1Amending Title 10 (Charities) of the Pennsylvania Consolidated
2Statutes, consolidating the Solicitation of Funds for
3Charitable Purposes Act; consolidating the Institutions of
4Purely Public Charity Act; and making related repeals.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1.  Title 10 of the Pennsylvania Consolidated
8Statutes is amended by adding parts to read:

9PART I

10PRELIMINARY PROVISIONS

11Chapter

121.  General Provisions

13CHAPTER 1

14GENERAL PROVISION

15Sec.

16101.  Short title of title.

17§ 101.  Short title of title.

18This title shall be known and may be cited as the "Charities
19Code."

1PART II

2GAMES

3(RESERVED)

4PART III

5OPERATION

6Chapter

711.  General Provisions (Reserved)

813.  Solicitation of Funds for Charitable Purposes

9CHAPTER 11

10GENERAL PROVISIONS

11(RESERVED)

12CHAPTER 13

13SOLICITATION OF FUNDS FOR CHARITABLE PURPOSES

14Sec.

151301.  Scope of chapter.

161302.  Legislative intent.

171303.  Definitions.

181304.  Powers and duties of secretary.

191305.  Registration of charitable organizations; financial
20reports; fees; failure to file.

211306.  Exemptions from registration.

221307.  Short form registration.

231308.  Registration of professional fundraising counsel and
24contracts.

251309.  Registration of professional solicitors; contract and
26disclosure requirements; bonds; records; books.

271310.  Contracts voidable by charitable organizations.

281311.  Information filed to become public records.

291312.  Records to be kept by charitable organizations,
30professional fundraising counsels and professional

1solicitors; inspection; retention.

21313.  Limitation on activities of charitable organizations;
3disclosure requirements.

41314.  Reciprocal agreements.

51315.  Prohibited acts.

61316.  Investigation; subpoenas; injunctions; court orders.

71317.  Administrative enforcement and penalties.

81318.  Criminal penalties.

91319.  Civil penalties.

101320.  Additional regulations by counties, municipalities or
11consolidated government.

121321.  Charitable organizations deemed fiduciary.

131322.  Prior registration unaffected.

141323.  Regulations.

15§ 1301.  Scope of chapter.

16This chapter relates to solicitation of funds for charitable
17purposes.

18§ 1302.  Legislative intent.

19It is the intention of the General Assembly that this chapter
20shall not merely require proper registration of charitable
21organizations, professional fundraisers and professional
22solicitors, but shall protect the citizens of this Commonwealth
23by requiring full public disclosure of the identity of persons
24who solicit contributions from the public, the purposes for
25which the contributions are solicited and the manner in which
26they are actually used, by promoting consumer education about
27charitable concerns, by providing civil and criminal penalties
28for deception and dishonest statements and conduct in the
29solicitation and reporting of contributions for or in the name
30of charitable purposes and by publicizing matters relating to

1fraud, deception and misrepresentation perpetrated in the name
2of charity. This chapter shall not be construed to be exclusive
3in its purview, and its application shall not operate as a bar
4or otherwise prevent the contemporaneous or subsequent
5application of other relevant acts.

6§ 1303.  Definitions.

7The following words and phrases when used in this chapter
8shall have the meanings given to them in this section unless the
9context clearly indicates otherwise:

10"Administrative costs."  Management and general costs of a
11charitable organization, not identifiable with a single program
12or fundraising activity, but indispensable to the conduct of the
13programs and activities and to an organization's existence,
14including expenses for the overall direction of the
15organization, business management, general recordkeeping,
16budgeting, financial reporting and related activities, salaries,
17rent, supplies, equipment and general overhead expenses.

18"Affiliate."  A chapter, branch, auxiliary or other
19subordinate unit of any charitable organization, however
20designated, whose policies, fundraising activities and
21expenditures are supervised or controlled by the parent
22organization.

23"Bureau."  The Bureau of Charitable Organizations of the
24Department of State.

25"Charitable organization."  A person granted tax exempt 
26status under section 501(c)(3) of the Internal Revenue Code of 
271986 (Public Law 99-514, 26 U.S.C. § 501(c)(3)) or a person who 
28is or holds himself out to be established for a charitable 
29purpose or a person who in a manner employs a charitable appeal 
30as the basis of any solicitation or an appeal which has a 

1tendency to suggest there is a charitable purpose to any 
2solicitation. An affiliate of a charitable organization which 
3has its principal place of business outside this Commonwealth 
4shall be a charitable organization for the purposes of this 
5chapter. The term shall not be deemed to include:

6(1)  A bona fide duly constituted organization of law
7enforcement personnel, firefighters or other persons who
8protect the public safety whose stated purpose in the
9solicitation does not include a benefit to a person outside
10the actual active membership of the organization.

11(2)  Any bona fide duly constituted religious
12institutions and separate groups or corporations which form
13an integral part of religious institutions, provided that:

14(i)  Religious institutions, groups or corporations
15are tax exempt under the Internal Revenue Code of 1986.

16(ii)  No part of the institution, group or
17corporation's net income inures to the direct benefit of
18an individual.

19(iii)  The institution, group or corporation's
20conduct is primarily supported by government grants or
21contracts, funds solicited from their own memberships,
22congregations or previous donors and fees charged for
23services rendered.

24"Charitable promotion."  An advertising or sales campaign,
25event or performance, conducted, produced, promoted,
26underwritten, arranged or sponsored by a commercial coventurer,
27which represents that the purchase or use of goods or services
28or attendance at events or performances offered or sponsored by
29the commercial coventurer will benefit, in whole or in part, a
30charitable organization or purpose.

1"Charitable purpose."  A benevolent, educational,
2philanthropic, humane, scientific, patriotic, social welfare or
3advocacy, public health, environmental conservation, civic or
4other eleemosynary objective, including an objective of a bona
5fide duly constituted organization of law enforcement personnel,
6firefighters or other persons who protect the public safety if a
7stated purpose of the solicitation includes a benefit to a
8person outside the actual active membership of the organization.

9"Commercial coventurer."  A person who for profit is
10regularly and primarily engaged in trade or commerce other than
11in connection with the raising of funds or any other thing of
12value when offered at the usual retail price comparable to
13similar goods or services in the market for a charitable
14organization and who advertises that the purchase or use of
15goods, services, entertainment or any other thing of value will
16benefit a charitable organization.

