Bill Text: DE HB187 | 2013-2014 | 147th General Assembly | Draft

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Bill Title: An Act To Amend Title 6 Of The Delaware Code Relating To Charitable Solicitations.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2014-05-14 - HS 1 for HB 187 - Assigned to Economic Development/Banking/Insurance/Commerce [HB187 Detail]

Download: Delaware-2013-HB187-Draft.html

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SPONSOR:	Rep. Keeley & Rep. Osienski & Sen. Simpson & Sen. Townsend
	Rep. Kowalko; Sen. Sokola

HOUSE OF REPRESENTATIVES

147th GENERAL ASSEMBLY

HOUSE BILL NO. 187

AN ACT TO AMEND TITLE 6 OF THE DELAWARE CODE RELATING TOCHARITABLE SOLICITATIONS.

WHEREAS, the Department of Justice, Consumer Protection Unit, enforces the current provisions of Subchapter X, Chapter 25, Title 6 to protect the public from fraudulent charitable and fraternal solicitations; and

WHEREAS, there is growing national support for state oversight of charitable organizations and their solicitation activities; and

WHEREAS, the current version of Delaware's Charitable/Fraternal Solicitation Act are lacking as to registration and annual financial reporting requirements which are imperative to protect the citizens of this State from fraudulent charitable solicitations and to create and maintain a transparent and robust philanthropic climate in Delaware;

NOW, THEREFORE:

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Chapter 25, Title 6 of the Delaware Code by striking Subchapter X in its entirety.

Section 2. Amend Title 6 of the Delaware Code by inserting a new Chapter 25D as shown by underlining as follows:

CHAPTER 25D. CHARITABLE FRATERNAL SOLICITATION

§2501D. Short title.

This chapter may be cited as the "Delaware Charitable Solicitation Act of 2013."

§2502D. Purpose.

The several purposes of this chapter are to require proper registration of charitable organizations, professional fundraisers and professional solicitors; to provide pertinent information to the public thereby enabling them to make informed decisions as to which charitable causes to support; and to safeguard the citizens of Delaware against fraudulent and misleading charitable solicitations, thereby enhancing public confidence in legitimate charitable organizations. The provisions of this chapter are intended to assist the Consumer Protection Unit of the Department of Justice of the State of Delaware investigate allegations of wrongdoing by charitable organizations, without having a chilling effect on charitable organizations or their donors.

§2503D. Definitions.

As used in this chapter, unless the context otherwise requires:

(1) "Attorney General" means the Attorney General of the Department of Justice for the State of Delaware, or his or her designee.

(2) "Charitable organization" means any person who is or holds himself or herself out to be established (i) for any benevolent, educational, humane, scientific, patriotic, social welfare or advocacy, public health, environmental conservation, civic, or philanthropic purpose; (ii) for the benefit of military personnel, veterans, law enforcement officers, firefighters, or other persons or fraternal organizations who protect the public safety; (iii) any person who in any manner employs a charitable appeal as the basis of any solicitation or an appeal which has a tendency to suggest there is a charitable purpose to any such solicitation; or (iv) any organization otherwise subject to § 501(c)(3) of the Internal Revenue Code of 1986 [26 U.S.C. § 501(c)], as amended.

(3) "Charitable purpose" means (i) any benevolent, educational, humane, scientific, patriotic, social welfare or advocacy, public health, environmental conservation, civic, or philanthropic objective; (ii) an objective to benefit law enforcement officers, firefighters, or other persons or fraternal organizations who protect the public safety; or (iii) any purpose described in § 501(c)(3) of the Internal Revenue Code of 1986 [26 U.S.C. § 501(c)], as amended.

(4) "Charitable solicitation" means any oral, written, or electronic request, directly, or indirectly, for money, credit, property, financial assistance or other thing of value on the plea, or representation that such money, credit, property, financial assistance, or other thing of value or any portion thereof, will be used for a charitable purpose or the benefit of a charitable organization.No actual contribution need be made in order for a charitable solicitation to be deemed to have taken place.Without limiting the scope of the foregoing, charitable solicitation shall include the following methods of requesting or securing such money, credit, property, financial assistance or other thing of value on the plea or representation that such money, credit, property, financial assistance, or other thing of value, or any portion thereof:

(i) the making of any announcement to any organization for the purpose of further dissemination, including announcements to the press, over the radio or television, or by telephone, telegraph, or facsimile, or over the internet, concerning an appeal or campaign by or for any charitable organization or purpose;

(ii) the distribution, circulation, posting, or publishing of any handbill, written or electronic advertisement, or other publication that directly or by implication seeks to obtain public support;

(iii) the sale, offer, or attempted sale, of any advertisement, advertising space, book, card, tag, coupon, device, magazine, membership, merchandise, subscription, flower, ticket, candy, cookies, or other tangible item in connection with which any appeal is made for any charitable organization or purpose; or where the name of any charitable organization is used or referred to in any appeal as an inducement or reason for making any sale; or where in connection with any sale, any statement is made that the whole or any part of the proceeds from any sale will be used for any charitable purpose or to benefit any charitable organization; and

(iv) a request made through the use of receptacles for contributions, including but not limited to, honor boxes, vending machines, wishing wells, contribution boxes, commercial donation and interactive websites, and novelty machines, where a charitable appeal is used, referred to, or implied as an inducement or reason to contribute. (5) "Charitable sales promotion" means an advertising or sales campaign, conducted by a commercial co-venturer, that represents that the purchase or use of goods or services offered by the commercial co-venturer will benefit, in whole or in part, a charitable organization or charitable purpose.

