Amended in Senate June 19, 2015

Amended in Assembly April 7, 2015

Amended in Assembly March 19, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 556


Introduced by Assembly Member Irwin

February 23, 2015


An act to amend Section 17510.85 of the Business and Professions Code, to add Section 2224.5 to the Civil Code, and to amend Sectionsbegin delete 12596 and 12599end deletebegin insert 12596, 12599, and 12599.1end insert of the Government Code, relating tobegin insert charitableend insert trusts.

LEGISLATIVE COUNSEL’S DIGEST

AB 556, as amended, Irwin. begin deleteTrusts: end deletebegin insertCharitable trusts:end insert regulation and enforcement.

Existing law requires an individual or entity who for compensation solicits funds or property for charitable purposes to disclose that the solicitation is being conducted by a commercial fundraiser for a charitable purpose and the registered name of the commercial fundraiser.

This bill would require the disclosures, if printed or if presented electronically, to be in at least 12-point type, and be clear and conspicuous.

Existing law, the Supervision of Trustees and Fundraisers for Charitable Purposes Act, generally regulates charitable corporations, trustees, and other legal entities holding property for charitable purposes, commercial fundraisers for charitable purposes, and fundraising counsel for charitable purposes, among others, over which the state or the Attorney General has enforcement or supervisory powers. Existing law defines a commercial fundraiser for charitable purposes to mean any individual, corporation, unincorporated association, or other legal entity who, for compensation, engages in specified activities, including, among other things, soliciting funds, assets, or property in this state for charitable purposes.begin insert Existing law defines a fundraising counsel for charitable purposes to mean any individual, corporation, unincorporated association, or other legal entity who, for compensation, engages in specified activities including, among other things, planning, managing, or preparing material for the solicitation of funds, but who does not engage in specified activities, including, among other things, soliciting funds, assets, or property for charitable purposes.end insert Existing law requires the Attorney General to establish and maintain a register of charitable corporations, unincorporated associations, and trustees subject to these provisions and of the particular trust or other relationship under which they hold property for charitable purposes. Existing law authorizes the Attorney General to bring any action against trustees or against any charitable corporation or director or officer thereof, to enforce a charitable trust, to impress property with a trust for charitable purposes, or to recover property or the proceeds thereof at any time within 10 years after the cause of action accrued.

This bill would expand the definition of a commercial fundraiser for charitable purposes to include any individual, corporation, unincorporated association, or other legal entity that 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, as specified.begin insert The bill would exclude from the definition of a commercial fundraiser for charitable purposes, a trustee, a charitable corporation, specified financial institutions, or an escrow agent or caging company, as defined, that receives or controls funds as a result of a solicitation for charitable purposes. The bill would list conditions in which a fundraising counsel for charitable purposes is deemed to receive or control funds, assets, or property. The bill would require an individual, corporation, unincorporated association, or other legal entity that does not meet the qualifications of fundraising counsel for charitable purposes to be deemed a commercial fundraiser for charitable purposes.end insert

This bill would authorize the Attorney General to bring an action for a violation of these provisions at any time within 10 years after the cause of action accrued. The bill would also authorize the Attorney General to bring an action for civil liability against a person who aids or abets a violation of these provisions at any time within 10 years after the cause of action accrued.

Existing law provides that one who wrongfully detains a thing is an involuntary trustee thereof for the benefit of the owner, and that one who gains a thing by fraud, or other wrongful act is an involuntary trustee of the thing gained for the benefit of the owner.

This bill would authorize the Attorney General to bring an action for a violation of these provisions at any time within 10 years after the cause of action accrued.

This bill would also authorize the Attorney General to bring an action for civil liability against a person who aids or abets a violation of these provisions at any time within 10 years after the cause of action accrued.

Existing law, the Nonprofit Corporation Law,begin delete setend deletebegin insert setsend insert forth standards of conduct for directors and officers of nonprofit public benefit corporations and provides that it is a crime for any director or officer of any corporation among other things, to knowingly engage in specified acts relating to fraud, to make materially false reports, to receive or acquire possession of the property of the corporation, or to falsify the books or accounts of the corporation.

