BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2077|
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THIRD READING
Bill No: AB 2077
Author: Allen (R)
Amended: 4/21/14 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-0, 6/17/14
AYES: Jackson, Corbett, Lara, Leno, Monning, Vidak
NO VOTE RECORDED: Anderson
SENATE APPROPRIATIONS COMMITTEE : 6-0, 8/14/14
AYES: De León, Gaines, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 76-0, 5/27/14 - See last page for vote
SUBJECT : Charitable organizations: enforcement
SOURCE : Author
DIGEST : This bill requires monies in the Registry of
Charitable Trusts Fund (RCT Fund), upon appropriation by the
Legislature, to be used by the Attorney General (AG) to enforce
the registration and reporting provisions of the Supervision of
Trustees and Fundraisers for Charitable Purposes Act (Act).
ANALYSIS :
Existing law:
1. Establishes the Act, which requires charitable corporations,
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unincorporated associations, trustees, and other legal
entities, commercial fundraisers, fundraising counsel, and
commercial coventurers who hold or solicit property for
charitable purposes to file a registration statement,
articles of incorporation, and an annual financial report
with the AG. The AG has supervisory and enforcement powers
over these entities and is required to maintain a register of
charitable organizations subject to the Act.
2. Provides that 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 AG. The AG has broad powers
under common law and California statutory law to carry out
these charitable trust enforcement responsibilities.
3. Provides that the AG shall be entitled to recover from
defendants named in a charitable trust enforcement action
reasonable attorney's fees and all actual costs incurred in
conducting that action.
4. Provides that the AG may refuse to register or may revoke or
suspend the registration of a charitable corporation or
trustee, commercial fundraiser, fundraising counsel, or
coventurer whenever the AG finds that the charitable
corporation or trustee, commercial fundraiser, fundraising
counsel, or coventurer has violated or is operating in
violation of any provisions of this article.
5. Provides for the establishment of the RCT Fund in the State
Treasury, to be administered by the Department of Justice
(DOJ). Notwithstanding any other provision of law, all
registration fees, registration renewal fees, and late fees
or other fees paid to the DOJ pursuant to the Act, and other
specified laws, must be deposited in the RCT Fund.
6. Provides that monies in the RCT Fund, upon appropriation by
the Legislature, must be used by the AG solely to operate and
maintain the AG's Registry of Charitable Trusts and Registry
of Conservators, Guardians, and Trustees, and provides public
access via the Internet to reports filed with the AG.
This bill:
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1. Provides that monies in the RCT Fund, upon appropriation by
the Legislature, must be used by the AG to operate and
maintain the AG's Registry of Charitable Trusts and Registry
of Conservators, Guardians, and Trustees, and to provide
public access via the Internet to reports filed with the AG.
2. Provides that monies in the RCT Fund, upon appropriation by
the Legislature, must be used by the AG to enforce the
registration and reporting requirements.
Background
The Act governs charitable corporations, trustees, commercial
fundraisers, fundraising counsel, and other commercial
coventurers who solicit or hold property for charitable
purposes. The AG has supervisory powers over these entities and
is required to maintain a registry of charitable corporations
and trustees subject to the Act.
AB 139 (Assembly Budget Committee, Chapter 74, Statutes of
2005), among other things, created the RCT Fund in which all
registration fees, registration renewal fees, and late fees or
other fees paid to the DOJ pursuant to the Act and other
specified laws must be deposited. The monies in the RCT Fund,
upon appropriation by the Legislature, must be used by the AG
solely to operate and maintain the AG's Registry of Charitable
Trusts and Registry of Conservators, Guardians, and Trustees,
and to provide public access via the Internet to reports filed
with the AG. Current law does not, in other words, allow the AG
to use these funds for the enforcement of the Act.
Prior Legislation
AB 2327 (Feuer, Chapter 483, Statutes of 2012), among other
things, revised the enforcement provisions of the Act to instead
authorize the AG to issue a cease and desist order whenever the
AG finds that any person or entity that the act applies to has
committed an act that would constitute a violation of, or is
operating in violation of, any provision of the Act. The bill
also authorized the AG to impose a specified penalty on any
person or entity for each act or omission that constitutes a
violation of the Act, subject to certain procedures, and further
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authorized the AG to suspend the registration of that person or
entity under certain circumstances.
SB 1262 (Sher, Chapter 919, Statutes of 2004) imposed audit
requirements on charities that receive or accrue a gross revenue
of $500,000 or more, required specific disclosures during a
solicitation or fundraising campaign, and required specific
provisions in written contracts between fundraisers and the
charitable organization.
SB 2015 (Sher, Chapter 475, Statutes of 2000) gave the AG
additional enforcement tools and resources, including enhanced
civil fines, the power to revoke or suspend the registration of
a charitable corporation or trustee, commercial fundraiser or
fundraising counsel or coventurer, and assessments for late
filings. That bill also authorized the AG to accept an
assurance of voluntary compliance through which a person in
violation could agree to discontinue the offensive act or to
correct any deficiencies under the Act.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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
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 will
result in $250,000 to $1.5 million in new fee revenues.
*RCT Fund
SUPPORT : (Verified 8/8/14)
Orange County Professional Firefighters
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California Association of Nonprofits
ARGUMENTS IN SUPPORT : According to the author:
The AG's Report on Commercial Fundraising has shown that
time and time again there are firms that raise millions of
dollars and only spend a small percentage of those dollars
on the proclaimed mission of the charity.
Current[ ]law tasks the Attorney General with the
registration, enforcement, and oversight of the charitable
organizations in California. It also provides for them to
maintain a database of nonprofits that have been found to
be bad actors. [However,] the AG's office doesn't have
the resources to enforce the laws on the books surrounding
these bad charities.
This bill allows the AG's office to utilize existing
revenue to enforce their registration codes and enforce
the laws on the books to "go after" bad charities.
ASSEMBLY FLOOR : 76-0, 5/27/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Perea, John A. Pérez, V.
Manuel Pérez, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Eggman, Patterson, Quirk-Silva, Vacancy
AL:d 8/16/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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