(6) "Commercial co-venturer" means a person who, for profit, is regularly and primarily engaged in trade or commerce other than in connection with soliciting for charitable organizations or charitable purposes, and who conducts charitable sales promotions.

(7) "Contribution" means the grant, promise, or pledge of any money, credit, property, financial assistance, or other thing of value, in response to a charitable solicitation.

(8) "Director" means the Director of the Consumer Protection Unit of the Department of Justice for the State of Delaware.

(9) "Fundraising costs" means those costs incurred in inducing others to make contributions to a charitable organization for which persons making the contributions receive no direct economic benefit.The term includes, but is not limited to, salaries, rent, the costs of acquiring and maintaining mailing lists, printing, mailing, and all direct and indirect costs of soliciting, as well as the cost of unsolicited merchandise sent to encourage contributions. The term does not include the direct cost of merchandise or goods sold, or the direct cost of fundraising dinners, bazaars, shows, circuses, banquets, dinners, theater parties, or any other form of benefit performances.

(10) ''Gross revenue" means income of any kind from all sources, from donors residing in this State and national gross revenue from a charitable solicitation activity or campaign, including all amounts received by a professional solicitor as the result of any solicitation campaign, except, gross revenue shall not include income obtained from federal grants or other charitable organizations.

(11) "Owner" means any person who has a direct or indirect interest in any professional fund-raising counsel or professional solicitor.

(12) "Parent organization" means that part of a charitable organization that coordinates, supervises, or exercises control over policy, fund raising, and expenditures, or assists or advises one or more related foundations, supporting organizations, chapters, branches, or affiliates of such organization in this State.

(13) "Percentage compensation" means any compensation, commission, bonus, award, or remuneration, whether direct, indirect, or otherwise, that is calculated by means of a formula, process, evaluation, or other mechanism that considers the amount of funds to be raised or received.

(14) "Person" means any individual, organization, corporation, government, governmental subdivision or agency, statutory trust, business trust, estate, trust, foundation, partnership, unincorporated association, limited liability company, limited liability partnership, limited partnership, benefit corporation, low-profit limited liability company, flexible purpose corporation, two or more of any of the foregoing having a joint or common interest, any group of individuals associated in fact but not otherwise a legal entity, or any other legal or commercial entity.

(15) "Professional fund-raising counsel" means any person who, for financial or other consideration, plans, conducts, manages, advises, consults, or prepares material for, or with respect to, the solicitation of contributions in this State for a charitable organization, and whose compensation is in no way related to the amount of money the professional fund-raising counsel raises for the organization but who does not solicit contributions nor employ, procure, or engage any compensated person to solicit contributions on a percentage basis.Professional fund-raising counsel shall not, at any time, have custody or control of charitable contributions.This term shall not include a volunteer, salaried officer, or employee of the charitable organization, or attorney acting on behalf of a charitable organization.

(16) "Professional solicitor" means a person who, for financial or other consideration, solicits contributions for a charitable purpose or on behalf of a charitable organization, either personally or through agents or employees employed or designated for that purpose, and whose compensation is based in part or in whole on the amount of money that the solicitor raises for the organization.A person who is otherwise a professional fund-raising counsel shall be deemed a professional solicitor if the person's compensation is related to the amount of contributions received, or if the person exercises custody or control of charitable contributions at any time.The term does not include a volunteer receiving no compensation or an employee of a professional solicitor.The term includes a salaried officer, director, member, or employee of a charitable organization if the salaried officer, director, member, or employee of the charitable organization receives compensation related to the amount of contributions received.The term does not include an attorney, investment counselor or advisor, financial advisor, or banker, or other person who:(i) advises another person to make a contribution to a charitable organization as part of the person's employment; and (ii) does not receive compensation from the charitable organization for that advice.

(17) "Willful violation" means the person committing the violation knew or should have known that the conduct was of the nature prohibited by this chapter.

§2504D. Registration of charitable organizations.

(a) Every charitable organization, except those entities exempt under subsection (b) of this section, whether domiciled in this State or in a foreign jurisdiction , that intends to solicit contributions in this State by any means or to have contributions solicited in this State on its behalf, prior to conducting any solicitation, or prior to having any solicitation conducted on its behalf by others, shall file an initial registration statement with the Director upon the Unified Registration Statement ("URS"), in its most recent version, or as revised, or on such other registration form as prescribed by the Director.At least two persons authorized by the charitable organization, one of whom shall be a board member or CEO of the organization, shall sign the URS or other prescribed registration form and shall certify under penalty provided by § 877 of Title 11 that the statements therein are true and correct to the best of their knowledge.A consolidated application for registration may, at the option of the charitable organization, be submitted by a parent organization for itself and any or all of its related foundations, supporting organizations, chapters, branches, or affiliates in this State.

