Amended in Assembly April 15, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 914

Introduced by Assembly Member Gordon

February 22, 2013

An act to amend Section 12586 of, and to add Article 3.5 (commencing with Section 84350) to Chapter 4 of Title 9 of, the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

AB 914, as amended, Gordon. Political Reform Act of 1974: campaign disclosures.

(1) The Political Reform Act of 1974 imposes various reporting requirements with regard to contributions and independent expenditures, as defined, made for political purposes. The act establishes the Fair Political Practices Commission as the agency responsible for administering and enforcing the act.

This bill would require the Commission to develop a Nonprofit and Multipurpose Organization Disclosure Statement form. The bill would require that the form provide for the disclosure of specified information relating to contributions, expenditures, and independent expenditures made by, and donations made to, a nonprofit corporation. The bill would require a nonprofit corporation to file a Nonprofit and Multipurpose Organization Disclosure Statement, at a time prescribed by the Commission, in any year in which the nonprofit corporation makes combined contributions, expenditures, and independent expenditures in this state aggregating $50,000 or more during the nonprofit corporation’s fiscal year.

The bill would require the Commission to make Nonprofit and Multipurpose Organization Disclosure Statements available to the public. The bill would authorize a nonprofit corporation or a donor to the nonprofit corporation to petition the Commission to maintain the confidentiality of information relating to donors and donations. The bill would require the Commission to grant a petition to maintain the confidentiality of donor and donation information if the petitioner establishes by clear and convincing evidence that the public disclosure of donor information will cause undue harm, threats, harassment, or reprisals to the donor, or that the donor did not know or have reason to know that his or her donation would be used to make a contribution, expenditure, or independent expenditure, as specified.

(2) The Supervision of Trustees and Fundraisers for Charitable Purposes Act provides the Attorney General with enforcement and supervisory powers relating to certain entities, including charitable corporations, unincorporated associations, and trustees. Existing law requires these entities to file with the Attorney General periodic written reports, under oath, that set forth information as to the nature of the assets held for charitable purposes and the administration of these assets by the corporation or the trustee in accordance with rules and regulations of the Attorney General. These requirements do not apply to an entity that is a committee for purposes of the Political Reform Act of 1974 that is required to file specified campaign statements pursuant to that act.

This bill would additionally require a charitable corporation, unincorporated association, or trustee that is required to file periodic written reports with the Attorney General to file a Nonprofit and Multipurpose Organization Disclosure Statement as an attachment to its periodic written reports if the entity made combined contributions, expenditures, or independent expenditures in this begin delete State end delete begin insert state end insert aggregating $50,000 or more during the entity’s fiscal year, as specified.

This bill would authorize an entity or its donors to petition the Attorney General to maintain the confidentiality of certain donor information in the same manner described above with respect to similar statements filed with the Commission, as specified.

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.

The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Section 12586 of the Government Code is
amended to read:

12586.  

(a) Except as otherwise provided and except corporate
trustees that 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 he or she shall
receive reasonably current, periodic reports as to all charitable
trusts or other relationships of a similar nature, which will enable
him or her 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 his or her 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 all of 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 assure 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 assure 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.

(h) (1) This subdivision applies only to a charitable corporation,
unincorporated association, or trustee that is required to file reports
with the Attorney General pursuant to this section and that makes
combined contributions, expenditures, and independent
expenditures in this state aggregating fifty thousand dollars
($50,000) or more during the entity’s fiscal year.

(2) The Fair Political Practices Commission shall develop a
Nonprofit and Multipurpose Organization Disclosure Statement
form that an entity described in paragraph (1) shall file with the
Attorney General, as required by this subdivision. The form, which
may be identical to the form created for nonprofit corporations
pursuant to Section 84350, shall provide for the disclosure of all
of the following information:

(A) The aggregate combined dollar amount of contributions,
expenditures, and independent expenditures that are made during
the reporting period.

(B) The amount of expenses attributable to contributions,
expenditures, and independent expenditures as a percentage of the
entity’s total expenses that are made during the reporting period.

(C) For purposes of an entity for which the combined amounts
of contributions, expenditures, and independent expenditures made
during the reporting period exceed 10 percent of the entity’s total
expenses, each of the following with respect to contributions,
expenditures, and independent expenditures made during that
period:

(i) The amount of any funds, or the fair market value of any
services or assets, that are provided in relation to a contribution,
expenditure, or independent expenditure.

(ii) The amount or fair market value of any liabilities incurred
in relation to a contribution, expenditure, or independent
expenditure.

(iii) The date that the funds, services, or assets were provided
or the liabilities were incurred.

(iv) The name and address of the recipient of the contribution,
expenditure, or independent expenditure.