This bill would authorize the Attorney General to bring an action for a violation of these provisions at any time within 10 years after the cause of action accrued. The bill would also authorize the Attorney General to bring an action for civil liability against a person who aids or abets a violation of the standards of conduct for directors and officers of nonprofit public benefit corporations at any time within 10 years after the cause of action accrued.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P3    1

SECTION 1.  

Section 17510.85 of the Business and Professions
2Code
is amended to read:

3

17510.85.  

(a) An individual, corporation, or other legal entity
4who for compensation solicits funds or other property in this state
5for charitable purposes shall disclose prior to an oral solicitation
6or sales solicitation made by direct personal contact, radio,
7television, telephone, or over the Internet, or at the same time as
8a written solicitation or sales solicitation:

P4    1(1) That the solicitation or sales solicitation is being conducted
2by a commercial fundraiser for charitable purposes.

3(2) The name of the commercial fundraiser for charitable
4purposes as registered with the Attorney General pursuant to
5Section 12599 of the Government Code.

6(b) The disclosures required pursuant to this section, if printed
7or if presented electronically, shall be in at least 12-point type, and
8shall be clear and conspicuous, as defined in Section 17601.

9

SEC. 2.  

Section 2224.5 is added to the Civil Code, to read:

10

2224.5.  

An action brought by the Attorney General pursuant
11to Section 2223 or 2224 may be brought at any time within 10
12years after the cause of action accrued.

13

SEC. 3.  

Section 12596 of the Government Code is amended
14to read:

15

12596.  

(a) A civil action brought by the Attorney General
16against trustees or other persons holding property in trust for
17charitable purposes or against any charitable corporation or any
18director or officer thereof to enforce a charitable trust or to impress
19property with a trust for charitable purposes or to recover property
20or the proceeds thereof for and on behalf of any charitable trust or
21corporation, may be brought at any time within 10 years after the
22cause of action accrued.

23(b) A civil action brought by the Attorney General for a violation
24of this article, pursuant to Section 2223 or 2224 of the Civil Code,
25or pursuant to Division 2 (commencing with Section 5000) of Title
261 of the Corporations Code, may be brought at any time within 10
27years after the cause of action accrued.

28(c) Notwithstanding Section 12581, the Attorney General may
29bring a civil action against a person who aids or abets a violation
30of this article, Section 2223 or 2224 of the Civil Code, or Article
313 (commencing with Section 5230) of Chapter 2 ofbegin insert Part 2 ofend insert
32 Division 2 of Title 1 of the Corporations Code, at any time within
3310 years after the cause of action accrued.

34

SEC. 4.  

Section 12599 of the Government Code is amended
35to read:

36

12599.  

(a) “Commercial fundraiser for charitable purposes”
37means any individual, corporation, unincorporated association, or
38other legal entity who for compensation does any of the following:

39(1) Solicits funds, assets, or property in this state for charitable
40purposes.

P5    1(2) As a result of a solicitation of funds, assets, or property in
2this state for charitable purposes, receives or controls the funds,
3assets, or property solicited for charitable begin delete purposes, including
4indirectly controlling the funds through either of the following
5means:end delete
begin insert purposes.end insert

begin delete

6(A) Maintaining an interest in an escrow account into which
7solicited funds are deposited.

end delete
begin delete

8(B) Maintaining access to, or the right to access, funds, assets,
9or property received by a caging company as a result of the
10solicitation.

end delete

11(3) Employs, procures, or engages any compensated person to
12solicit, receive, or control funds, assets, or property for charitable
13purposes.