(b) The following charitable organizations shall be exempted from the requirements of §2504D(a):

(1) Religious organizations or societies that are exempt from filing an IRS Form 990 federal annual information return pursuant to 26 U.S.C. §6033(a)(3)(A)(i), (a)(3)(A)(iii), or (a)(3)(C)(i);

(2) Political parties, candidates for federal or state office, and political action committees, required to file financial information with federal or state elections commissions;

(3) Charitable organizations that do not intend to, and do not actually, raise or receive gross revenue excluding grants from governmental entities or from organizations exempt from federal taxation under §501(c)(3) of the federal Internal Revenue Code of 1986, as amended, in excess of fifty thousand dollars ($50,000) during a fiscal year, or do not receive contributions from more than ten (10) persons during a fiscal year.The exemption authorized in this subparagraph shall not apply to a charitable organization that (i) has contracted with a paid solicitor to solicit contributions in this state for the organization; or (ii) has incurred administrative salary or commission costs in relation to its solicitation activities;

(4) Any parent-teacher association or educational institution, the curricula of which in whole or in part are registered or approved by any state or the United States either directly or by acceptance of accreditation by an accrediting body, and any 501(c)(3) organization authorized by and having established identity with the aforementioned educational institutions, so long as solicitations of charitable contributions by such institutions and organizations are primarily directed to students, alumni, faculty and trustees of such institutions and their families;

(5) Any nonprofit hospital licensed by the State, or any similar provision of the laws of any other state;

(6) Any governmental unit or instrumentality of any state or the United States;

(7) Any entity created by an Act of Congress;

(8) Fraternal beneficiary societies, orders, or associations operating for the exclusive benefit of the members of a fraternity itself, and which solicit contributions solely from their own membership, family members of the members of the organization, volunteers, or an affiliate of the organization, and the members receive no compensation, directly or indirectly, therefor, and exempt from filing an IRS Form 990 federal annual information return pursuant to 26 U.S.C. §6033(a)(3)(C)(v);

(9) Civic leagues and civic organizations which solicit contributions solely from their own membership, family members of the members of the organization, volunteers, or an affiliate of the organization and the members receive no compensation, directly or indirectly, therefor;

(10) Any organization which limits solicitations to persons who have a right to vote as a member, such as alumni, trade or professional organizations; and

(11) Any person or organization which solicits contributions for the relief of a single individual, specifically identified by name, if all contributions do not exceed ten thousand dollars ($10,000) and are transferred to the identified individual with no restrictions and without any deductions therefrom.

(c) Each charitable organization filing a registration form, whether initial or revised, required by this section shall pay an administrative filing fee of twenty-five dollars ($25.00)at the time of registration.

(d) The URS or other prescribed registration forms shall be electronically filed with the Director and may require the use of electronic signatures in accordance with the provisions of §2504D(a) above, and the Uniform Electronic Transactions Act under Chapter 12A of this title, and/or electronic payment.

(e) After the filing of an initial registration statement with the Director, if a charitable organization changes or modifies its charitable purpose, the charitable organization shall file a revised registration statement in the same form as the initial registration statement. The revised registration statement shall be denoted as such and shall be filed in the same manner as provided for by this section.

§2505D. Annual financial reports; fiscal records and fees.

(a) Every charitable organization required to register pursuant to § 2504D(a), and not otherwise exempt under §2504D(b), shall annually file with the Director a report for its most recently completed fiscal year.The report shall include a financial statement on a form prescribed by the Director; or, in the Director's discretion, a copy of the charitable organization's IRS Form 990, or other substantially similar federal form, with all schedules except schedules of donors; or a copy of the charitable organization's internal annual financial statement. Such financial statement, in whichever form submitted, shall include:

i. a clear statements of the gross revenue, expenses, and net income inuring to the benefit of the charitable organization;

ii. a balance sheet as of the close of the fiscal year; and

iii. a schedule of the activities carried on by the charitable organization in the performance of its purposes and the amounts expended thereon during the fiscal year.

(b) The charitable organization shall electronically file with the Director the annual financial report not more than eight (8) months following the close of its fiscal year, on or before the date the charitable organization files a Form 990, or other substantially similar federal form, with the Internal Revenue Service.

(c) The annual financial report shall be accompanied by a filing fee as prescribed by subsection (h) of this section.

(d) The annual financial report shall be signed by two officers authorized by the charitable organization, or other equivalent persons authorized by the charitable organization, who shall certify under penalty provided by § 877 of Title 11 that the report is true and correct to the best of their knowledge.

(e) The Director shall accept a copy or duplicate original of financial statements, reports, or returns filed by the charitable organization with the Internal Revenue Service or another state having requirements similar to the provisions of this section; provided that the Director may prescribe the form of the annual financial report for charitable organizations that file the Form 990N with the Internal Revenue Service.

(f) A charitable organization with gross revenue in excess of $1,000,000, in the year covered by the annual financial report, shall include its financial statements and an audit report prepared by a certified public accountant.A charitable organization with gross revenue less than $1,000,000, but nonetheless subject to a requirement imposed by any governmental authority or third party to provide an audit report prepared by a certified public accountant, shall include such audit report with its annual financial report.A charitable organization with gross revenue in excess of $500,000 but less than $1,000,000 in the year covered by the annual financial report shall include, in lieu of an audit report, an independent certified public accountant review report as defined by the American Institute of Certified Public Accountants.