(v) A description of the contribution, expenditure, or
independent expenditure and its purpose, including whether the
contribution, expenditure, or independent expenditure was made
in support of or opposition to a candidate, political party, ballot
measure, or other question put before the voters in an election.

(vi) Information related to each begin delete donation received by the end delete begin insert donor
who made donations in an aggregate amount of ten thousand
dollars ($10,000) or more to the end insert entity during the reporting period,
including the name and address of begin delete each end delete begin insert the end insert donor begin delete who made
donations in an aggregate amount of ten thousand dollars ($10,000)
or more during the reporting period end delete , the name of the employer of
begin delete each individual end delete begin insert the end insert donor, if available, and the date and amount
of each donation begin insert from that donor during the reporting period end insert .

(3) (A) Except as otherwise provided in this paragraph, an entity
described in paragraph (1) shall file a Nonprofit and Multipurpose
Organization Disclosure Statement as an attachment to its periodic
written reports required by this section with the Attorney General
for any year in which the entity meets the fifty thousand dollar
($50,000) threshold for combined aggregate contributions,
expenditures, and independent expenditures made during a fiscal
year. Except as provided in paragraph (4), the Attorney General
shall make the filed Nonprofit and Multipurpose Organization
Disclosure Statement available to the public through the Register
of Charitable Corporations and Trustees established pursuant to
Section 12584.

(B) An entity is not required to disclose the information
described in subparagraph (C) of paragraph (2) if that information
has been previously disclosed by the entity in any other campaign
statement or report required by the Political Reform Act of 1974
(Title 9 (commencing with Section 81000)).

(C) If an entity required to file a Nonprofit and Multipurpose
Organization Disclosure Statement pursuant to this subdivision
maintains one or more segregated bank accounts for the purpose
of making election-related contributions, expenditures, or
independent expenditures, and those accounts represent the
exclusive source of the entity’s election-related contributions,
expenditures, and independent expenditures in this state, the entity
is only required to report information described in clause (vi) of
subparagraph (C) of paragraph (2) with respect to donations
deposited into the segregated election-related accounts.

(4) A charitable corporation, unincorporated association, or
trustee that is subject to the reporting requirements of this
subdivision, or a donor to any of these entities, may petition the
Attorney General, no later than 45 days prior to the date on which
the Nonprofit and Multipurpose Organization Disclosure Statement
must be filed, to maintain the confidentiality of donor information
that is disclosed on the statement. If a petitioner demonstrates by
clear and convincing evidence that the public disclosure of donor
information reported on the Nonprofit and Multipurpose
Organization Disclosure Statement will cause undue harm, threats,
harassment, or reprisals to the donor or that the donor did not know
or have reason to know that his or her donation would be used to
make a contribution, expenditure, or independent expenditure in
this state, the Attorney General shall treat the donor and donation
information as confidential and shall redact the donor and donation
information from any documents that are made available to the
public. The Attorney General shall inform the petitioner, in writing,
whether the petition to maintain the confidentiality of donor and
donation information has been granted or denied. The Attorney
General’s grant or denial determination shall include a statement
of findings and conclusions, and the reasons or basis for the
determination.

(5)  begin delete The Attorney General shall immediately provide a copy of
each filed Nonprofit and Multipurpose Organization Disclosure
Statement to the Fair Political Practices Commission. end delete begin insert A charitable
corporation, unincorporated association, or trustee that is subject
to the reporting requirements of this subdivision shall file a copy
of the Nonprofit and Multipurpose Organization Disclosure
Statement with the Fair Political Practices Commission at the
same time that the entity files the statement with the Attorney
General. However, if a charitable corporation, unincorporated
association, or trustee that is subject to the reporting requirements
of this subdivision, or a donor to any of these entities, petitions
the Attorney General to maintain the confidentiality of donor and
donation information contained in the statement pursuant to
paragraph (4), the entity shall not be required to file a copy of the
Nonprofit and Multipurpose Organization Disclosure Statement
with the Fair Political Practices Commission until the Attorney
General has informed the petitioner whether the petition has been
granted or denied. end insert If the Attorney General has approved a petition
to maintain the confidentiality of donor and donation information
disclosed on the Nonprofit and Multipurpose Organization
Disclosure Statement pursuant to paragraph (4), the Fair Political
Practices Commission shall also treat that information as
confidential and shall not make that information publicly available.

(6) For purposes of this subdivision, the following terms have
the following meanings:

(A) “Contribution” has the same meaning as set forth in Section
82015.

(B) “Expenditure” has the same meaning as set forth in Section
82025.

(C) “Independent expenditure” has the same meaning as set
forth in Section 82031.

SEC. 2.  

Article 3.5 (commencing with Section 84350) is added
to Chapter 4 of Title 9 of the Government Code, to read:

 

Article 3.5.  Nonprofit and Multipurpose Organizations

 

84350.  

