Bill Text: HI SB2250 | 2014 | Regular Session | Amended

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Bill Title: Charitable Solicitation; Collection Boxes; Charitable Organizations; Professional Solicitors; Commercial Co-venturers

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2014-04-25 - Conference committee meeting to reconvene on 04-25-14 4:00PM in conference room 016. [SB2250 Detail]

Download: Hawaii-2014-SB2250-Amended.html

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THE SENATE	S.B. NO.	2250
TWENTY-SEVENTH LEGISLATURE, 2014		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

 

 

RELATING TO CHARITABLE SOLICITATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  Chapter 467B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§467B-     Collection boxes; required disclosures.  (a)  The front of every collection box that is owned and operated by a charitable organization exempt from income tax under Section 501(c)(3) of the Internal Revenue Code shall conspicuously display all of the following:

     (1)  The name, address, telephone number, and, if available, the internet web address of the charitable organization; and

     (2)  A statement, in lettering at least two inches in height and one-half inch in width, that reads, "This collection box is owned and operated by a tax exempt charitable organization.".

     (b)  The front of every collection box that is owned and operated by a professional solicitor shall conspicuously display all of the following:

     (1)  The name, address, telephone number, and, if available, the internet web address of the professional solicitor;

     (2)  A statement, in lettering at least two inches in height and one-half inch in width, that reads, "This collection box is owned and operated by a professional solicitor.  Items donated here support, in part, the professional solicitor, which is a for-profit organization."; and

     (3)  The name of the charitable organization that will benefit from the donation of contributions to the collection box.

     (c)  The front of every collection box that is owned and operated by a for-profit organization that is not a professional solicitor or an organization that is not a charitable organization exempt from income tax under Section 501(c)(3) of the Internal Revenue Code shall conspicuously display all of the following:

     (1)  The name, address, telephone number, and, if available, the internet web address of the for-profit organization; and

     (2)  A statement, in lettering at least two inches in height and one-half inch in width, that reads, "This collection box is owned and operated by a for-profit organization that is not a charity.  Any contributions made here are not tax deductible.".

     (d)  Every charitable organization or professional solicitor owning or operating a collection box shall be registered with the department under section 467B-2.1 or 467B‑12, as applicable.

     (e)  For purposes of this section, a "collection box" means an unattended canister, box, bin, receptacle, or similar device, used for soliciting and collecting donations of salvageable personal property."

     SECTION 2.  Section 467B-2.1, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Every public benefit corporation domiciled in Hawaii and every charitable organization not exempted by section 467B‑11.5 shall register with the department prior to conducting any solicitation of contributions or prior to having any solicitation of contributions conducted on its behalf by others.  Two authorized officers of the charitable organization shall sign the registration form and shall certify that the statements therein are true and correct to the best of their knowledge subject to penalties imposed by section 710-1063.  A central or parent organization that has received a group exemption letter from the Internal Revenue Service may submit 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.] the subordinate organizations covered under the group exemption that are included in the central or parent organization's annual information return to the Internal Revenue Service."

     SECTION 3.  Section 467B-2.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Within ninety days after a solicitation campaign or event has been completed and on the anniversary of the commencement of a solicitation campaign lasting more than one year, a professional solicitor shall file with the attorney general a financial report for the campaign, including gross revenue and an itemization of all expenses incurred on a form prescribed by the attorney general.  The attorney general may require the financial report to be submitted electronically.  This report shall be signed under penalty provided by section 710-1063 by the authorized contracting agent for the professional solicitor [and two authorized officials of the charitable organization] and shall report gross revenue from Hawaii donors and national gross revenue from a solicitation activity or campaign.  If a financial report required under this section is not filed, unless it is shown that the failure is due to reasonable cause, an initial fine of $100 shall be imposed and an additional fine of $20 shall be imposed for each day during which the violation continues; provided that the total amount imposed under this subsection shall not exceed $1,000.  The professional solicitor shall provide a copy of the financial report to the charitable organization to which the financial report pertains within ten days of its submission of the report to the attorney general.  A professional solicitor shall maintain during each solicitation campaign and for not less than three years after the completion of that campaign the following records, which shall be available for inspection upon demand by the attorney general:

     (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 solicitation;

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

     (4)  The location and account number of each bank or other financial institution account in which the professional solicitor has deposited revenue from the solicitation campaign."

     SECTION 4.  Section 467B-5.5, Hawaii Revised Statutes, is amended to read as follows:

     "§467B-5.5  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 commercial co-venturer shall file a copy of the written consent with the department not less than ten 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 where, and the starting and final date when, the offering is 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 per cent 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[;], which date shall be no more than ninety days after the end of the charitable sales promotion; 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 promotion.  A copy of the final accounting shall be provided to the attorney general not more than twenty days after the copy is requested by the attorney general.  [A copy of the final accounting shall be provided to the charitable organization not more than twenty days after the copy is requested by the charitable organization.]  The final accounting shall be kept by the commercial co-venturer for a period of three years, unless the commercial co-venturer and the charitable organization mutually agree that the accounting should be kept by the charitable organization instead of the commercial co-venturer.