17"Contribution."  The promise, grant or pledge of money,
18credit, property, financial assistance or other thing of any
19kind or value, excluding volunteer services, in response to a
20solicitation, including the payment or promise to pay in
21consideration of a performance, event or sale of a good or
22service. Payment by members of an organization for membership
23fees, dues, fines or assessments or for services rendered to
24individual members, if the fees, dues, fines or assessments
25confer a bona fide right, privilege, professional standing,
26honor or other direct benefit, shall not be deemed
27contributions, provided that membership is not conferred solely
28as consideration for making a contribution in response to a
29solicitation. Government grants or contracts shall not be deemed
30a contribution.

1"Department."  The Department of State of the Commonwealth.

2"Federated fundraising organization."  A federation of
3independent charitable organizations which have voluntarily
4joined together, including, but not limited to, a United Way or
5Community Chest, for purposes of raising and distributing money
6for and among themselves and where membership does not confer
7upon the federated group organization operating authority and
8control of the individual agencies.

9"Firefighters."  A person who is or represents or holds
10itself out to represent, aid, train or otherwise benefit a paid
11or volunteer firefighter, active or retired, or his family.

12"Fundraising costs."  Those costs incurred in inducing others
13to make contributions to a charitable organization for which the
14contributors will receive no direct economic benefit.
15Fundraising costs normally include, but are not limited to,
16salaries, rent, acquiring and maintaining mailing lists,
17printing, mailing and direct and indirect costs of soliciting,
18as well as the cost of unsolicited merchandise sent to encourage
19contributions. Fundraising costs do not include the direct cost
20of merchandise or goods sold or the direct cost of fundraising
21dinners, bazaars, shows, circuses, banquets, dinners, theater
22parties or any other form of benefit performances.

23"Law enforcement personnel."  A person who is or represents
24or holds itself out to represent, aid, train or otherwise
25benefit a police officer, sheriff or deputy sheriff, constable
26or deputy constable, county detective, fire police or other
27person who is empowered to make arrests, serve warrants, issue
28summons or otherwise enforce the laws of this Commonwealth to
29include retired law enforcement personnel and the families of
30law enforcement personnel.

1"Net proceeds."  The total proceeds received from the
2solicitation of contributions reduced by the direct cost of
3merchandise or other goods sold or fundraising events of any
4kind.

5"Owner."  A person who has a direct or indirect interest in a
6professional fundraising counsel or professional solicitor.

7"Parent organization."  That part of a charitable
8organization which coordinates, supervises or exercises control
9of policy, fundraising and expenditures, or assists or receives
10funds from or advises one or more affiliates.

11"Person."  An individual, organization, corporation,
12association, partnership, trust, foundation or any other entity
13however styled.

14"Professional fundraising counsel."  A person who is retained
15by a charitable organization for a fixed fee or rate under a
16written agreement to plan, manage, advise, consult or prepare
17material for or with respect to the solicitation in this
18Commonwealth of contributions for a charitable organization, but
19who does not solicit contributions or employ, procure or engage
20a compensated person to solicit contributions and who does not
21have custody or control of contributions. A bona fide salaried
22officer or regular, nontemporary employee of a charitable
23organization shall not be deemed to be a professional
24fundraising counsel provided that the individual is not employed
25or engaged as professional fundraising counsel or as a
26professional solicitor by another person.

27"Professional solicitor."  Any person who is retained for
28financial or other consideration by a charitable organization to
29solicit in this Commonwealth contributions for charitable
30purposes directly or in the form of payment for goods, services

1or admission to fundraising events, whether the solicitation is
2performed personally or through his agents, servants or
3employees or through agents, servants or employees especially
4employed by or for a charitable organization who are engaged in
5the solicitation of contributions, the sale of goods or services
6or the production of fundraising events under the direction of
7the person, or a person who plans, conducts, manages, carries
8on, advises, consults, whether directly or indirectly, in
9connection with the solicitation of contributions, sale of goods
10or services or the production of fundraising events for or on
11behalf of any charitable organization, but does not qualify as a
12professional fundraising counsel within the meaning of this
13chapter. A person who is otherwise a professional fundraising
14counsel shall be deemed a professional solicitor if his
15compensation is related to the amount of contributions received.
16A bona fide salaried officer or regular, nontemporary employee
17of a charitable organization shall not be deemed to be a
18professional solicitor provided that the individual is not
19employed or engaged as professional fundraising counsel or as a
20professional solicitor by any other person.

21"Secretary."  The Secretary of the Commonwealth.

22"Solicitation."  A direct or indirect request for a
23contribution on the representation that the contribution will be
24used in whole or in part for a charitable purpose, including,
25but not limited to, any of the following:

26(1)  An oral request that is made in person, by
27telephone, radio or television or other advertising or
28communication media.

29(2)  A written or otherwise recorded or published request
30that is mailed, sent, delivered, circulated, distributed,

1posted in a public place or advertised or communicated by
2press, telegraph, television or other media.

3(3)  A sale of, offer or attempt to sell an
4advertisement, advertising space, sponsorship, book, card,
5chance, coupon, device, food, magazine, merchandise,
6newspaper, subscription, ticket or other service or tangible
7good, thing or item of value.

8(4)  An announcement requesting the public to attend an
9appeal, assemblage, athletic or competitive event, carnival,
10circus, concert, contest, dance, entertainment, exhibition,
11exposition, game, lecture, meal, party, show, social
12gathering or other performance or event of any kind.

13§ 1304.  Powers and duties of secretary.

14The secretary shall have the following powers and duties to:

15(1)  Provide for and regulate the registration of
16charitable organizations, professional fundraising counselors
17and professional solicitors.

18(2)  Decide matters relating to the issuance, renewal,
19suspension or revocation of registrations.

20(3)  Promulgate, adopt and enforce the rules and
21regulations necessary to carry out this chapter.

22(4)  Promulgate regulations altering fees and fines
23established in this chapter sufficient to meet expenditures
24of the bureau.

25(5)  Take appropriate action to initiate civil or 
26criminal proceedings necessary to enforce this chapter, in 
27accordance with the act of October 15, 1980 (P.L.950, 
28No.164), known as the Commonwealth Attorneys Act.

29(6)  Conduct hearings and make adjudications.

30(7)  Keep a record showing the names and addresses of all

1registered charitable organizations, professional fundraising
2counsel and professional solicitors.

3(8)  Submit annually, on or before September 30, to the
4Governor, to the State Government Committee of the Senate and
5to the State Government Committee of the House of
6Representatives, as well as to interested parties, a report
7on the number of registered charities, the number of
8charities ordered to cease and desist solicitation, the
9number of charities contracting with professional solicitors
10and the compensation of professional solicitors for each
11solicitation campaign in relation to the funds raised and
12administrative costs.

