California Bill to Strengthen Enforcement of Charity Registration and Reporting

Sacramento

On May 27, 2014, Assembly Bill No. 2077 (AB 2077), introduced by Assemblyman Travis Allen, was unanimously passed on the Assembly Floor. AB 2077 provides that moneys in the Registry of Charitable Trusts Fund, upon appropriation by the Legislature, shall be used by the Attorney General to enforce the registration and reporting provisions of the Supervision of Trustees and Fundraisers for Charitable Purposes Act applicable to charitable corporations, unincorporated associations, trustees, and other legal entities holding property for charitable purposes, commercial fundraisers for charitable purposes, fundraising counsel for charitable purposes, and commercial coventurers. The Registry of Charitable Trusts Fund is largely funded by registration fees from charities and commercial fundraisers.

According to the Center for Investigative Reporting:

State law requires charities that fundraise in the state to register with the attorney general. The Department of Justice estimates that there are 52,000 delinquent charities in California. At least 130,000 additional charities operate in California despite having failed to register, according to an Assembly staff analysis.

From the Assembly:

FISCAL EFFECT:
On-going costs to the Attorney General in the range of $1.4 million (special fund) to support up to 13 positions to:

1) Handle administrative appeals and court actions related to delinquencies.

2) Assist unregistered charities in complying with registration and reporting requirements.

3) Review initial applications and financial reports.

4) Provide public education and protection activities.

The intent of the legislation initially focused primarily on commercial fundraisers and the summary of the bill still reads: “Requires money in the Registry of Charitable Trusts (RCT) Fund to be used by the Attorney General to enforce the registration and reporting requirements of commercial charitable fundraisers, pursuant to the Supervision of Trustees and Fundraisers for Charitable Purposes Act.” However, the proposed change to Government Code Section 12587.1 provides for more broader enforcement by simply adding the following:

(d) Moneys in the fund, upon appropriation by the Legislature, shall be used by the Attorney General to enforce the registration and reporting provisions.

Charitable organizations in California subject to the registration and reporting requirements should be aware of this push and general trend towards greater enforcement. While in the past, penalties for late filings appeared to be rarely imposed absent some other wrongdoing, AB 2077 suggests that the Attorney General may begin to get more strict with timely registrations and registration renewals.

Resources:

Attorney General – Charitable Trusts (CT) Forms

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