14(4) Plans, manages, advises, counsels, consults, or prepares
15material for, or with respect to, the solicitation in this state of funds,
16assets, or property for charitable purposes,begin delete and is compensated by
17a percentage interest in the funds, assets, or property received
18through a solicitation campaign, rather than by a flat fee. This
19paragraph shall not apply to any entity described in subdivision
20(b) of Section 12599.1.end delete
begin insert but is disqualified as a fundraising counsel
21for charitable purposes pursuant to subdivision (a) of Section
2212599.1.end insert

begin delete

23(5) (A) Plans, manages, advises, counsels, consults, or prepares
24material for, or with respect to, the solicitation in this state of funds,
25assets, or property for charitable purposes, and does either of the
26following:

27(i) Has an ownership or management interest in any other entity
28that receives or controls the funds, assets, or property solicited for
29charitable purposes.

30(ii) Receives any material financial benefit, directly or indirectly,
31from any other individual or entity that receives or controls the
32funds, assets, or property solicited for charitable purposes, other
33than the nonprofit soliciting the funds, assets, or property for
34charitable purposes.

35(B) This paragraph shall not apply to any entity described in
36subdivision (b) of Section 12599.1.

end delete

37A commercial fundraiser for charitable purposes shall include
38any person, association of persons, corporation, or other entity that
39obtains a majority of its inventory for sale by the purchase, receipt,
40or control for resale to the general public, of salvageable personal
P6    1property solicited by an organization qualified to solicit donations
2pursuant to Section 148.3 of the Welfare and Institutions Code.

3A commercial fundraiser for charitable purposes shall not include
4a “trustee” as defined in Section 12582 or 12583, a “charitable
5corporation” as defined in Section 12582.1, or any employee
6thereof. A commercial fundraiser for charitable purposes shall not
7include an individual who is employed by or under the control of
8a commercial fundraiser for charitable purposes registered with
9the Attorney General. A commercial fundraiser for charitable
10purposes shall not include any federally insured financial institution
11that begin delete holdsend delete begin insert holds,end insert as abegin delete depositoryend deletebegin insert depository,end insert funds received as a
12result of a solicitation for charitablebegin delete purposes.end deletebegin insert purposes, or an
13escrow agent or caging company that receives or controls funds
14received as a result of a solicitation for charitable purposes. For
15purposes of this sectionend insert
begin insert, a caging company is a business that
16receives contributions, processes donor mail, and deposits all
17contributions to an account under the sole control of the charitable
18organization.end insert

19As used in this section, “charitable purposes” includes any
20solicitation in which the name of any organization of law
21enforcement personnel, firefighters, or other persons who protect
22the public safety is used or referred to as an inducement for
23transferring any funds, assets, or property, unless the only
24expressed or implied purpose of the solicitation is for the sole
25benefit of the actual active membership of the organization.

26(b) A commercial fundraiser for charitable purposes shall, prior
27to soliciting any funds, assets, or property, including salvageable
28personal property, in California for charitable purposes, or prior
29to receiving and controlling any funds, assets, or property,
30including salvageable personal property, as a result of a solicitation
31in this state for charitable purposes, register with the Attorney
32General’s Registry of Charitable Trusts on a registration form
33provided by the Attorney General. Renewals of registration shall
34be filed with the Registry of Charitable Trusts by January 15 of
35each calendar year in which the commercial fundraiser for
36charitable purposes does business and shall be effective for one
37year. A registration or renewal fee of two hundred dollars ($200)
38shall be required for registration of a commercial fundraiser for
39charitable purposes, and shall be payable by certified or cashier’s
40check to the Attorney General’s Registry of Charitable Trusts at
P7    1the time of registration or renewal. The Attorney General may
2adjust the annual registration or renewal fee, or means of payment,
3as needed pursuant to this section. The Attorney General’s Registry
4of Charitable Trusts may grant extensions of time to file annual
5registration as required, pursuant to subdivision (b) of Section
612586. No separate fee shall be charged by the Attorney General
7for electronic registration, electronic renewal, or electronic
8repayment of fees.

9(c) A commercial fundraiser for charitable purposes shall file
10with the Attorney General’s Registry of Charitable Trusts an annual
11financial report on a form provided by the Attorney General,
12accounting for all funds collected pursuant to any solicitation for
13charitable purposes during the preceding calendar year. The annual
14financial report shall be filed with the Attorney General’s Registry
15of Charitable Trusts no later than 30 days after the close of the
16preceding calendar year.