13(9)  Delegate to a division director of his office the
14powers and duties under this chapter as he may deem
15appropriate.

16(10)  Exercise other authority accorded to him by this
17chapter.

18§ 1305.  Registration of charitable organizations; financial
19reports; fees; failure to file.

20(a)  Registration and approval required.--A charitable
21organization, unless exempted from registration requirements
22under section 1306 (relating to exemptions from registration),
23shall file a registration statement with the department. This
24statement must be refiled annually within 135 days after the
25close of its fiscal year in which the charitable organization
26was engaged in solicitation activities. The department shall
27review the statement under subsection (r). No charitable
28organization shall solicit contributions or have contributions
29solicited in its behalf before approval of its registration
30statement by the department.

1(b)  Filing of statement.--It shall be the duty of the 
2president, chairman or principal officer of each charitable 
3organization to file the registration statement, financial 
4report and fee required under this section. The registration 
5statement shall be made by two authorized officers subject to 18 
6Pa.C.S. § 4904 (relating to unsworn falsification to 
7authorities), including the chief fiscal officer of the 
8organization, and shall contain the following information:

9(1)  The name of the organization and any other name or
10names under which it intends to solicit contributions.

11(2)  The principal address and telephone number of the
12organization and the addresses and telephone numbers of
13offices in this Commonwealth. If the organization does not
14maintain an office, the name and address of the individual
15having custody of its financial records.

16(3)  The names and addresses of any affiliates which
17share in the contributions or other revenue raised in this
18Commonwealth.

19(4)  The names and addresses of the officers, directors
20and trustees and the principal salaried executive staff
21officers.

22(5)  A copy of the financial report required under
23subsection (e).

24(6)  A copy of any determination of the organization's
25tax-exempt status under the Internal Revenue Code of 1986
26(Public Law 99-514, 26 U.S.C. § 1 et seq.) and, for
27organizations granted tax-exempt status under section 501(c)
28(3) of the Internal Revenue Code of 1986, a copy of the last
29filed Internal Revenue Service Form 990 and Schedule A for
30every charitable organization and parent organization.

1(7)  The date when the organization's fiscal year begins.

2(8)  Whether:

3(i)  The organization is authorized by any other
4governmental authority to solicit contributions.

5(ii)  The organization or any of its present
6officers, directors, executive personnel or trustees are
7or have ever been enjoined in any jurisdiction from
8soliciting contributions or have been found to have
9engaged in unlawful practices in the solicitation of
10contributions or administration of charitable assets.

11(iii)  The organization's registration or license has
12been denied, suspended or revoked by any governmental
13agency together with the reasons for the denial,
14suspension or revocation.

15(iv)  The organization has voluntarily entered into
16an assurance of voluntary discontinuance or agreement
17similar to that set forth in section 1319(b) (relating to
18civil penalties), together with a copy of that agreement.

19(9)  A clear description of the specific programs for
20which contributions will be used and a statement whether the
21programs are planned or in existence.

22(10)  The names and addresses of professional solicitors,
23professional fundraising counsels and commercial coventurers
24who are acting or have agreed to act on behalf of the
25organization.

26(11)  The names of the individuals or officers of the
27organization who are in charge of any solicitation
28activities, who will have final responsibility for the
29custody of the contributions and who will be responsible for
30the final distribution of the contributions.

1(12)  Whether any of the organization's officers,
2directors, trustees or employees are related by blood,
3marriage or adoption to each other or to officers, agents or
4employees of professional fundraising counsel or professional
5solicitor under contract to the organization or to a supplier
6or vendor providing goods or services to the organization,
7and the names and business and residence addresses of any
8related parties. Where the number of employees or vendors
9renders it impractical for the registrant to contact them on
10an individual basis regarding the existence of the
11relationships set forth under this section, the registrant
12may file an affidavit stating which relationships, if any,
13exist to the best of the affiant's information and belief.

14(13)  Other information required by the regulations of
15the department.

16(c)  Additional filings.--With the initial registration only,
17each charitable organization required to be registered shall
18also file with the department the following documents:

19(1)  A copy of the organization's charter, articles of
20organization, agreement of association, instrument of trust,
21constitution or other organizational instrument and bylaws.

22(2)  A statement setting forth where and the date when
23the organization was legally established, the form of its
24organization and its tax-exempt status together with a copy
25of the letter of exemption, if any, issued by the Internal
26Revenue Service.

27(d)  Federal tax exemption determination.--Each charitable
28organization registered with the department shall file with the
29department a copy of a Federal tax exemption determination
30letter received after the initial registration within 30 days

1after receipt, and any amendments to its organizational
2instrument within 30 days after adoption.

3(e)  Financial report.--With each registration statement
4filed under this section, a charitable organization must file a
5financial report for the immediately preceding fiscal year,
6which shall contain a balance sheet and statements of revenue,
7expenses and changes in fund balances indicating the
8organization's gross revenue, the amount of funds received from
9solicitations or other fundraising activities and expenditures
10for supplies, equipment, goods, services, programs, activities
11or other expenses, a detailed list of salaries and wages paid
12and expenses allowed to an officer or employee if the
13organization is not required to file an Internal Revenue Service
14Form 990 and the disposition of the net proceeds received from
15solicited contributions or other fundraising activities.

16(f)  Audit of certain financial reports.--The financial
17report of every charitable organization which receives annual
18contributions of $300,000 or more shall be audited by an
19independent certified public accountant or public accountant.
20Every charitable organization which receives annual
21contributions of at least $100,000, but less than $300,000,
22shall be required to have a review or audit of their financial
23statements performed by an independent certified public
24accountant or public accountant. Every charitable organization
25which receives annual contributions of at least $50,000, but
26less than $100,000, shall be required to have a compilation,
27review or audit of their financial statements performed by an
28independent certified public accountant or public accountant. A
29compilation, audit or review is optional for a charitable
30organization which receives annual contributions of less than

1$50,000. Audits shall be performed in accordance with generally
2accepted auditing standards, including the Statements on
3Auditing Standards of the American Institute of Certified Public
4Accountants, but reviews shall be performed in accordance with
5the Statements on Standards for Accounting and Review Services
6of the American Institute of Certified Public Accountants.

7(g)  Governmental audits.--Government audits of government
8grants shall be accepted and shall be included as part of the
9financial statements.

10(h)  Other acceptable reports.--The department may accept a
11copy of a current financial report previously prepared by a
12charitable organization for a governmental agency in another
13jurisdiction in compliance with the laws of that jurisdiction,
14provided that the report filed with the other governmental
15agency shall be substantially similar in content to the report
16required by this section.

