BILL ANALYSIS Ó
AB 2855
Page 1
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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|Policy |Privacy and Consumer |Vote:|6 - 2 |
|Committee: |Protection | | |
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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
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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