17(d) The contents of the forms for annual registration and annual
18financial reporting by commercial fundraisers for charitable
19purposes shall be established by the Attorney General in a manner
20consistent with the procedures set forth in subdivisions (a) and (b)
21of Section 12586. The annual financial report shall require a
22detailed, itemized accounting of funds, assets, or property, solicited
23for charitable purposes on behalf of each charitable organization
24exempt from taxation under Section 501(c)(3) of the Internal
25Revenue Code or for each charitable purpose during the accounting
26period, and shall include, among other data, the following
27information for funds, assets, or property, solicited by the
28commercial fundraiser for charitable purposes:

29(1) Total revenue.

30(2) The fee or commission charged by the commercial fundraiser
31for charitable purposes.

32(3) Salaries paid by the commercial fundraiser for charitable
33purposes to its officers and employees.

34(4) Fundraising expenses.

35(5) Distributions to the identified charitable organization or
36purpose.

37(6) The names and addresses of any director, officer, or
38employee of the commercial fundraiser for charitable purposes
39who is a director, officer, or employee of any charitable
40organization listed in the annual financial report.

P8    1(e) A commercial fundraiser for charitable purposes that obtains
2a majority of its inventory for sale by the purchase, receipt, or
3control for resale to the general public, of salvageable personal
4property solicited by an organization qualified to solicit donations
5pursuant to Section 148.3 of the Welfare and Institutions Code
6shall file with the Attorney General’s Registry of Charitable Trusts,
7and not with the sheriff of any county, an annual financial report
8on a form provided by the Attorney General that is separate and
9distinct from forms filed by other commercial fundraisers for
10charitable purposes pursuant to subdivisions (c) and (d).

11(f) It shall be unlawful for any commercial fundraiser for
12charitable purposes to solicit funds in this state for charitable
13purposes unless the commercial fundraiser for charitable purposes
14has complied with the registration or annual renewal and financial
15reporting requirements of this article. Failure to comply with these
16registration or annual renewal and financial reporting requirements
17shall be grounds for injunction against solicitation in this state for
18charitable purposes and other civil remedies provided by law.

19(g) A commercial fundraiser for charitable purposes is a
20constructive trustee for charitable purposes as to all funds collected
21pursuant to solicitation for charitable purposes and shall account
22to the Attorney General for all funds. A commercial fundraiser for
23charitable purposes is subject to the Attorney General’s supervision
24and enforcement over charitable funds and assets to the same extent
25as a trustee for charitable purposes under this article.

26(h) Not less than 10 working days prior to the commencement
27of each solicitation campaign, event, or service, or not later than
28commencement of solicitation for solicitations to aid victims of
29emergency hardship or disasters, a commercial fundraiser for
30charitable purposes shall file with the Attorney General’s Registry
31of Charitable Trusts a notice on a form prescribed by the Attorney
32General that sets forth all of the following:

33(1) The name, address, and telephone number of the commercial
34fundraiser for charitable purposes.

35(2) The name, address, and telephone number of the charitable
36organization with whom the commercial fundraiser has contracted.

37(3) The fundraising methods to be used.

38(4) The projected dates when performance under the contract
39will commence and terminate.

P9    1(5) The name, address, and telephone number of the person
2responsible for directing and supervising the work of the
3commercial fundraiser under the contract.

4(i) There shall be a written contract between a commercial
5fundraiser for charitable purposes and a charitable organization
6for each solicitation campaign, event, or service, that shall be
7signed by the authorized contracting officer for the commercial
8fundraiser and by an official of the charitable organization who is
9authorized to sign by the organization’s governing body. The
10contract shall be available for inspection by the Attorney General
11and shall contain all of the following provisions:

12(1) The legal name and address of the charitable organization
13as registered with the Registry of Charitable Trusts, unless the
14 charitable organization is exempt from registration.

15(2) A statement of the charitable purpose for which the
16solicitation campaign, event, or service is being conducted.

17(3) A statement of the respective obligations of the commercial
18fundraiser and the charitable organization.