17(i)  Reports to accompany audit.--Audited and reviewed
18financial statements must be accompanied by the report prepared
19and signed by the independent public accountant.

20(j)  Optional departmental action.--The department shall have
21the discretion to require that an audit or review be submitted
22by a charitable organization which files a registration
23statement. The department shall also have the discretion to
24accept the financial statement submitted by the organization in
25lieu of an audit or review where special facts and circumstances
26are presented.

27(k)  Time extension for filings.--For good cause shown, the
28department may extend the time for the annual filing of a
29registration statement or financial report for a period not to
30exceed 180 days during which time the previous registration

1remains in effect.

2(l)  Cancellation of registration.--In no event shall the
3registration of a charitable organization continue in effect
4after the date the organization should have filed, but failed to
5file, its financial report in accordance with this section. The
6organization shall not be eligible to file a new registration
7statement until it shall have filed the required financial
8report with the department.

9(m)  Reports by affiliates.--

10(1)  Each affiliate whose parent organization has its
11principal place of business in this Commonwealth may
12separately file the registration statement or financial
13information required by this section, or report the required
14information to its parent organization which shall then file
15a combined registration statement and financial report for
16its Pennsylvania affiliates. There shall be appended to each
17combined report a schedule, containing information as
18prescribed in the regulations of the department, reflecting
19the activities of each affiliate, which shall contain a
20certification, under oath, by an official of the
21organization, that the information contained in the schedule
22is true. The failure of a parent organization to file a
23combined registration statement and financial report shall
24not excuse either the parent organization or its affiliates
25from complying with the requirements of this section.

26(2)  If an affiliate is soliciting in this Commonwealth
27but its parent organization has its principal place of
28business outside this Commonwealth, both the affiliate and
29the parent organization shall independently comply with the
30registration requirements of this section.

1(n)  Federated organizations.--An independent member agency
2of a federated fundraising organization shall independently
3comply with the provisions of this section unless specifically
4exempted or unless it receives allocations solely from the
5federated fundraising organization and does not independently
6solicit contributions. Donor choice programs are deemed to be
7independent solicitations.

8(o)  Retention of records.--Each charitable organization
9required to register shall maintain records, books and reports
10for at least three years after the end of the period of
11registration to which they relate, which shall be available for
12inspection upon demand by the department and the Office of
13Attorney General.

14(p)  Annual registration fees.--A charitable organization
15which submits a short form registration statement under section
161307 (relating to short form registration) or receives
17contributions of $25,000 or less during the immediately
18preceding fiscal year shall pay an annual registration fee of
19$15. A charitable organization which receives contributions in
20excess of $25,000 but less than $100,000 during the immediately
21preceding fiscal year shall pay an annual registration fee of
22$100. A charitable organization which receives contributions in
23excess of $100,000 but not exceeding $500,000 during the
24immediately preceding fiscal year shall pay an annual
25registration fee of $150. A charitable organization which
26receives contributions in excess of $500,000 during the
27immediately preceding fiscal year shall pay an annual
28registration fee of $250. A parent organization filing on behalf
29of one or more affiliates and a federated fundraising
30organization filing on behalf of its member agencies shall pay a

1single annual registration fee for itself and other affiliates
2or member agencies included in the registration statement.

3(q)  Late filing fees.--In addition to the registration fee,
4an organization failing to file a registration application by
5the due date shall pay an additional fee of $25 for each month
6or part of the month after the date on which the registration
7statement and financial report were due to be filed or after the
8period of extension granted for the filing.

9(r)  Department review.--The department shall examine each
10registration statement and supporting documents filed by a
11charitable organization and shall determine whether the
12registration requirements are satisfied. If the department
13determines that the registration requirements are not satisfied,
14the department must notify the charitable organization within
15ten working days of its receipt of the registration statement,
16otherwise the registration statement is deemed to be approved.
17Within seven days after receipt of a notification that the
18registration requirements are not satisfied, the charitable
19organization may request a hearing. The hearing must be held
20within seven days of receipt of the request, and a determination
21must be rendered within three working days of the hearing.

22(s)  Administration of charitable contributions.--A
23charitable organization shall maintain and administer the
24contributions raised on its behalf through an account in the
25name of the charitable organization and under its sole control.

26(t)  Updating information.--A material change in information
27filed with the department under this section shall be reported
28in writing by the registrant to the department not more than 30
29days after the change occurs.

30§ 1306.  Exemptions from registration.

1(a)  General rule.--The following charitable organizations
2shall be exempt from the registration requirements of this
3chapter:

4(1)  Educational institutions, the curricula of which in
5whole or in part are registered with or approved by the
6Department of Education, either directly or by acceptance of
7accreditation by an accrediting body recognized by the
8Department of Education, and any auxiliary associations,
9foundations and support groups which are directly responsible
10to educational institutions.

11(2)  Hospitals which are subject to regulation by the
12Department of Health or the Department of Public Welfare and
13the hospital foundation, if any, which is an integral part of
14the hospitals.

15(3)  A local post, camp, chapter or similarly designated
16element or a county unit of the elements of:

17(i)  any veterans' organization chartered under
18Federal law and any service foundation recognized in the
19bylaws of the organization;

20(ii)  a bona fide organization of volunteer firemen;

21(iii)  a bona fide ambulance association;

22(iv)  a bona fide rescue squad association; or

23(v)  a bona fide auxiliary or affiliate of any
24organization or association under subparagraph (i), (ii),
25(iii) or (iv);

26provided that all fundraising activities of an organization
27or association under subparagraph (i), (ii), (iii), (iv) or
28(v) are carried on by volunteers, members or an auxiliary or
29affiliate of the organization or association, and those
30volunteers, members or affiliates receive no compensation

1directly or indirectly for the fundraising activities.

2(4)  Public nonprofit library organizations which receive
3financial aid from State and municipal governments and file
4an annual fiscal report with the State Library System.

5(5)  Senior citizen centers and nursing homes which are 
6nonprofit and charitable and which have been granted tax-
7exempt status under the Internal Revenue Code of 1986 (Public 
8Law 99-514, 26 U.S.C. § 1 et seq.), provided that all 
9fundraising activities are carried on by volunteers, members 
10or officers of the senior citizen center and those 
11volunteers, members or officers receive no compensation, 
12directly or indirectly, for the fundraising activities.

13(6)  Bona fide parent teacher associations or parent
14teacher organizations as recognized in a notarized letter
15from the school district in which they are located.