(g) The Director, upon written request and for good cause shown, may grant an extension of time for the filing of the annual financial report.

(h) Each charitable organization filing a report required by this section shall pay a filing fee, based on the total amount of its gross revenue during the time covered by the report, at the close of the calendar or fiscal year adopted by the charitable organization, as follows, or in the amount and with any additional sums as may be prescribed by the Director:

(1) $10, if gross revenue is $50,000 or more but less than $100,000;

(2) $25, if gross revenue is $100,000 or more but less than $500,000;

(3) $50, if gross revenue is $500,000 or more but less than $1,000,000;

(4) $100, if gross revenue is $1,000,000 or more.

(i) If a return or report required under this section is not filed, taking into account any extension of time for filing, a fine of $20 may be imposed for each day during which the violation continues; provided that the total amount imposed under this subsection shall not exceed $5,000.Returns and reports submitted without the proper filing fee shall not be accepted for filing.

(j) The annual registrations shall be electronically filed with the Director and may require the use of electronic signatures, and/or electronic payment.

§2506D. Filing requirements for professional fund-raising counsel and professional solicitors.

(a) Every professional fund-raising counsel or professional solicitor, prior to any charitable solicitation, shall register with the Director.The registration statement shall contain the information set forth in subsection (e) of this section on forms prescribed by the Director.The registration statement shall be accompanied by a fee in the amount of $250.Renewal registration statements shall be filed with the Director on or before July 1 of each calendar year by each professional fund-raising counsel or professional solicitor.The renewal statement shall contain the information set forth in subsection (e) of this section on forms prescribed by the Director.A renewal fee of $250, or in any amount and with any additional sums as may be prescribed by the Director, shall accompany the renewal statement.

(b) Each professional solicitor who exercises custody or control over charitable contributions at any time, at the time of each filing, shall file with and have approved by the Director a bond in which the applicant is the principal obligor in the penal sum of $25,000, or in the amount and with any additional sums as may be prescribed by the Director, issued with good and sufficient surety or sureties approved by the Director and which shall remain in effect for one (1) year.Upon a violation of this chapter, or any regulation adopted pursuant to this chapter, by the applicant, its officers, directors, employees, agents, servants, and/or independent contractors, the bond shall inure to the State.A partnership, limited partnership, limited liability partnership, limited liability company, low-profit limited liability company, corporation, benefit corporation, flexible purpose corporation, or any other legal or commercial entity that is a professional solicitor may, with the consent of the Director, file a consolidated bond on behalf of all its members, officers, and employees.

(c) The Director shall examine each registration statement and supporting document filed by a professional fund-raising counsel or professional solicitor and shall determine whether the registration requirements are satisfied.If the Director determines that the registration requirements are not satisfied, the Director shall notify the professional fund-raising counsel or professional solicitor in writing within thirty (30) business days of its receipt of the registration statement; otherwise the registration statement is deemed to be approved.Within fourteen (14) business days after receipt of a notification that the registration requirements are not satisfied, the professional fund-raising counsel or professional solicitor shall submit a written report to the Director setting forth the proposed plan by the professional fund-raising counsel or professional solicitor to cure any deficiencies in the registration statement signed by a person authorized by the professional fund-raising counsel or professional solicitor certifying under penalty provided by § 877 of Title 11 that the statements therein are true and correct to the best of their knowledge.

(d) The Director may require that registration and renewal registration, surety bonds, and contracts be filed with the Director electronically and may require the use of electronic signatures, and/or electronic payment.

(e) Each registration and renewal registration shall contain, in a form acceptable to the Director, a statement that includes, but is not limited to, the following disclosures:

(1) The names and addresses of all owners, members, officers, and directors of a professional fund-raising counsel, and the names and addresses of all owners, members, officers, and directors of a professional solicitor;

(2) The corporate form of the registrant, whether corporation, benefit corporation, flexible purpose corporation, limited liability company, low-profit limited liability company, partnership, limited partnership, limited liability partnership, or individual;

(3) Whether the registrant has an office in this State, the address of that office, and the name and phone number of the person in charge of the office;

(4) The names and addresses of any individuals supervising any solicitation activity;

(5) Whether the registrant has entered into a consent agreement with, been disciplined by, or subject to administrative action by, any other governmental agency within or outside this State;

(6) Whether any employee, officer, member, director, or any person with a controlling interest in the registrant has been convicted by any federal or state court within the past ten (10) years of a felony or misdemeanor involving fraud, theft, larceny, embezzlement, fraudulent conversion, misappropriation of property, or any crime of dishonesty;

(7) The date that the registrant began soliciting residents of this State on behalf of a charitable organization or providing professional fund-raising counsel or professional solicitation services; and

(8) Whether any owners, members, directors, or officers are related to:

(A) Any other owners, members, directors, officers, or employees of the registrant; and

(B) Any officer, member, director, trustee, or employee of a charitable organization under contract with the registrant.

§2507D. Denial, suspension, or revocation of registration of charitable organizations, professional solicitors, or professional fund-raising counsel.