19(4) If the commercial fundraiser is to be paid a fixed fee, a
20statement of the fee to be paid to the commercial fundraiser and a
21good faith estimate of what percentage the fee will constitute of
22the total contributions received. The contract shall clearly disclose
23the assumptions upon which the estimate is based, and the stated
24assumptions shall be based upon all of the relevant facts known
25to the commercial fundraiser regarding the solicitation to be
26conducted by the commercial fundraiser.

27(5) If a percentage fee is to be paid to the commercial fundraiser,
28a statement of the percentage of the total contributions received
29that will be remitted to or retained by the charitable organization,
30or, if the solicitation involves the sale of goods or services or the
31sale of admissions to a fundraising event, the percentage of the
32purchase price that will be remitted to the charitable organization.
33The stated percentage shall be calculated by subtracting from
34contributions received and sales receipts not only the commercial
35fundraiser’s fee, but also any additional amounts that the charitable
36organization is obligated to pay as fundraising costs.

37(6) The effective and termination dates of the contract and the
38date solicitation activity is to commence within the state.

39(7) A provision that requires that each contribution in the control
40or custody of the commercial fundraiser shall in its entirety and
P10   1within five working days of its receipt comply with either of the
2following:

3(A) Be deposited in an account at a bank or other federally
4insured financial institution that is solely in the name of the
5charitable organization and over which the charitable organization
6has sole control of withdrawals.

7(B) Be delivered to the charitable organization in person, by
8United States express mail, or by another method of delivery
9providing for overnight delivery.

10(8) A statement that the charitable organization exercises control
11and approval over the content and frequency of any solicitation.

12(9) If the commercial fundraiser proposes to make any payment
13in cash or in kind to any person or legal entity to secure any
14person’s attendance at, or sponsorship, approval, or endorsement
15of, a charity fundraising event, the maximum dollar amount of
16those payments shall be set forth in the contract. “Charity
17fundraising event” means any gathering of persons, including, but
18not limited to, a party, banquet, concert, or show, that is held for
19the purpose or claimed purpose of raising funds for any charitable
20purpose or organization.

21(10) A provision that includes all of the following statements:

22(A) The charitable organization has the right to cancel the
23contract without cost, penalty, or liability for a period of 10 days
24following the date on which the contract is executed.

25(B) The charitable organization may cancel the contract by
26serving a written notice of cancellation on the commercial
27fundraiser.

28(C) If mailed, service shall be by certified mail, return receipt
29requested, and cancellation shall be deemed effective upon the
30expiration of five calendar days from the date of mailing.

31(D) Any funds collected after effective notice that the contract
32has been canceled shall be deemed to be held in trust for the benefit
33of the charitable organization without deduction for costs or
34expenses of any nature.

35(E) The charitable organization shall be entitled to recover all
36funds collected after the date of cancellation.

37(11) A provision that includes all of the following statements:

38(A) Following the initial 10-day cancellation period, the
39charitable organization may terminate the contract by giving 30
40days’ written notice.

P11   1(B) If mailed, service of the notice shall be by certified mail,
2return receipt requested, and shall be deemed effective upon the
3expiration of five calendar days from the date of mailing.

4(C) In the event of termination under this subdivision, the
5charitable organization shall be liable for services provided by the
6commercial fundraiser up to 30 days after the effective service of
7the notice.

8(12) A provision that, following the initial 10-day cancellation
9period, the charitable organization may terminate the contract at
10any time upon written notice, without payment or compensation
11of any kind to the commercial fundraiser, if the commercial
12fundraiser or its agents, employees, or representatives do any of
13the following:

14(A) Make any material misrepresentations in the course of
15solicitations or with respect to the charitable organization.

16(B) Are found by the charitable organization to have been
17convicted of a crime arising from the conduct of a solicitation for
18a charitable organization or purpose punishable as a misdemeanor
19or a felony.

20(C) Otherwise conduct fundraising activities in a manner that
21causes or could cause public disparagement of the charitable
22organization’s good name or good will.

