BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 2077 (Allen) - Charitable organizations: enforcement.
Amended: April 21, 2014 Policy Vote: Judiciary 6-0
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2077 would remove the existing limitation on
the use of the Registry of Charitable Trusts (RCT) Fund and
would require that moneys in the RCT Fund, upon appropriation by
the Legislature, be used by the Attorney General to (AG) enforce
registration and reporting provisions.
Fiscal Impact:
Ongoing significant costs of about $1.3 million (Special
Fund*) annually to enforce the registration and reporting
provisions of the Act at the staffing level proposed by the
Department of Justice (DOJ).
Potentially significant future increases in fee revenue
(Special Fund*) to the extent enforcement activities are
effective in bringing entities into compliance. At $25 to
$150 per new/renewal registration, every 10,000 entities
would result in $250,000 to $1.5 million in new fee
revenues.
*RCT Fund
Background: Existing law establishes the Supervision of Trustees
and Fundraisers for Charitable Purposes Act (Act) which governs
charitable corporations, trustees, commercial fundraisers,
fundraising counsel, commercial coventures, and other legal
entities who hold or solicit property for charitable purposes
over which the Attorney General has enforcement and supervisory
powers. The Act requires these legal entities to register and
file specified financial reports with the AG's Registry of
Charitable Trusts, as specified.
The Act establishes the Registry of Charitable Trusts Fund,
which is administered by the DOJ. Under existing law, all
registration fees, registration renewal fees, and late fees or
AB 2077 (Allen)
Page 1
other fees paid to the DOJ for purposes of the Act and other
specified laws must be deposited into the RCT Fund. Moneys in
the RCT Fund, upon appropriation by the Legislature, are to be
used solely to operate and maintain the AG's Registry of
Charitable Trusts and Registry of Conservators, Guardians, and
Trustees, and provide public access via the internet to reports
filed with the AG.
According to the DOJ, there are over 130,000 charities and
charitable trustees operating in California that are not
registered on the RCT registry. Additionally, there are
approximately 52,000 charities currently registered but have
delinquent registration status (due to renewal fees and/or
annual reporting requirement).
This bill seeks to enable to AG to use RCT Fund moneys to
enforce the registration and reporting provisions of the Act.
Proposed Law: This bill would explicitly authorize the DOJ to
utilize moneys in the RCT Fund, upon appropriation by the
Legislature, to enforce the registration and reporting
provisions of the Supervision of Trustees and Fundraisers for
Charitable Purposes Act.
Staff Comments: The DOJ indicates costs during the first three
years of enforcement activities would be in the range of $1.2
million to $1.6 million from the RCT Fund to fund 13 new
positions for enforcement of the registration and reporting
provisions of the Act. Ongoing costs in 2017-18 and annually
thereafter are estimated at $1.3 million for nine permanent
positions.
According to the DOJ, there are over 130,000 charities and
charitable trustees operating in California that are not
registered on the RCT registry. Additionally, there are
approximately 52,000 charities currently registered but have
delinquent registration status due to non-payment of renewal
fees and/or failure to meet the annual financial reporting
requirements of the Act.
The new registration fee schedule ranges from $25 for a
non-profit entities to $350 for a commercial fundraiser. Annual
renewal fees of $0 to $300 are charged on a sliding scale based
on an entity's annual revenue.
AB 2077 (Allen)
Page 2
The RCT Fund balance has been relatively stable at over $3.2
million for the past three years, with revenues slightly
outpacing expenditures. The RCT Fund is projected to have a
balance of $3.8 million at year-end 2014-15. The DOJ projects
that significant new and renewal registration fee revenues will
be generated by the enforcement activities. These revenues are
projected to be more than adequate to sustain ongoing costs.