following:
(1)For compensation, other than as a percentage of the funds, assets, or property received as a result of a solicitation campaign, plans, manages, advises, counsels, consults, or prepares material for, or with respect to, the solicitation in this state of funds, assets, or property for charitable purposes.
(2)Does not solicit funds, assets, or property for charitable purposes.
(3)Does not receive or control funds, assets, or property solicited for charitable purposes in this state. An individual, corporation, unincorporated association, or other legal entity is deemed to receive or control funds, assets, or property if any of the following apply:
(A)It has the right to approve or veto any payment from an escrow account to which funds received from a solicitation for charitable purposes are subject.
(B)It maintains an interest in an account into which solicited funds are deposited.
(C)It has the right to access funds, assets, or property received from a solicitation for charitable purposes and held by a caging company.
(D)It has any ownership or management interest in any other entity that receives or controls the funds, assets, or property solicited for charitable purposes, including, but not limited to, an escrow agent or caging company, but not including any federally insured financial institution.
(E)It receives any financial benefit, directly or indirectly, from any other individual or entity that receives or controls the funds, assets, or property solicited for charitable purposes, other than the trustee or charitable corporation soliciting the funds, assets, or property for charitable purposes.
(4)Does not employ, procure, or engage any compensated person to solicit, receive, or control funds, assets, or property for charitable purposes.
Any
individual, corporation, unincorporated association, or other legal entity who, for compensation, plans, manages, advises, counsels, consults, or prepares material for, or with respect to, the solicitation in this state of funds, assets, or property for charitable purposes, but does not meet the qualifications of a fundraising counsel for charitable purposes in this subdivision, shall be deemed to be a commercial fundraiser for charitable purposes as described in subdivision (a) of Section 12599, unless excluded by that section.
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, or an escrow agent or caging company that receives or controls funds received as a result of a solicitation for charitable purposes. For purposes of this section, a caging company is a business that receives contributions, processes donor mail, and deposits all contributions into an account under the sole control of the charitable organization.
(b)“Fundraising counsel for charitable purposes” does not include any of the following:
(1)An attorney, investment counselor, or banker who in the conduct
of that person’s profession advises a client when actually engaged in the giving of legal, investment, or financial advice.
(2)A trustee as defined in Section 12582 or 12583.
(3)A charitable corporation as defined in Section 12582.1, or any employee thereof.
(4)A person employed by or under the control of a fundraising counsel for charitable purposes, as defined in subdivision (a).
(5)A person, corporation, or other legal entity, engaged as an independent contractor directly by a trustee or a charitable corporation, that prints, reproduces, or distributes written materials prepared by a trustee, a charitable corporation, or any employee thereof, or that performs
artistic or graphic services with respect to written materials prepared by a trustee, a charitable corporation, or any employee thereof, provided that the independent contractor does not perform any of the activities described in paragraph (1) of subdivision (a).
(6)A person whose total annual gross compensation for performing any activity described in paragraph (1) of subdivision (a) does not exceed twenty-five thousand dollars ($25,000).
(7)A person or entity that meets the definition of both a fundraising counsel for charitable purposes and a charitable fundraising platform as defined in paragraph (1) of subdivision (a) of Section 12599.9 is disqualified as a fundraising counsel for charitable purposes, and shall only be a charitable fundraising platform.
(c)A fundraising counsel for charitable purposes shall, prior to managing, advising, counseling, consulting, or preparing material for, or with respect to, the solicitation in this state of funds, assets, or property for charitable purposes, register with the Attorney General’s Registry of Charities and Fundraisers on a registration form provided by the Attorney General. Renewals of registration shall be filed with the Attorney General’s Registry of Charities and Fundraisers by January 15 of each calendar year in which the fundraising counsel 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 fundraising counsel for charitable purposes, and shall be payable by certified or
cashier’s check to the Attorney General’s Registry of Charities and Fundraisers at the time of registration and 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 Charities and Fundraisers may grant extensions of time to file annual registration as required, pursuant to subdivision (b) of Section 12586.
(d)A fundraising counsel for charitable purposes shall file annually with the Attorney General’s Registry of Charities and Fundraisers on a form provided by the Attorney General, a report listing each person, corporation, unincorporated association, or other legal entity for whom the fundraising counsel has performed any services described in paragraph (1) of subdivision (a), and a statement certifying that the
fundraising counsel had a written contract with each listed person, corporation, unincorporated association, or other legal entity that complied with the requirements of subdivision (f).
(e)Not less than 10 working days prior to the commencement of the performance of any service for a charitable organization by a fundraising counsel for charitable purposes, or not later than commencement of solicitation for solicitations to aid victims of emergency hardship or disasters, the fundraising counsel shall file with the Attorney General’s Registry of Charities and Fundraisers 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 fundraising counsel for charitable purposes.