16(7)  Any corporation established by an act of Congress of
17the United States that is required by Federal law to submit
18annual reports of its activities to Congress containing
19itemized accounts of all receipts and expenditures after
20being fully audited by the Department of Defense.

21(8)  Any charitable organization which receives
22contributions of $25,000 or less annually, provided that the
23organization does not compensate any person who conducts
24solicitations. Charitable organizations which receive more
25than $25,000 in contributions shall file the appropriate
26registration statement within 30 days after the contributions
27are received.

28(b)  Effect of exemption.--Exemption from the registration
29requirements of this chapter shall in no way limit the
30applicability of other provisions of the act to a charitable

1organization or any professional solicitor or professional
2fundraising counsel acting on its behalf, except that written
3notice under sections 1309(k) (relating to registration of
4professional solicitors; contract and disclosure requirements;
5bonds; records; books) and 1313(c) (relating to limitation on
6activities of charitable organizations; disclosure requirements)
7shall not apply.

8§ 1307.  Short form registration.

9(a)  Organizations required to file.--The following
10charitable organizations shall be required to file short form
11annual registration statements with the department in lieu of
12the registration statement required by section 1305 (relating to
13registration of charitable organizations; financial reports;
14fees; failure to file):

15(1)  Persons or charitable organizations accepting 
16contributions for the relief of any individual specified by 
17name at the time of acceptance or solicitation when all of 
18the contributions collected without any deductions whatsoever 
19are turned over to the named beneficiary for his use; 
20provided that all contributions collected shall be held in 
21trust and shall be subject to the provisions of 20 Pa.C.S. 
22Ch. 77 (relating to trusts). The secretary, the Attorney 
23General, any contributor or any person who provides any goods 
24or services for which funds are expressly or implicitly 
25solicited shall have the right to petition the court of 
26common pleas of the county in which the trust is located for 
27an accounting of all contributions. For purposes of this 
28paragraph, the trust shall be deemed to be located in the 
29county where the principal place of business of the 
30charitable organization is located. If a charitable 

1organization has its principal place of business outside this 
2Commonwealth, all of the following shall apply:

3(i)  If an affiliate is soliciting contributions
4within this Commonwealth, the trust shall be deemed to be
5located in the county where the principal place of
6business of the affiliate is located.

7(ii)  If a person is soliciting contributions within
8this Commonwealth, the trust shall be deemed to be
9located in the county where the principal place of
10business or the residence of the person is located.

11(iii)  If there is no place of business or residence
12within this Commonwealth, the trust shall be deemed to be
13located in the county of Dauphin.

14(2)  Organizations which only solicit within the
15membership of the organization by the members of the
16organization; provided that the term "membership" shall not
17include those persons who are granted a membership solely
18upon making a contribution as the result of solicitation. For
19the purpose of this paragraph, "member" means a person having
20membership in a nonprofit corporation, or other organization,
21in accordance with the provisions of its articles of
22incorporation, bylaws or other instruments creating its form
23and organization and having bona fide rights and privileges
24in the organization such as the right to vote, to elect
25officers and directors, to hold office or position as
26ordinarily conferred on members of the organizations.

27(3)  Charitable organizations whose fundraising
28activities are carried on by volunteers, members, officers or
29permanent employees and which do not receive contributions in
30excess of $25,000 during a fiscal year, if no part of their

1assets or income inures to the benefit of or is paid to any
2officer or member, professional fundraising counsel,
3professional solicitor or commercial coventurer. Charitable
4organizations which do not intend to solicit and receive in
5excess of $25,000, but do receive contributions in excess of
6that amount shall file the financial report required in
7section 1305 within 30 days after contributions are received
8in excess of that amount.

9(4)  Organizations described in section 1306(a)(3)
10(relating to exemptions from registration) which do not
11receive contributions in excess of $100,000 during a fiscal
12year if no part of their assets or income inures to the
13benefit of or is paid to a professional solicitor.

14(b)  Contents of statement.--The short form annual
15registration statements required to be filed under this section
16shall include any information required by the regulations of the
17department.

18(c)  Financial report.--Charitable organizations which file a
19short form registration statement need not file the financial
20report required under section 1305 (relating to registration of
21charitable organizations; financial reports; fees; failure to
22file).

23(d)  Updating of information.--Any material change in any
24information filed with the department pursuant to this section
25shall be reported in writing by the registrant to the department
26not more than 30 days after the change occurs.

27§ 1308.  Registration of professional fundraising counsel and
28contracts.

29(a)  Registration and approval required.--No person shall act 
30as a professional fundraising counsel before obtaining 

1department approval of a registration statement pursuant to 
2subsection (c) or after the expiration, suspension or revocation 
3of registration. A registration application shall be signed and 
4be made by the principal officer of the professional fundraising 
5counsel subject to 18 Pa.C.S. § 4904 (relating to unsworn 
6falsification to authorities) and shall contain all of the 
7following information:

8(1)  The address of the principal place of business of
9the applicant and any Pennsylvania addresses, if the
10principal place of business is located outside this
11Commonwealth.

12(2)  The form of the applicant's business.

13(3)  The names and residence addresses of all principals
14of the applicant, including all officers, directors and
15owners.

16(4)  Whether any of the owners, directors, officers or
17employees of the applicant are related by blood, marriage or
18adoption to any other directors, officers, owners or
19employees of the applicant, any officer, director, trustee or
20employee of any charitable organization under contract to the
21applicant or any supplier or vendor providing goods or
22services to any charitable organization under contract to the
23applicant.

24(5)  The name of any person who is in charge of any
25solicitation activity.

26(6)  Any other information required by the regulations of
27the department.

28(b)  Registration fee.--The application for registration
29shall be accompanied by a fee of $250. A professional
30fundraising counsel which is a partnership or corporation may

1register for and pay a single fee on behalf of all of its
2partners, members, officers, directors, agents and employees.
3Each registration shall be valid for one year and may be renewed
4for additional one-year periods upon application to the
5department and payment of the registration fee.

6(c)  Department review of registration statement.--The
7department shall examine each registration statement and
8supporting documents filed by a professional fundraising counsel
9and shall determine whether the registration requirements are
10satisfied. If the department determines that the registration
11requirements are not satisfied, the department must notify the
12professional fundraising counsel within ten working days of its
13receipt of its registration statement, otherwise the
14registration statement is deemed to be approved. Within seven
15days after receipt of a notification that the registration
16requirements are not satisfied, the professional fundraising
17counsel may request a hearing. The hearing must be held within
18seven days of receipt of the request, and a determination must
19be rendered within three working days of the hearing.