The Director may by order deny, suspend, or revoke any registration of any charitable organization, professional solicitor, or professional fund-raising counsel if the Director finds that the applicant or registrant, or any partner, officer, director, or any person occupying a similar status or performing similar functions, of the applicant or registrant, or any person directly controlling the applicant or registrant:

(1) Has filed an application for registration which is incomplete or contained any statement which was, in light of the circumstances under which it was made, false or misleading;

(2) Has violated or failed to comply with any provision of this chapter;

(3) Has been convicted by any federal or state court within the past ten (10) years of a felony or a misdemeanor involving fraud, theft, larceny, embezzlement, fraudulent conversion, misappropriation of property, or any crime of dishonesty;

(4) Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of charitable solicitations;

(5) Is the subject of a cease and desist order of the Attorney General or of any order within or outside this State denying, suspending or revoking registration as a charitable organization, professional solicitor, or professional fund-raising counsel;

(6) Has engaged in dishonest or unethical practices within or outside this State;

(7) Has failed to pay the proper filing fee, but the Director shall vacate any denial or suspension order when the deficiency has been corrected;

(8) Has within the past five (5) years been a partner, officer, director, controlling person or any person occupying a similar status or performing similar functions, of a charitable organization, professional solicitor or professional fund-raising counsel whose registration in this State or any state has been denied or revoked; or

(9) Is no longer in existence or has ceased to do business as a charitable organization, professional solicitor, or professional fund-raising counsel, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator, receiver or guardian, or cannot be located after reasonable search.

§2508D. Hearing procedures.

(a) By administrative order.

(1) Upon the finding of a violation of § 2507D, after due notice and a hearing, the Director may issue an order denying, suspending, or revoking an applicant or registrant's registration.

(2) Upon the finding of a violation of § 2514D, after due notice and a hearing, the Director may order any relief as authorized by § 2516D(b).

(b) By summary administrative order.

(1) Where the Director in his or her discretion perceives a threat to the public interest in connection with an alleged violation of § 2514D, the Director may issue and serve upon the alleged violator a summary registration suspension and/or summary cease and desist order ordering an immediate discontinuance of the unlawful practice identified in the order.

(2) A complaint detailing the specific allegations against the alleged violator shall accompany any summary cease and desist order served upon the alleged violator.The Director shall provide a hearing on the charges in the complaint within fourteen (14) days after the issuance of the complaint and the cease and desist order.A written opinion and order, containing findings of fact and conclusions of law, shall issue within fourteen (14) days after the close of the hearing.The order issued after the hearing may provide for any administrative remedy authorized by this chapter.

(c) Any party, including the Director, who is aggrieved by the hearing officer's final order may appeal the order to Superior Court within thirty (30) days after the date the order is issued.The hearing officer shall file the administrative record with the Court within sixty (60) days after receipt of the notice of appeal.The administrative order, including any lawful sanctions, shall be affirmed by the Court if its findings are supported by substantial evidence.

(d) The Attorney General shall appoint a Deputy Attorney General to act as the administrative hearing officer to adjudicate charges brought by the Director against any person.Such hearing officer shall be a Deputy Attorney General who is not assigned to the Consumer Protection Unit.

§2509D. Professional solicitors; required disclosures.

(a) A professional solicitor who makes a charitable solicitation shall furnish to each person from whom a charitable solicitation is being sought, prior to collecting or attempting to collect any contribution, a written or oral confirmation of the expected contribution, containing the following information clearly and conspicuously:

(1) The full legal name, address, and telephone number of the individual professional solicitor who directly communicated with the contributor;

(2) The full legal name of the charitable organization for whom the professional solicitor is soliciting; and

(3) A disclosure that the contribution is not tax-deductible, if applicable, or, if the professional solicitor maintains that the contribution is tax-deductible, in whole or in part, the portion of the contribution that the professional solicitor maintains is tax-deductible.

§2510D. Professional solicitor financial reports; contribution account.

(a) Within ninety (90) days after a charitable solicitation campaign or event has been completed or for a charitable solicitation campaign lasting more than one (1) year, within ninety (90) days of the anniversary of commencement, a professional solicitor, a charitable organization, or any other person who exercises custody and control over the proceeds of the campaign, shall file with the Director a financial report for the charitable solicitation campaign, including gross revenue and an itemization of all expenses incurred on a form prescribed by the Director, and a copy of the written contract for the solicitation services as required by §2513D of this chapter.For a charitable solicitation campaign lasting more than one (1) year, the financial report will contain the gross revenue and an itemization of all expenses incurred for the prior year.This report shall be signed, under penalty provided by § 877 of Title 11, by the authorized agent for the person or entity with custody and control of the proceeds of the campaign,and shall report gross revenue from donors residing in this State and national gross revenue from a charitable solicitation activity or campaign.At the time of filing the report, the person submitting the report shall send a true and correct copy of the report to the charitable organization on whose behalf the campaign was conducted, and to the professional solicitor, if not the filer.

(b) A professional solicitor shall maintain during each charitable solicitation campaign and for not less than five (5) years after the completion of that charitable solicitation activity or campaign the following records, which shall be available for inspection upon request by the Director:

(1) The date and amount of each contribution received and the name and address of each contributor;

(2) The name and residence of each employee, agent, or other person involved in the charitable solicitation activity or campaign;

(3) Records of all gross revenue received and expenses incurred in the course of the charitable solicitation activity or campaign;

(4) A copy of the written contract entered into with the charitable organization for the solicitation services to be provided by the professional solicitor, as required by §2513D of this chapter; and

(5) The name, location, and account number of each bank or other financial institution account in which the professional solicitor has deposited gross revenue from the charitable solicitation activity or campaign.