     (d)  A fine of $20 shall be imposed on a commercial co‑venturer who fails to file a written consent as required by subsection (b), unless it is shown that the failure is due to reasonable cause, for each day during which the violation continues; provided that the total amount imposed under this subsection shall not exceed $1,000.

     (e)  The attorney general may issue a cease and desist order whenever the attorney general finds that a commercial co‑venturer has engaged in an act or practice that violates this chapter.

     (f)  When the attorney general finds that a commercial co‑venturer has violated or is operating in violation of this chapter, the attorney general may impose an administrative fine not to exceed $1,000 for each act that constitutes a violation of this chapter and an additional penalty, not to exceed $100 per day, for each day during which the violation continues.  Any person aggrieved by an action of the attorney general under this section may request a hearing to review that action in accordance with chapter 91 and rules adopted by the attorney general.  Any request for hearing shall be made within ten days after the attorney general has served the person with notice of the action, which notice shall be deemed effective upon mailing."

     SECTION 5.  Section 467B-6.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Every charitable organization required to register pursuant to section 467B-2.1 shall annually file with the department a report for its most recently completed fiscal year.  If the charitable organization files a Form 990 or 990-EZ with the Internal Revenue Service, the annual report shall be a copy of that Form 990 or 990-EZ.  If the registered charitable organization is required to file a Form 990-T with the Internal Revenue Service, the annual report shall include a copy of that Form 990-T.  If a charitable organization is not required to file a Form 990 or 990-EZ with the Internal Revenue Service, the annual report shall contain all information prescribed by the department.  The charitable organization shall file its annual report not later than the fifteenth day of the fifth month following the close of its fiscal year.  A charitable organization that has obtained an extension of time to file a Form 990 or 990-EZ from the Internal Revenue Service may obtain an extension of time to file the annual report with the department, by electronically filing with the department a copy of the Internal Revenue Service's approved extension of time to file.  The annual report shall be accompanied by a filing fee as prescribed by subsection (d).  The department shall accept, under conditions prescribed by the attorney general, 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 attorney general may prescribe the form of the annual financial report for charitable organizations that file the Form 990-N with the Internal Revenue Service, or who are not required to file a Form 990 or 990-EZ with the Internal Revenue Service."

     SECTION 6.  Section 467B-6.5, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  Each charitable organization filing a report required by this section shall pay a filing fee to the department based on the total amount of its gross revenues during the time covered by the report at the close of the calendar or fiscal year adopted by the charitable organization as follows:

     (1)  [$10,] $0, if less than $25,000;

     (2)  $25, if $25,000 but less than $50,000;

     (3)  $50, if $50,000 but less than $100,000;

     (4)  $100, if $100,000 but less than $250,000;

     (5)  $150, if $250,000 but less than $500,000;

     (6)  $200, if $500,000 but less than $1,000,000;

     (7)  $250, if $1,000,000 but less than $2,000,000;

     (8)  $350, if $2,000,000 but less than $5,000,000; or

     (9)  $600, if $5,000,000 or more."

     SECTION 7.  Section 467B-9, Hawaii Revised Statutes, is amended to read as follows:

     "§467B-9  Prohibited acts.  (a)  No person, for the purpose of soliciting contributions from persons in the State, shall use the name 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 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 charitable organization, professional solicitor, professional fundraising counsel, or commercial co-venturer soliciting contributions shall use 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.

     (c)  No person, in connection with any solicitation or sale, shall misrepresent or mislead anyone by any manner, means, practice, or device whatsoever, to believe that the solicitation or sale is being conducted on behalf of a charitable organization or that the proceeds of the solicitation or sale will be used for charitable purposes, if that is not the fact.

     (d)  No professional solicitor, and no agent, employee, independent contractor, or other person acting on behalf of the professional solicitor, shall solicit in the name of or on behalf of any charitable organization unless:

     (1)  The professional solicitor has obtained the written authorization of two officers of the organization, which authorization shall bear the signature of the professional solicitor and the officers of the charitable organization and shall expressly state on its face the period for which it is valid, which shall not exceed one year from the date of issuance, and has filed a copy of the written authorization with the attorney general prior to the solicitation; and

     (2)  The professional solicitor and any person who, for compensation, acts as an agent, employee, independent contractor, or otherwise on behalf of the professional solicitor carries a copy of the authorization while conducting solicitations, and exhibits it on request to persons solicited or police officers or agents of the department.

     (e)  No charitable organization, professional fundraising counsel, professional solicitor, or commercial co-venturer subject to this chapter shall use or exploit the fact of filing any statement, report, professional fundraising counsel contracts, written consents, or professional solicitor contracts or other documents or information required to be filed under this chapter or with the department 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 for the solicitation by the charitable organization, professional fundraising counsel, professional solicitor, or commercial co‑venturer; provided that the use of the following statement shall not be deemed a prohibited exploitation:  "Information regarding this organization has been filed with the State of Hawaii department of the attorney general.  Filing does not imply endorsement or approval of the organization or the public solicitation for contributions.