20(d)  Written contract.--There shall be a written contract
21between a charitable organization and a professional fundraising
22counsel which shall be filed by the professional fundraising
23counsel with the department at least ten working days prior to
24the performance by the professional fundraising counsel of any
25service. No solicitation or services pursuant to the contract
26shall begin before the department has approved the contract
27pursuant to subsection (e). The contract must be signed by two
28authorized officials of the charitable organization, one of whom
29must be a member of the organization's governing body, and the
30authorized contracting officer for the professional fundraising

1counsel. The contract shall contain all of the following
2provisions:

3(1)  The legal name and address of the charitable
4organization as registered with the department unless that
5charitable organization is exempt from registration.

6(2)  A statement of the charitable purpose for which the
7solicitation campaign is being conducted.

8(3)  A statement of the respective obligations of the
9professional fundraising counsel and the charitable
10organization.

11(4)  A clear statement of the fees which will be paid to
12the professional fundraising counsel.

13(5)  The effective and termination dates of the contract,
14or, if the contract does not have a set termination date, the
15contract shall contain a clause allowing either party a
16reasonable period to terminate the contract or notify the
17other party if either party chooses not to renew. The
18contract shall also contain the date services will commence
19with respect to solicitation in this Commonwealth of
20contributions for a charitable organization.

21(6)  A statement that the professional fundraising
22counsel will not at any time have custody or control of
23contributions.

24(7)  A statement that the charitable organization
25exercises control and approval over the content and volume of
26any solicitation.

27(8)  Any other information required by the regulations of
28the department.

29(e)  Department review of contract.--The department shall
30examine each contract filed by a professional fundraising

1counsel and shall determine whether the contract contains the
2required information. If the department determines that the
3requirements are not satisfied, the department must notify the
4professional fundraising counsel within ten working days of its
5receipt of the contract, otherwise the contract is deemed to be
6approved. Within seven days after receipt of a notification that
7the requirements are not satisfied, the professional fundraising
8counsel may request a hearing. The hearing must be held within
9seven days of receipt of the request, and a determination must
10be rendered within three working days of the hearing.

11§ 1309.  Registration of professional solicitors; contract and
12disclosure requirements; bonds; records; books.

13(a)  Registration and approval required.--No person shall act 
14as a professional solicitor before obtaining department approval 
15of a registration statement pursuant to subsection (d) or after 
16the expiration, suspension or revocation of registration. A 
17registration application shall be signed and made by the 
18principal officer of the professional solicitor subject to 18 
19Pa.C.S. § 4904 (relating to unsworn falsification to 
20authorities) and shall contain all of the following information:

21(1)  The address of the principal place of business of
22the applicant and any Pennsylvania addresses, if the
23principal place of business is located outside this
24Commonwealth.

25(2)  The form of the applicant's business.

26(3)  The names and residence addresses of all principals
27of the applicant, including all officers, directors and
28owners.

29(4)  Whether any of the owners, directors, officers or
30employees of the applicant are related by blood, marriage or

1adoption to any other directors, officers, owners or
2employees of the applicant, any officer, director, trustee or
3employee of any charitable organization under contract to the
4applicant or any supplier or vendor providing goods or
5services to any charitable organization under contract to the
6applicant.

7(5)  The name of all persons in charge of any
8solicitation activity.

9(6)  Any other information required by the regulations of
10the department.

11(b)  Registration fee.--The application for registration
12shall be accompanied by a fee of $250. A professional solicitor
13which is a partnership or corporation may register for and pay a
14single fee on behalf of all of its partners, members, officers,
15directors, agents and employees. Each registration shall be
16valid for one year and may be renewed for additional one-year
17periods upon application to the department and payment of the
18registration fee.

19(c)  Bond.--A professional solicitor shall, at the time of
20making application for registration and renewal of registration,
21file with and have approved by the department a bond, in which
22it shall be the principal obligor in the sum of $25,000, or a
23greater amount as prescribed by the regulations of the
24department and which shall have one or more sureties
25satisfactory to the department whose liability in the aggregate
26as sureties will at least equal that sum and maintain the bond
27in effect as long as the registration is in effect. The bond
28shall run to the Commonwealth for use of the secretary, Attorney
29General and any person who may have a cause of action against
30the obligor for any losses resulting from malfeasance,

1nonfeasance or misfeasance in the conduct of solicitation
2activities. A professional solicitor which is a partnership or
3corporation may file one $25,000 bond or an amount specified by
4regulation of the department on behalf of all its partners,
5members, officers, directors, agents and employees.

6(d)  Department review of registration statement.--The
7department shall examine each registration statement and
8supporting documents filed by a professional solicitor and shall
9determine whether the registration requirements are satisfied.
10If the department determines that registration requirements are
11not satisfied, the department must notify the professional
12solicitor within ten working days of its receipt of its
13registration statement, otherwise the registration statement is
14deemed to be approved. Within seven days after receipt of a
15notification that the regulation requirements are not satisfied,
16the professional solicitor may request a hearing. The hearing
17must be held within seven days of receipt of the request, and a
18determination must be rendered within three working days of the
19hearing.

20(e)  Contract filing.--No less than ten working days prior to
21the commencement of each solicitation campaign, event or
22services, a professional solicitor shall file with the
23department a copy of the contract described in subsection (f)
24and a written solicitation notice. No solicitation or services
25pursuant to the contract shall begin before the department has
26approved the contract pursuant to subsection (g). The
27solicitation notice shall be accompanied by a fee of $25 and
28shall be signed and sworn to by the authorized contracting
29officer for the professional solicitor. If more than one event
30or campaign is conducted under a contract, then a solicitation

1notice addendum must be filed no less than ten working days
2prior to the commencement of each additional event or campaign.
3No additional fee is required to file the addendum. The
4solicitation notice and addendum shall contain all of the
5following information:

6(1)  A description of the solicitation event or campaign.

7(2)  Each location and telephone number from which the
8solicitation is to be conducted.

9(3)  The legal name and resident address of each person
10responsible for directing and supervising the conduct of the
11campaign and each person who is to solicit during the
12campaign.

13(4)  A statement as to whether the professional solicitor
14will at any time have custody or control of contributions.

15(5)  The account number and location of each bank account
16where receipts from the campaign are to be deposited.

17(6)  A full and fair description of the charitable
18program for which the solicitation campaign is being carried
19out.

20(7)  The date the solicitation campaign or event will
21begin or be held within this Commonwealth and the termination
22date for each campaign or event.