23(13) Any other information required by the regulations of the
24Attorney General.

25(j) It shall be unlawful for a commercial fundraiser for charitable
26purposes to not disclose the percentage of total fundraising
27expenses of the fundraiser upon receiving a written or oral request
28from a person solicited for a contribution for a charitable purpose.
29“Percentage of total fundraising expenses,” as used in this section,
30means the ratio of the total expenses of the fundraiser to the total
31revenue received by the fundraiser for the charitable purpose for
32which funds are being solicited, as reported on the most recent
33financial report filed with the Attorney General’s Registry of
34Charitable Trusts. A commercial fundraiser shall disclose this
35information in writing within five working days from receipt of a
36request by mail or facsimile. A commercial fundraiser shall orally
37disclose this information immediately upon a request made in
38person or in a telephone conversation and shall follow this response
39with a written disclosure within five working days. Failure to
40comply with the requirements of this subdivision shall be grounds
P12   1for an injunction against solicitation in this state for charitable
2purposes and other civil remedies provided by law.

3(k) If the Attorney General issues a report to the public
4containing information obtained from registration forms or
5financial report forms filed by commercial fundraisers for
6charitable purposes, there shall be a separate section concerning
7commercial fundraisers for charitable purposes that obtain a
8majority of their inventory for sale by the purchase, receipt, or
9control for resale to the general public, of salvageable personal
10property solicited by an organization qualified to solicit donations
11pursuant to Section 148.3 of the Welfare and Institutions Code.
12The report shall include an explanation of the distinctions between
13these thrift store operations and other types of commercial
14fundraising.

15(l) No person may act as a commercial fundraiser for charitable
16purposes if that person, any officer or director of that person’s
17business, any person with a controlling interest in the business, or
18any person the commercial fundraiser employs, engages, or
19procures to solicit for compensation, has been convicted by a court
20of any state or the United States of a crime arising from the conduct
21of a solicitation for a charitable organization or purpose punishable
22as a misdemeanor or felony.

23(m) A commercial fundraiser for charitable purposes shall not
24solicit in the state on behalf of a charitable organization unless that
25charitable organization is registered or is exempt from registration
26with the Attorney General’s Registry of Charitable Trusts.

27(n) If any provision of this section or the application thereof to
28any person or circumstances is held invalid, that invalidity shall
29not affect any other provision or application of this section that
30can be given effect without the invalid provision or application,
31and to this end the provisions of this section are severable.

32begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 12599.1 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
33to read:end insert

34

12599.1.  

(a) “Fundraising counsel for charitable purposes” is
35defined as any individual, corporation, unincorporated association,
36or other legal entity who is described by all of the following:

37(1) Forbegin delete compensationend deletebegin insert compensation, other than as a percentage
38of the funds, assets, or property received as a result of a solicitation
39campaign,end insert
plans, manages, advises, counsels, consults, or prepares
P13   1material for, or with respect to, the solicitation in this state of funds,
2assets, or property for charitable purposes.

3(2) Does not solicit funds, assets, or property for charitable
4purposes.

5(3) Does not receive or control funds, assets, or property
6solicited for charitable purposes in this state.begin insert An individual,
7corporation, unincorporated association, or other legal entity is
8deemed to receive or control funds, assets, or property if any of
9the following apply:end insert

begin insert

10(A) It has the right to approve or veto any payment from an
11escrow account to which funds received from a solicitation for
12charitable purposes are subject.

end insert
begin insert

13(B) It maintains an interest in an account into which solicited
14funds are deposited.

end insert
begin insert

15(C) It has the right to access funds, assets, or property received
16from a solicitation for charitable purposes and held by a caging
17company.

end insert
begin insert

18(D) It has any ownership or management interest in any other
19entity that receives or controls the funds, assets, or property
20solicited for charitable purposes, including, but not limited to, an
21escrow agent or caging company, but not including any federally
22insured financial institution.

end insert
begin insert

23(E) It receives any financial benefit, directly or indirectly, from
24any other individual or entity that receives or controls the funds,
25assets, or property solicited for charitable purposes, other than
26the trustee or charitable corporation soliciting the funds, assets,
27or property for charitable purposes.