(2)The name, address, and telephone number of the charitable organization with whom the fundraising counsel has contracted.
(3)The projected dates when performance under the contract will commence and terminate.
(4)The name, address, and telephone number of the person responsible for directing and supervising the work of the fundraising counsel under the contract.
(f)There shall be a written contract between a fundraising counsel for charitable purposes and a charitable organization for each service to be performed by the fundraising counsel for the charitable organization, that shall be signed by the authorized contracting officer for the fundraising
counsel 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 Attorney General’s Registry of Charities and Fundraisers unless the charitable organization is exempt from registration.
(2)A statement of the charitable purpose for which the solicitation campaign is being conducted.
(3)A statement of the respective obligations of the fundraising counsel and the charitable organization.
(4)A clear statement of the fees and any other form of compensation, including commissions
and property, that will be paid to the fundraising counsel.
(5)The effective and termination dates of the contract and the date services will commence with respect to solicitation in this state of contributions for a charitable organization.
(6)A statement that the fundraising counsel will not at any time solicit funds, assets, or property for charitable purposes, receive or control funds, assets, or property solicited for charitable purposes, or employ, procure, or engage any compensated person to solicit, receive, or control funds, assets, or property for charitable purposes.
(7)A statement that the charitable organization exercises control and approval over the content and frequency of any solicitation.
(8)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 fundraising counsel.
(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.
(9)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 fundraising counsel to the effective date of the termination.
(10)Any other information required by the regulations of the Attorney General.
(g)It shall be unlawful for any fundraising counsel for charitable purposes to manage, advise, counsel, consult, or prepare material for, or with respect to, the solicitation in this state of funds, assets, or property for charitable purposes unless the fundraising counsel for charitable purposes has complied with the registration or annual renewal and financial reporting requirements of this article.
(h)A fundraising counsel for charitable purposes is subject to the Attorney General’s supervision and enforcement to the same extent as a trustee for charitable purposes under this article.
(i)If any provision of this section or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or application of this section
which can be given effect without the invalid provision or application, and to this end the provisions of this section are severable.
Added by Stats. 2021, Ch. 616, Sec. 18. (AB 488) Effective January 1, 2022.
(a)The Attorney General shall establish rules and regulations necessary for the administration of Section 12599.9, which shall include, but are not limited to, all of the following:
(1)The additional acts of solicitation that meet the definition of a charitable fundraising platform or platform charity, as needed, in order to address changes in technology and charitable fundraising through platforms.
(2)The content of the form and other information to be provided by a charitable fundraising platform for registration and in annual reports filed with the Attorney General’s Registry of Charitable Trusts, including all of the following:
(A)The manner and timing of the filing of registration and reports.
(B)The handling of confidential, trade secret, or personal information provided.
(C)The circumstances under which partnering charitable fundraising platforms or platform charities may submit an annual report on behalf of other charitable fundraising platforms, taking into consideration the benefits and expenses of submitting individual reports for charitable fundraising platforms as compared to consolidated reports for charitable fundraising platforms that partner with platform charities.
(D)The payment of fees to cover the reasonable costs to administer and enforce Section 12599.9.
(3)The requirements for any written
agreement between a recipient charitable organization and a charitable fundraising platform or a platform charity that provides consent for or otherwise applies to solicitations for donations, including permitting those agreements to be entered into electronically.
(4)The requirements for holding donations or distributing donations and grants of recommended donations, including all of the following:
(A)(i) The maximum length of times it takes to send the donated funds, taking into consideration the acts of solicitation described in paragraph (1) of subdivision (a), the number of donations made through a charitable fundraising platform or platform charity, whether donations are made to the charitable fundraising platform, platform charity, recipient charitable organizations, other charitable organizations, or persons engaging in peer-to-peer charitable
fundraising, whether the recipient charitable organization has provided consent for a solicitation, whether further verification information is requested to prevent fraud, and whether donations are sent to alternate recipient charitable organizations.
(ii) For charitable fundraising platforms as defined in subparagraph (C) or (D) of paragraph (1) of subdivision (a) of Section 12599.9, the length of time to send donations or grants of recommended donations to the recipient charitable organization shall be no less than on a quarterly basis and subject to any minimum amounts, not to exceed ten dollars ($10), as disclosed pursuant to paragraphs (2) and (3) of subdivision (e) of Section 12599.9. Regardless of the minimum amount, donations or grants of recommended donations to the recipient charitable organization shall be sent after four consecutive quarters, unless the recipient charitable organization is not eligible to receive the funds, as
disclosed pursuant to paragraphs (2) and (3) of subdivision (e) of Section 12599.9.
(B)The circumstances under which donors or persons may be contacted to provide alternate recipient charitable organizations or notified when the donated funds are sent.
(C)The circumstances when donor or personal information may be provided to recipient charitable organizations.
(b)This section shall become operative on January 1, 2022.