23(8)  Any other information required by the regulations of
24the department.

25(f)  Written contract.--There shall be a written contract
26between a professional solicitor and a charitable organization
27for each solicitation campaign which shall be signed by two
28authorized officials of the charitable organization, one of whom
29must be a member of the organization's governing body, and the
30authorized contracting officer for the professional solicitor.

1The contract shall contain all of the following provisions:

2(1)  The legal name and address of the charitable
3organization as registered with the department, unless that
4charitable organization is exempt from registration.

5(2)  A statement of the charitable purpose for which the
6solicitation campaign is being conducted.

7(3)  A statement of the respective obligations of the
8professional solicitor and the charitable organization.

9(4)  A statement of the guaranteed minimum percentage of
10the gross receipts from contributions which will be remitted
11to or retained by the charitable organization, if any, or, if
12the solicitation involves the sale of goods, services or
13tickets to a fundraising event, the percentage of the
14purchase price which will be remitted to the charitable
15organization, if any. Any stated percentage shall exclude any
16amount which the charitable organization is to pay as
17fundraising costs.

18(5)  A statement of the percentage of the gross revenue
19which the professional solicitor will be compensated. The
20stated percentage shall include any amount which the
21professional solicitor is to be reimbursed as payment for
22fundraising costs. If the compensation of the professional
23solicitor is not contingent upon the number of contributions
24or the amount of revenue received, his compensation shall be
25expressed as a reasonable estimate of the percentage of the
26gross revenue, and the contract shall clearly disclose the
27assumptions upon which the estimate is based. The stated
28assumptions shall be based upon all of the relevant facts
29known to the professional solicitor regarding the
30solicitation to be conducted by the professional solicitor.

1(6)  The effective and termination dates of the contract,
2or, if the contract does not have a set termination date, the
3contract shall contain a clause allowing either party a
4reasonable period to terminate the contract or notify the
5other party if either party chooses not to renew. The
6contract shall also contain the date solicitation activity is
7to commence within this Commonwealth.

8(7)  Any other information required by the regulations of
9the department.

10(g)  Department review of contract.--The department shall
11examine each contract and solicitation notice filed by a
12professional solicitor and shall determine whether the contract
13and notice contain the required information. If the department
14determines that the requirements are not satisfied, the
15department must notify the professional solicitor within ten
16working days of its receipt of the contract and notice,
17otherwise the contract and notice are deemed to be approved.
18Within seven days after receipt of a notification that the
19requirements are not satisfied, the professional solicitor may
20request a hearing. The hearing must be held within seven days of
21receipt of the request, and a determination must be rendered
22within three working days of the hearing.

23(h)  Required disclosures.--Prior to orally requesting a
24contribution or contemporaneously with a written request for a
25contribution, a professional solicitor shall be responsible for
26clearly and conspicuously disclosing:

27(1)  The name of the professional solicitor as on file
28with the department and that the solicitation is being
29conducted by a professional solicitor who is being paid for
30his services.

1(2)  If the individual acting on behalf of the
2professional solicitor identifies himself by name, the
3individual's legal name.

4(3)  The legal name of the charitable organization as
5registered with the department and a description of how the
6contributions raised by the solicitation will be utilized for
7a charitable purpose or, if there is no charitable
8organization, a description as to how the contributions
9raised by the solicitation will be utilized for a charitable
10purpose.

11(i)  Responses.--Any responses given by or on behalf of a
12professional solicitor to an oral or written request for
13information shall be truthful.

14(j)  Information on disclosure.--In the case of a
15solicitation campaign conducted orally, whether by telephone or
16otherwise, any written confirmation, receipt and reminder sent
17to any person who has contributed or has pledged to contribute
18shall include a clear and conspicuous disclosure of the
19information required by subsection (h).

20(k)  Notice.--In addition to the information required by
21subsection (j), any written confirmation, receipt and reminder
22of a contribution made pursuant to an oral solicitation and any
23written solicitation shall conspicuously state verbatim:

24The official registration and financial information of
25(insert the legal name of the charity as registered with
26the department) may be obtained from the Pennsylvania
27Department of State by calling toll free, within
28Pennsylvania, 1 (800) 000-0000. Registration does not
29imply endorsement.

30(l)  Financial reports.--Within 90 days after a solicitation

1campaign or event has been completed and on the anniversary of
2the commencement of a solicitation campaign lasting more than
3one year, a professional solicitor shall file with the
4department a financial report for the campaign, including gross
5revenue and an itemization of all expenses incurred. This report
6shall be signed and sworn to by the authorized contracting agent
7for the professional solicitor and two authorized officials of
8the charitable organization.

9(m)  Retention of records--A professional solicitor shall
10maintain during each solicitation campaign and for not less than
11three years after the completion of the campaign the following
12records, which shall be available for inspection upon demand by
13the department or the Office of Attorney General:

14(1)  The date and amount of each contribution received
15and the name and address of each contributor.

16(2)  The name and residence of each employee, agent or
17other person involved in the solicitation.

18(3)  Records of all revenue received and expenses
19incurred in the course of the solicitation campaign.

20(4)  The location and account number of each bank or
21other financial institution account in which the professional
22solicitor has deposited revenue from the solicitation
23campaign.

24(n)  Records from ticket sales.--If the professional
25solicitor sells tickets to an event and represents that tickets
26will be donated for use by another, the professional solicitor
27shall maintain, for not less than three years after the
28completion of the event, the following records, which shall be
29available for inspection upon demand by the department or the
30Office of Attorney General:

1(1)  The number of tickets purchased and donated by each
2contributor.

3(2)  The name and address of all organizations receiving
4donated tickets for use by others, including the number of
5tickets received by each organization.

6(o)  Deposit of contributions.--Each contribution in the
7control or custody of the professional solicitor shall, in its
8entirety and within five days of its receipt, be deposited in an
9account at a bank or other federally insured financial
10institution which shall be in the name of the charitable
11organization. The charitable organization shall maintain and
12administer the account and shall have sole control of all
13withdrawals.

14(p)  Updating of information.--Any material change in any
15information filed with the department pursuant to this section
16shall be reported in writing by the professional solicitor to
17the department not more than seven days after the change occurs.

18(q)  Restrictions.--

19(1)  No person may act as a professional solicitor if the
20person, any officer or director, any person with a
21controlling interest, or any person the professional
22solicitor employs, engages or procures to solicit for
23compensation, has been convicted, by a court of any state or
24the United States, of any felony or of any misdemeanor
25involving dishonesty or arising from the conduct of a
26solicitation for a charitable organization or purpose.