end insert

28(4) Does not employ, procure, or engage any compensated
29person to solicit, receive, or control funds, assets, or property for
30charitable purposes.

begin insert

31Any individual, corporation, unincorporated association, or
32other legal entity who, for compensation, plans, manages, advises,
33counsels, consults, or prepares material for, or with respect to,
34the solicitation in this state of funds, assets, or property for
35charitable purposes, but does not meet the qualifications of a
36fundraising counsel for charitable purposes in this subdivision,
37shall be deemed to be a commercial fundraiser for charitable
38purposes as described in subdivision (a) of Section 12599, unless
39excluded by that section.

end insert
begin insert

P14   1A commercial fundraiser for charitable purposes shall not
2include a “trustee” as defined in Section 12582 or 12583, a
3“charitable corporation” as defined in Section 12582.1, or any
4 employee thereof. A commercial fundraiser for charitable purposes
5shall not include an individual who is employed by or under the
6control of a commercial fundraiser for charitable purposes
7registered with the Attorney General. A commercial fundraiser
8for charitable purposes shall not include any federally insured
9financial institution that holds, as a depository, funds received as
10a result of a solicitation for charitable purposes, or an escrow
11agent or caging company that receives or controls funds received
12as a result of a solicitation for charitable purposes. For purposes
13of this section, a caging company is a business that receives
14contributions, processes donor mail, and deposits all contributions
15into an account under the sole control of the charitable
16organization.

end insert

17(b) “Fundraising counsel for charitable purposes” does not
18include any of the following:

19(1) An attorney, investment counselor, or banker who in the
20conduct of that person’s profession advises a client when actually
21engaged in the giving of legal, investment, or financial advice.

22(2) A trustee as defined in Section 12582 or 12583.

23(3) A charitable corporation as defined in Section 12582.1, or
24any employee thereof.

25(4) A person employed by or under the control of a fundraising
26counsel for charitable purposes, as defined in subdivision (a).

27(5) A person, corporation, or other legal entity, engaged as an
28independent contractor directly by a trustee or a charitable
29corporation, that prints, reproduces, or distributes written materials
30prepared by a trustee, a charitable corporation, or any employee
31thereof, or that performs artistic or graphic services with respect
32to written materials prepared by a trustee, a charitable corporation,
33or any employee thereof, provided that the independent contractor
34does not perform any of the activities described in paragraph (1)
35of subdivision (a).

36(6) A person whose total annual gross compensation for
37performing any activity described in paragraph (1) of subdivision
38(a) does not exceed twenty-five thousand dollars ($25,000).

39(c) A fundraising counsel for charitable purposes shall, prior to
40managing, advising, counseling, consulting, or preparing material
P15   1for, or with respect to, the solicitation in this state of funds, assets,
2or property for charitable purposes, register with the Attorney
3General’s Registry of Charitable Trusts on a registration form
4provided by the Attorney General. Renewals of registration shall
5be filed with the Registry of Charitable Trusts by January 15 of
6each calendar year in which the fundraising counsel for charitable
7purposes does business and shall be effective for one year.

8A registration or renewal fee of two hundred dollars ($200) shall
9be required for registration of a fundraising counsel for charitable
10purposes, and shall be payable by certified or cashier’s check to
11the Attorney General’s Registry of Charitable Trusts at the time
12of registration and renewal. The Attorney General may adjust the
13annual registration or renewal fee, or means of payment, as needed
14pursuant to this section. The Attorney General’s Registry of
15Charitable Trusts may grant extensions of time to file annual
16registration as required, pursuant to subdivision (b) of Section
1712586.

18(d) A fundraising counsel for charitable purposes shall file
19annually with the Attorney General’s Registry of Charitable Trusts
20on a form provided by the Attorney General, a report listing each
21person, corporation, unincorporated association, or other legal
22entity for whom the fundraising counsel has performed any services
23described in paragraph (1) of subdivision (a), and a statement
24certifying that the fundraising counsel had a written contract with
25each listed person, corporation, unincorporated association, or
26other legal entity that complied with the requirements of
27subdivision (f).