(a) This section shall apply only to a nonprofit
corporation, as defined in Section 501(c) of the Internal Revenue
Code, that is not required to file periodic written reports with the
Attorney General under the Supervision of Trustees and
Fundraisers for Charitable Purposes Act (Article 7 (commencing
with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title
2) and that makes combined contributions, expenditures, and
independent expenditures in this state aggregating fifty thousand
dollars ($50,000) or more during the nonprofit corporation’s fiscal
year.

(b) The Commission shall develop a Nonprofit and Multipurpose
Organization Disclosure Statement form that provides for the
disclosure of all of the following information:

(1) The aggregate combined dollar amount of contributions,
expenditures, and independent expenditures that are made during
the reporting period.

(2) The amount of expenses attributable to contributions,
expenditures, and independent expenditures as a percentage of the
nonprofit organization’s total expenses that are made during the
reporting period.

(3) For purposes of a nonprofit organization for which the
combined amounts of contributions, expenditures, and independent
expenditures made during the reporting period exceed 10 percent
of the nonprofit organization’s total expenses, each of the following
with respect to contributions, expenditures, and independent
expenditures made during that period:

(A) The amount of any funds, or the fair market value of any
services or assets, that are provided in relation to a contribution,
expenditure, or independent expenditure.

(B) The amount or fair market value of any liabilities incurred
in relation to a contribution, expenditure, or independent
expenditure.

(C) The date that the funds, services, or assets were provided
or the liabilities were incurred.

(D) The name and address of the recipient of the contribution,
expenditure, or independent expenditure.

(E) A description of the contribution, expenditure, or
independent expenditures and its purpose, including whether the
contribution, expenditure, or independent expenditure was made
in support of or opposition to a candidate, political party, ballot
measure, or other question put before the voters in an election.

(F) Information related to each begin delete donation received by end delete begin insert donor who
made donations in an aggregate amount of ten thousand dollars
($10,000) or more to end insert the nonprofit corporation during the reporting
period, including each of the following:

(i) The name and address of begin delete each end delete begin insert the end insert donor begin delete who made donations
in an aggregate amount of ten thousand dollars ($10,000) or more
during the reporting period end delete .

(ii) The name of the employer of begin delete each individual end delete begin insert the end insert donor, if
available.

(iii) The date and amount of each donation begin insert from that donor
during the reporting period end insert .

(c) (1) Except as otherwise provided in this subdivision, a
nonprofit corporation described in subdivision (a) shall file, at a
time to be determined by the Commission, a Nonprofit and
Multipurpose Organization Disclosure Statement with the
Commission for any year in which the nonprofit corporation meets
the fifty thousand dollar ($50,000) threshold for combined
aggregate contributions, expenditures, and independent
expenditures made during a fiscal year. Except as provided in
subdivision (d), the Commission shall make the filed Nonprofit
and Multipurpose Organization Disclosure Statement available to
the public, as required by Section 81008.

(2) A nonprofit corporation is not required to disclose the
information described in paragraph (3) of subdivision (b) if that
information has been previously disclosed by the nonprofit
corporation in any other campaign statement or report required by
this title.

(3) If a nonprofit corporation required to file a Nonprofit and
Multipurpose Organization Disclosure Statement pursuant to this
section maintains one or more segregated bank accounts for the
purpose of making election-related contributions, expenditures,
or independent expenditures, and those accounts represent the
exclusive source of the nonprofit corporation’s election-related
contributions, expenditures, and independent expenditures in this
state, the nonprofit corporation is only required to report
information described in subparagraph (F) of paragraph (3) of
subdivision (b) with respect to donations deposited into the
segregated election-related accounts.

(d) A nonprofit corporation or a donor to a nonprofit corporation
that is subject to the reporting requirements of this section may
petition the Commission, no later than 45 days prior to the date
on which the Nonprofit and Multipurpose Organization Disclosure
Statement must be filed, to maintain the confidentiality of donor
information that is disclosed on the statement. If a petitioner
demonstrates by clear and convincing evidence that the public
disclosure of donor information reported on the Nonprofit and
Multipurpose Organization Disclosure Statement will cause undue
harm, threats, harassment, or reprisals to the donor or that the donor
did not know or have reason to know that his or her donation would
be used to make a contribution, expenditure, or independent
expenditure in this state, the Commission shall, notwithstanding
Section 81008, treat the donor and donation information as
confidential and shall redact the donor and donation information
from any documents that are made available to the public. The
Commission shall inform the petitioner, in writing, whether the
petition to maintain the confidentiality of donor and donation
information has been granted or denied. The Commission’s grant
or denial determination shall include a statement of findings and
conclusions, and the reasons or basis for the determination.

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.

SEC. 4.  

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.