BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2855


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          Date of Hearing:  May 11, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2855 (Frazier) - As Amended April 7, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMAR


          This bill:


          1)Requires a charity's website home page to include a prominent  
            link directing consumers to the Attorney General's (AG's)  
            website for information about consumer rights and protections  
            and charity research resources, and requires a charity's  








                                                                    AB 2855


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            written solicitation materials to include this AG website  
            address.


          2)Requires the AG, no later than July 1, 2017, to develop and  
            publish on its website, information about consumer rights and  
            protections and charity research resources that will better  
            prepare potential donors to research a charity before making a  
            decision to donate.


          FISCAL EFFECT:


          One-time costs could exceed $150,000 for the AG to develop and  
          adopt regulations to implement the bill's requirements. This  
          would require one attorney position and support staff. There  
          could be additional costs following adoption to modify the AG's  
          website and respond to compliance-related inquiries from  
          charities. Enforcement costs would likely be absorbable. The  
          AG's Charitable Trust Unit currently has seven investigative  
          auditor positions.


          Given the depth and breadth of opposition to this bill, and the  
          history of litigation regarding nonprofits and compelled speech,  
          it is reasonable to assume that the state could incur  
          significant legal costs if this bill was enacted.


          COMMENTS:


          1)Purpose. This bill is intended to give consumers more  
            information about how to research a charity before making a  
            gift by requiring charities to provide a link in their  
            solicitation materials to the AG's website containing  
            information about charitable giving, and by requiring the AG  
            to publish educational materials specifically about consumer  








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            rights and protections and charity research resources. The  
            author cites recent examples of improprieties by several  
            charities-the Cancer Fund of America, Cancer Support Services,  
            Children's Cancer Fund of American, The Breast Cancer Society,  
            the Kids Wish Network, and Wounded Warrior Project.


          2)Current Oversight and Regulation of Charities. Most charities  
            in California must file annual financial reports with the AG's  
            Registry of Charitable Trusts. Registered charities are  
            required to file a copy of their tax Form 990 on an annual  
            basis with the Registry, as well as with the Internal Revenue  
            Service (IRS).  Through a partnership with the IRS, GuideStar  
            (www.guidestar.org) publishes the electronically-filed Form  
            990s submitted to the IRS. The Registry is accessible through  
            a Registry Search tool on the AG's existing webpage for  
            charities: www.oag.ca.gov/charities.  The Registry Search tool  
            allows a charity's public filings to be viewed and downloaded  
            from the Registry database.


            The AG is responsible for regulating charities and the  
            professional fundraisers who solicit on their behalf.  The  
            attorneys and auditors of the AG's Charitable Trusts Section  
            investigate and bring legal actions against charities and  
            fundraising professionals that misuse charitable assets or  
            engage in fraudulent fundraising practices.  Charities that  
            violate California's laws are subject to suspension,  
            revocation and civil fines.


          3)Opposition. The California Association of Nonprofits  
            (CalNonprofits) states in opposition to this bill that, "AB  
            2855 (Frazier)?would require every charity seeking funds to  
            support their work to include on their web sites and any  
            document a charity produces, which includes fundraising  
            language, to include a link to the Attorney General's web  
            site.  While the web site disclosure requirement in subsection  
            (a) is burdensome, expensive, duplicative, confusing and  








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            likely both unconstitutional and unenforceable, the 'any  
            document' requirement in subsection (b) is all those things on  
            steroids." A similar letter of opposition was signed by almost  
            500 nonprofits.


          4)Comment. The requirement to include the AG's website address  
            on every written solicitation document seems unduly onerous,  
            particularly for a charity that would be providing a link to  
            the same information on its homepage. In addition, the July 1,  
            2017, mandate on the AG may not provide sufficient time to  
            complete the regulatory process.


          5)Prior Legislation. AB 2118 (Butler), Chapter 544, Statutes of  
            2012, in part required household goods carriers to add links  
            to their websites directing consumers to the Public Utilities  
            Commission's website containing consumer education information  
            for customers of moving companies.  


          Analysis Prepared by:Chuck Nicol / APPR. / (916)  
          319-2081