28(e) Not less than 10 working days prior to the commencement
29of the performance of any service for a charitable organization by
30a fundraising counsel for charitable purposes, or not later than
31commencement of solicitation for solicitations to aid victims of
32emergency hardship or disasters, the fundraising counsel shall file
33with the Attorney General’s Registry of Charitable Trusts a notice
34on a form prescribed by the Attorney General that sets forth all of
35the following:

36(1) The name, address, and telephone number of the fundraising
37counsel for charitable purposes.

38(2) The name, address, and telephone number of the charitable
39organization with whom the fundraising counsel has contracted.

P16   1(3) The projected dates when performance under the contract
2will commence and terminate.

3(4) The name, address, and telephone number of the person
4responsible for directing and supervising the work of the
5fundraising counsel under the contract.

6(f) There shall be a written contract between a fundraising
7counsel for charitable purposes and a charitable organization for
8each service to be performed by the fundraising counsel for the
9charitable organization, that shall be signed by the authorized
10contracting officer for the fundraising counsel and by an official
11of the charitable organization who is authorized to sign by the
12organization’s governing body. The contract shall be available for
13inspection by the Attorney General and shall contain all of the
14following provisions:

15(1) The legal name and address of the charitable organization
16as registered with the Registry of Charitable Trusts unless the
17charitable organization is exempt from registration.

18(2) A statement of the charitable purpose for which the
19solicitation campaign is being conducted.

20(3) A statement of the respective obligations of the fundraising
21counsel and the charitable organization.

22(4) A clear statement of the fees and any other form of
23compensation, including commissions and property, that will be
24paid to the fundraising counsel.

25(5) The effective and termination dates of the contract and the
26date services will commence with respect to solicitation in this
27state of contributions for a charitable organization.

28(6) A statement that the fundraising counsel will not at any time
29solicit funds, assets, or property for charitable purposes, receive
30or control funds, assets, or property solicited for charitable
31purposes, or employ, procure, or engage any compensated person
32to solicit, receive, or control funds, assets, or property for charitable
33purposes.

34(7) A statement that the charitable organization exercises control
35and approval over the content and frequency of any solicitation.

36(8) A provision that includes all of the following statements:

37(A) The charitable organization has the right to cancel the
38contract without cost, penalty, or liability for a period of 10 days
39following the date on which the contract is executed.

P17   1(B) The charitable organization may cancel the contract by
2serving a written notice of cancellation on the fundraising counsel.

3(C) If mailed, service shall be by certified mail, return receipt
4requested, and cancellation shall be deemed effective upon the
5expiration of five calendar days from the date of mailing.

6(9) A provision that includes all of the following statements:

7(A) Following the initial 10-day cancellation period, the
8charitable organization may terminate the contract by giving 30
9days’ written notice.

10(B) If mailed, service of the notice shall be by certified mail,
11return receipt requested, and shall be deemed effective upon the
12expiration of five calendar days from the date of mailing.

13(C) In the event of termination under this subdivision, the
14charitable organization shall be liable for services provided by the
15fundraising counsel to the effective date of the termination.

16(10) Any other information required by the regulations of the
17Attorney General.

18(g) It shall be unlawful for any fundraising counsel for charitable
19purposes to manage, advise, counsel, consult, or prepare material
20for, or with respect to, the solicitation in this state of funds, assets,
21or property for charitable purposes unless the fundraising counsel
22for charitable purposes has complied with the registration or annual
23renewal and financial reporting requirements of this article.

24(h) A fundraising counsel for charitable purposes is subject to
25the Attorney General’s supervision and enforcement to the same
26extent as a trustee for charitable purposes under this article.

27(i) If any provision of this section or the application thereof to
28any person or circumstances is held invalid, that invalidity shall
29not affect other provisions or application of this section which can
30be given effect without the invalid provision or application, and
31to this end the provisions of this section are severable.



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