(c) Any material change in any information filed with the Director pursuant to this section shall be reported in writing by the professional solicitor to the Director not more than seven (7) days after the change occurs.

(d) Each contribution in the control or custody of the professional solicitor, in its entirety and within five (5) days of its receipt, shall be deposited in an account at a federally insured bank or other federally insured financial institution, which shall be in the name of the charitable organization. The charitable organization shall maintain and administer the account and shall have sole control of all withdrawals.

§2511D. Records.

(a) Every charitable organization, professional fund-raising counsel, professional solicitor, and commercial co-venturer subject to this chapter shall keep true and accurate records as to its activities in a form that will accurately provide support for the information required by this chapter, including, but not limited to, written contracts required under § 2513D of this chapter.Upon request, the records shall be made available to the Director for inspection.Except as provided in subsection (c) of this section, records shall be retained for a period of not less than five (5) years.

(b) In addition to the requirements under subsection (a) of this section, a professional solicitor shall maintain accurate records of the name, address, and telephone number of any person who has been solicited; the amount of any contribution; and the date of the solicitation.The professional solicitor shall provide a copy of such records to the charitable organization on a quarterly basis.

(c) If a professional solicitor sells tickets to an event and represents that tickets will be donated for use by another, the professional solicitor, for not less than five (5) years after the completion of such event, shall maintain the following records, which shall be available for inspection upon request by the Director:

(1) The number of tickets purchased and donated by each contributor; and

(2) The name and address of all charitable organizations receiving donated tickets for use by others, including the number of tickets received by each charitable organization.

§2512D. Commercial co-venturer's charitable sales promotions.

(a) All charitable sales promotions by a commercial co-venturer shall disclose the name of the commercial co-venturer.

(b) Prior to the commencement of any charitable sales promotion in this State conducted by a commercial co-venturer using the name of a charitable organization, the commercial co-venturer shall obtain the written consent of the charitable organization whose name will be used during the charitable sales promotion.The charitable organization shall file a copy of the written consent with the Director not less than ten (10) business days prior to the commencement of the charitable sales promotion within this State.An authorized representative of the charitable organization and the commercial co-venturer shall sign the written consent, and the terms of the written consent shall include the following:

(1) The goods or services to be offered to the public;

(2) The geographic area(s) where, and all the dates when, the offerings are to be made;

(3) The manner in which the name of the charitable organization is to be used, including any representation to be made to the public as to the amount or percent, per unit of goods or services purchased or used that is to benefit the charitable organization;

(4) A provision for a final accounting on a per unit basis to be given by the commercial co-venturer to the charitable organization and the date when it is to be made; and

(5) The date when and the manner in which the benefit is to be conferred on the charitable organization.

(c) A final accounting for each charitable sales promotion shall be prepared by the commercial co-venturer following the completion of the charitable sales promotion.A copy of the final accounting shall be provided to the charitable organization in accordance with the date set forth in the written contract required under subsection (b)(4) of this section.The final accounting shall be kept by the commercial co-venturer as provided by § 2511D.

(d) The commercial co-venturer shall retain all records related to the charitable sales promotion for a period of not less than five (5) years.

§2513D. Written contracts.

(a) There shall be a written contract between a charitable organization and a professional fund-raising counsel or professional solicitor.The contract shall be signed by two members of the charitable organization, one of whom shall be a board member or CEO of the organization, and an authorized contracting officer for the professional fund-raising counsel or professional solicitor.The contract shall contain all of the following provisions:

(1) The legal name and address of the charitable organization and the professional fund-raising counsel or professional solicitor;

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

(3) A statement of the respective obligations of the professional fund-raising counsel or professional solicitor and the charitable organization;

(4) A statement of the guaranteed minimum percentage of the gross revenue from contributions that will be remitted to or retained by the charitable organization, if any, or, if the charitable solicitation involves the sale of goods, services, or tickets to a fundraising event, the percentage of the purchase price that will be remitted to the charitable organization, if any.The stated percentage shall exclude any amount that the charitable organization is to pay as fundraising costs;

(5) Information concerning the compensation of the professional solicitor as follows:

(A) If the compensation of the professional solicitor is contingent upon the number of contributions or the amount of gross revenue received, a statement shall be included specifying the percentage of the gross revenue that is the basis for that compensation.The stated percentage shall include any amount that the professional solicitor is to be reimbursed for fundraising costs;

(B) If the compensation of the professional fundraising counsel or professional solicitor is not contingent upon the number of contributions or amount of gross revenue received from the charitable solicitation campaign, the compensation may be expressed as a reasonable estimate of the percentage of the gross revenue, and the contract shall clearly disclose the assumptions upon which the estimate is based.The stated assumptions shall be based upon all of the relevant facts known to the professional solicitor or professional fundraising counsel regarding the charitable solicitation to be conducted; or

(C) If the compensation of the professional fundraising counsel or professional solicitor is not contingent on the number of contributions or amount of gross revenue received from the charitable solicitation campaign, the compensation shall be stated in a dollar amount;

(6) The effective and termination dates of the contract or, if the contract does not have a set termination date, a clause allowing either party a reasonable period to terminate the contract or notify the other party if either party chooses not to renew. The contract shall also contain the date services will commence with respect to charitable solicitation in this State of contributions for a charitable organization;

(7) In the case of a professional fund-raising counsel, a statement that the professional fund-raising counsel will not at any time have custody or control of contributions;

(8) A statement that the charitable organization exercises control and approval over the content and volume of any charitable solicitation; and

(9) Any other information required by the Director.