     (f)  No person, while soliciting, shall impede or obstruct, with the intent to physically inconvenience the general public or any member thereof in any public place or in any place open to the public.

     (g)  No person shall submit for filing on behalf of any charitable organization, professional fundraising counsel, professional solicitor, or commercial co-venturer, any statement, financial statement, report, attachment, or other information to be filed with the department that contains information, statements, or omissions that are false or misleading.

     (h)  No person shall solicit contributions from persons in the State or otherwise operate in the State as a charitable organization, an exempt charitable organization, professional fundraising counsel, professional solicitor, or commercial co‑venturer unless the person has filed the information required by this chapter with the department in a timely manner.

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

     (j)  No person shall fail to file the information and registration statement, annual or financial reports, and other statements required by this chapter or fail to provide any information demanded by the attorney general pursuant to this chapter in a timely manner.

     (k)  No person shall employ in any solicitation or collection of contributions for a charitable organization, any device, scheme, or artifice to defraud or obtain money or property by means of any false, deceptive, or misleading pretense, representation, or promise.

     (l)  No person, in the course of any solicitation, shall represent that funds collected will be used for a particular charitable purpose, or particular charitable purposes, if the funds solicited are not used for the represented purposes.

     (m)  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.

     (n)  No person shall act as a professional solicitor if the person, any officer, any person with a controlling interest therein, or any person the professional solicitor employs, engages, or procures to solicit for compensation, has been convicted by any federal or state court of any felony, or of any misdemeanor involving dishonesty or arising from the conduct of a solicitation for a charitable organization or purpose.

     (o)  No charitable organization shall use the services of an unregistered professional solicitor or professional fundraising counsel.

     (p)  No person or charitable organization shall fail to make the collection box disclosures required by section 467B‑   ."

     SECTION 8.  Section 467B-11.5, Hawaii Revised Statutes, is amended to read as follows:

     "§467B-11.5  Charitable organizations exempted from registration and financial disclosure requirements.  The following charitable organizations shall not be subject to sections 467B-2.1 and 467B-6.5, if the organization submits [information as the department may require] to the department an application for exemption to substantiate an exemption under this section[:] and the department approves the organization's application; provided that the attorney general may require the application for exemption to be filed electronically with the department and may require the use of electronic signatures:

     (1)  Any duly organized religious corporation, institution, or society that is exempt from filing Form 990 with the Internal Revenue Service pursuant to sections 6033(a)(3)(A)(i) and (iii) and 6033(a)(3)(C)(i) of the Internal Revenue Code, as amended;

     (2)  Parent-teacher associations;

     (3)  Any educational institution that is licensed or accredited by any of the following licensing or accrediting organizations:

         (A)  Hawaii Association of Independent Schools;

         (B)  Hawaii Council of Private Schools;

         (C)  Western Association of Schools and Colleges;

         (D)  Middle States [Association of Colleges and Schools;] Commission on Higher Education;

         (E)  New England Association of Schools and Colleges;

         (F)  North Central Association of Colleges and Schools;

         (G)  Northwest Commission on Colleges and Universities;

         (H)  Southern Association of Colleges and Schools; or

         (I)  The National Association for the Education of Young Children;

          and any organization exempt from taxation under section 501(c)(3) of the Internal Revenue Code expressly authorized by, and having an established identity with, such an educational institution; provided that the organization's solicitation of contributions is primarily directed to the students, alumni, faculty, and trustees of the institutions and their respective families;

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

     (5)  Any corporation established by an act of the United States Congress that is required by federal law to submit to Congress annual reports, fully audited by the United States Department of Defense, of its activities including itemized accounts of all receipts and expenditures;

     (6)  Any agency of this State, another state, or the federal government; and

     (7)  Any charitable organization that normally receives less than $25,000 in contributions annually, if the organization does not employ or compensate a professional solicitor or professional fundraising counsel.  For purposes of this paragraph, an organization normally receives less than $25,000 in contributions annually if, during the immediately preceding three fiscal years, it received, on average, less than $25,000 in contributions."

     SECTION 9.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 10.  This Act shall take effect on December 21, 2112.

 

Report Title:

Charitable Solicitation; Collection Boxes; Charitable Organizations; Professional Solicitors; Commercial Co-venturers

 

Description:

Requires certain disclosures on collection boxes for donated clothing and household items that are owned and operated by a charitable organization exempt from the income tax under Section 501(c)(3) of the Internal Revenue Code, a professional solicitor, or a for-profit organization that is not a professional solicitor or an organization exempt from the income tax under Section 501(c)(3) of the Internal Revenue Code; clarifies registration requirement for Hawaii domiciled charitable organizations and by nonprofits covered by an IRS Group Exemption Ruling; authorizes the Attorney General to require electronic financial reporting by professional solicitors; imposes a fee for late financial reports by professional solicitors; amends the time within which commercial co-venturers must provide a final accounting to a charitable organization; clarifies exemptions from registration requirements; and makes other technical and housekeeping amendments to chapter 467B, Hawaii Revised Statutes.  Effective 12/21/2112.  (HD1)

 

 

 

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