(b) No professional fund-raising counsel or professional solicitor shall contract with a charitable organization unless the professional fund-raising counsel or professional solicitor is registered with the Director; and, if a professional solicitor, unless bonded as required by §2506D(b) of this chapter.A contract with an unregistered professional fund-raising counsel or professional solicitor shall be voidable at the option of the charitable organization.

(c) Whenever a charitable organization contracts with a professional fund-raising counsel or professional solicitor, the charitable organization shall have the right to cancel the contract without cost, penalty, or liability, for a period of ten (10) business days following the date on which that contract is executed.Any provision in the contract that is intended to waive this right of cancellation shall be void and unenforceable.

(d) A charitable organization may cancel a contract pursuant to subsection (c) by serving a written notice of cancellation on the professional fund-raising counsel or professional solicitor. If mailed, service shall be by certified mail, return receipt requested, and cancellation shall be deemed effective upon receipt by the professional fund-raising counsel or professional solicitor.The notice shall be sufficient if it indicates that the charitable organization does not intend to be bound by the contract.

(e) Any funds collected after effective notice that a contract has been canceled shall be deemed to be held in trust for the benefit of the charitable organization without deduction for cost or expenses of any nature.A charitable organization shall be entitled to recover all funds collected after the date of cancellation.

§2514D. Unlawful practices.

(a) No person, for the purpose of conducting a charitable solicitation of contributions from persons in this State, shall use the name, logo, or trademarked identification of any other person except that of an officer, director, or trustee of the charitable organization by or for which contributions are solicited, without the written consent of the other persons.

A person shall be deemed to have used the name of another person for the purpose of soliciting contributions if the latter person's name is listed on any stationery, advertisement, brochure, or written, oral, or electronic correspondence in or by which a contribution is solicited by, or on behalf of, a charitable organization or the latter person's name is listed or referred to in connection with a request for a contribution as one who has contributed to, sponsored, or endorsed the charitable organization or its activities.

(b) No person shall solicit contributions from persons in this State as a charitable organization, professional fund-raising counsel, professional solicitor, or commercial co-venturer unless the person has filed the information required by this chapter with the Director.

(c) No person shall aid, abet, or otherwise permit any persons to solicit contributions from persons in this State unless the person soliciting contributions has complied with the requirements of this chapter.

(d) No charitable organization, professional fund-raising counsel, or professional solicitor subject to this chapter shall use or exploit the fact of filing any statement, report, professional fund-raising counsel contracts, or professional solicitor contracts or other documents or information required to be filed under this chapter or with the Director so as to lead the public to believe that the filing in any manner constitutes an endorsement or approval by the State of the purposes or goals of the charitable solicitation by the charitable organization, professional fund-raising counsel, or professional solicitor.

(e) No person shall receive compensation from a charitable organization for obtaining moneys or bequests for that charitable organization if that person has also received compensation for advising the donor to make the donation; provided that compensation may be received if the person obtains the written consent of the donor to receive compensation from the charitable organization.

(f) No charitable organization shall use the services of an unregistered professional solicitor or professional fund-raising counsel in connection with conducting solicitations in this State.

(g) No person shall use any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact with the intent that others rely upon such concealment, suppression or omission, whether or not any person has in fact been misled, deceived or damaged to solicit charitable contributions.Such acts or practices shall include, but are not limited to, any of the following:

(1) The failure of any person to identify himself or herself by name prior to making a charitable solicitation;

(2) The failure of a person to identify the charitable organization, for which the charitable solicitation is being made, and the charitable purpose of the charitable solicitation, prior to making the charitable solicitation;

(3) If the charitable solicitation is made by a professional solicitor, the failure to disclose that the person soliciting the contribution is, or is employed by, a professional solicitor and the identity of the professional solicitor;

(4) When requested by the person being solicited, the failure of any person to disclose the amount/percentage of the contribution that will be turned over to the charitable organization, the amount/percentage of the contribution to be used for the charitable purposes for which it is being solicited and the amount/percentage to be retained by the professional solicitor or professional fund-raising counsel. To the extent the amount/percentage of the contribution to be turned over to the charitable organization is not known at the time of the charitable solicitation, the person shall provide a good faith estimate, disclosed as such, of the amount/percentage of the contribution to be turned over to the charitable organization;

(5) The use of or reference to the term "sheriff," "deputy sheriff," "police," "law enforcement," "trooper," "rescue squad," "firemen", or "firefighter" unless (i) the person making such representations is employed by a police, law enforcement, rescue squad or fire department, as defined by the Director, and the person is authorized by such entity to engage in charitable solicitation, or (ii) such entity has authorized the use or reference to such term in writing for the purpose of charitable solicitation;

(6) The representation that a percentage of the contribution will be used for a charitable purpose if the person has reason to believe the contribution will not be used for a charitable purpose;

(7) The representation that another person endorses the charitable solicitation unless such person has consented in writing to the use of the person's name for the purpose of endorsing the charitable solicitation;

(8) The representation that the contribution is solicited on behalf of anyone other than the charitable organization that authorized the charitable solicitation in accordance with this chapter;

(9) The use of the name of any charitable organization without the written consent of the charitable organization;

(10) The use of a name, symbol, or statement so closely related or similar to that used by another charitable organization or governmental agency that the use thereof would tend to confuse or mislead the public;

(11) The failure to create and/or maintain the records and written contracts as required by this chapter; or

(12) The failure to file the information and registration statement, annual financial reports, and other statements or contracts required by this chapter or failure to provide any information requested by the Director pursuant to this chapter.

(h) In determining whether or not a practice is unfair, deceptive, fraudulent, or misleading under this chapter, definitions, standards or interpretations relating thereto under the Uniform Deceptive Trade Practices Act or the Consumer Fraud Act of Chapter 25 of Title 6 shall be instructive.

(i) Every person soliciting, collecting, or expending contributions for charitable purposes and every officer, director, trustee, and employee of any such person concerned with the solicitation, collection, or expenditure of such contribution, or acting as a professional fund-raising counsel shall be deemed to be a fiduciary and acting in a fiduciary capacity.

(j) No charitable organization or any officer, director, member, volunteer, or employee of a charitable organization shall be deemed in violation of this section for an unlawful practice committed by a professional solicitor or professional fund-raising counsel unless the charitable organization or such officer, director, member, volunteer, or employee knew or should have known of such unlawful practice, or the charitable organization or such officer, director, member, volunteer, or employee had fraudulent intent in connection with the unlawful practice.

§2515D. Time restriction.

No charitable organization, professional solicitor, and/or professional fund-raising counsel shall engage in charitable solicitation of any person after 9:00 p.m. or before 8:00 a.m., unless explicitly authorized by the person being solicited prior to the charitable solicitation.A prior existing relationship, by itself, is insufficient to waive the above time restrictions.

§2516D. Enforcement authority.

(a) The Attorney General shall have the same authority in carrying out the provisions of this chapter as is provided by Chapter 25 of this title or Chapter 25 of Title 29.

(b) After due notice and an administrative hearing, any willful violation of the provisions of this chapter, or of a lawful cease and desist order of the Director or the hearing officer, may be sanctioned by an administrative penalty up to $5,000 per violation, a cease and desist order, an order of restitution (including donations to a violator), rescission, recoupment, reformation of contract, or disgorgement of monies obtained by unlawful conduct or other monies that would constitute unjust enrichment.

(c) Class G felony. -- Any person whoknowingly violates any provisions of this chapter shall upon conviction be fined not more than $10,000 or imprisoned not more than 2 years at Level V incarceration, and/or both, per violation.

(d) No indictment or information may be returned under this chapter more than five (5) years after the alleged violation.The Superior Court shall have exclusive jurisdiction of any criminal violations of this chapter.

(e) The remedies and penalties provided for in this chapter are not exclusive and shall be in addition to any other procedures, rights, or remedies which exist with respect to any other provisions of law, including but not limited to state and/or federal criminal prosecutions and/or actions brought by private parties.

(f) The Director may adopt such regulations, not inconsistent herewith, as the Director may deem necessary or appropriate in the administration, interpretation, and enforcement of this chapter.The Director shall have standing to seek additional civil remedies in the Superior Court or the Court of Chancery for violations of this chapter.Chapter II of the Delaware Administrative Procedures Act, Chapter 101 of Title 29, shall apply to the procedures for adopting such regulations.

§2517D. Fees and penalties.

All fees and penalties required to be paid pursuant to this chapter shall be credited by the State Treasury to the State Consumer Protection Fund as provided for in Chapter 25 of this title.

§2518D. Public records.

Except as otherwise provided herein, registration statements, applications, reports, notices, contract or agreements between charitable organizations and professional fund-raising counsel, professional solicitors and commercial co-ventures, and all other documents and information required to be filed under this chapter with the Director shall become public records in the Consumer Protection Unit and shall be open to the general public electronically, or at such time and under such conditions as the Director may prescribe.

§2519D. Severability.

If any provision of this chapter, or the application thereof to any person or circumstance, is held invalid, such invalidity shall not affect any other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to that end, the provisions of this chapter that are held invalid are declared to be severable.

§2520D. Effective date.

This Act shall become effective 120 days after enactment into law.

SYNOPSIS

This Act will require, among other things: (1) the registration of all charitable organizations soliciting in this State or engaging in solicitation activities directed to Delaware citizens and the annual disclosure of certain financial information relating to these entities; and (2) the registration of professional fund-raising counsel and professional solicitors soliciting in this State or engaging in solicitation activities directed to Delaware citizens and the annual reporting of certain financial information relating to these entities. The purpose of these regulations and the electronic compilation and publication of this information serves to provide the public with the tools and information sufficient to make informed decisions about which charitable purposes to support while also facilitating transparency and confidence in the sector; thereby creating a more robust philanthropic climate in Delaware. Armed with more information, the public and the Delaware Department of Justice will be able to more aggressively and proactively pursue charitable fraud.