27(2)  A professional solicitor shall not solicit in this
28Commonwealth on behalf of a charitable organization unless
29that charitable organization is registered or is exempt from
30registration with the department.

1§ 1310.  Contracts voidable by charitable organizations.

2(a)  Contracts with registered groups.--No professional
3fundraising counsel or professional solicitor shall contract
4with a charitable organization unless the professional
5fundraising counsel or professional solicitor is registered with
6the department. A contract with an unregistered professional
7fundraising counsel or professional solicitor shall be voidable
8at the option of the charitable organization.

9(b)  Cancellation of contract.--Whenever a charitable
10organization contracts with a professional fundraising counsel
11or professional solicitor, the charitable organization shall
12have the right to cancel the contract without cost, penalty or
13liability for a period of ten days following the date on which
14that contract is executed. Any provision in the contract that is
15intended to waive this right of cancellation shall be void and
16unenforceable.

17(c)  Manner of cancellation.--A charitable organization may
18cancel a contract pursuant to subsection (b) by serving a
19written notice of cancellation on the professional fundraising
20counsel or professional solicitor. If mailed, service shall be
21by certified mail, return receipt requested, and cancellation
22shall be deemed effective upon receipt by the professional
23fundraising counsel or professional solicitor. The notice shall
24be sufficient if it indicates that the charitable organization
25does not intend to be bound by the contract.

26(d)  Cancellation notice to department.--Whenever a
27charitable organization cancels a contract pursuant to the
28provisions of this section, it shall mail a duplicate copy of
29the notice of cancellation to the department.

30(e)  Status of funds after cancellation.--Any funds collected

1after effective notice that a contract has been canceled shall
2be deemed to be held in trust for the benefit of the charitable
3organization without deduction for costs or expenses of any
4nature. A charitable organization shall be entitled to recover
5all funds collected after the date of cancellation.

6§ 1311.  Information filed to become public records.

7Except as otherwise provided in section 1312 (relating to 
8records to be kept by charitable organizations, professional
9fundraising counsels and professional solicitors; inspection;
10retention), registration statements and applications, reports,
11notices, contracts or agreements between charitable
12organizations and professional fundraising counsel, professional
13solicitors and commercial coventurers, and all other documents
14and information required to be filed under this chapter with the
15department, shall become public records in the office of the
16bureau and shall be open to the general public at the time and
17under conditions the department prescribes.

18§ 1312.  Records to be kept by charitable organizations,
19professional fundraising counsels and professional
20solicitors; inspection; retention.

21(a)  True and accurate fiscal records.--A charitable
22organization, professional fundraising counsel and professional
23solicitor subject to the provisions of this chapter shall, in
24accordance with the rules and regulations prescribed by the
25department, keep true fiscal records as to its activities in
26this Commonwealth as may be covered under this chapter, in a
27form to enable them to accurately provide the information
28required under this chapter.

29(b)  Availability for inspection.--Except as provided in
30subsection (c), the records shall be made available for

1inspection upon demand by the department or the Office of
2Attorney General.

3(c)  Nonpublic records.--Notwithstanding subsection (b),
4names, addresses and identities of contributors and amounts
5contributed by them shall not be considered a matter of public
6record. This information shall generally:

7(1)  Not be made available for public inspection.

8(2)  Not be used for a purpose inconsistent with this
9chapter.

10(3)  Be removed from the records in the custody of the
11department at the time that the information is no longer
12necessary for the enforcement of this chapter.

13(d)  Term of record retention.--Records shall be maintained
14for a period of at least three years after the end of the period
15of registration to which they relate.

16§ 1313.  Limitation on activities of charitable organizations;
17disclosure requirements.

18(a)  Solicitation limitation.--A charitable organization may
19only solicit contributions for the charitable purpose expressed
20in a solicitation for contributions or the registration
21statement of the charitable organization and may only apply
22contributions in a manner substantially consistent with that
23purpose.

24(b)  Solicitation disclosures.--A charitable organization
25soliciting in this Commonwealth shall disclose the following at
26the point of solicitation:

27(1)  Its legal name and address as registered with the
28department. If different, the legal name and address of the
29charitable organization, as registered with the department,
30on whose behalf the solicitation is being conducted. Any use

1of a project or program name in a solicitation must be
2followed immediately by a disclosure of the legal, registered
3name of the charitable organization.

4(2)  If requested, the name and address or telephone
5number of a representative to whom inquiries could be
6addressed.

7(3)  A full and fair description of the charitable
8purpose or purposes for which the solicitation is being made
9and a source from which written information is available.

10(4)  If requested, the source from which a financial
11statement may be obtained. The financial statement shall:

12(i)  Be consistent with the annual financial report
13requested under section 1305 (relating to registration of
14charitable organizations; financial reports; fees;
15failure to file).

16(ii)  Disclose assets, liabilities, fund balances,
17revenue and expenses for the preceding fiscal year.

18(iii)  List expenses separately, under the categories
19of Program Services, Administrative Costs and Fundraising
20Costs.

21(c)  Notice on printed solicitation.--On every printed
22solicitation or written confirmation, receipt and reminder of a
23contribution, the following statement must be printed
24conspicuously, verbatim:

25The official registration and financial information of
26(insert the legal name of the charity as registered with
27the department) may be obtained from the Pennsylvania
28Department of State by calling toll free, within
29Pennsylvania, 1 (800) 732-0999. Registration does not
30imply endorsement.

1(d)  Misrepresentation.--A misrepresentation is accomplished
2by words, conduct or failure to disclose a material fact. A
3charitable organization may not misrepresent any of the
4following:

5(1)  Its purpose.

6(2)  Its nature.

7(3)  The purpose of a solicitation.

8(4)  The beneficiary of a solicitation.

9(e)  Control over fundraising activities.--A charitable
10organization must establish and exercise control over
11fundraising activities conducted for its benefit, including
12approval of all written contracts and agreements, and must
13assure that fundraising activities are conducted without
14coercion.

15(f)  Restrictions on certain contracts.--A charitable
16organization shall not enter into a contract or agreement with
17or employ any professional fundraising counsel or professional
18solicitor unless the counsel or solicitor is registered with the
19department.

20(g)  Registration with department required.--A charitable
21organization shall not enter into a contract or agreement with
22or raise any funds for a charitable organization required to be
23registered pursuant to this chapter unless both charitable
24organizations are registered with the department.

25(h)  Deposit of contributions.--Each contribution in the
26control or custody of a professional solicitor shall, in its
27entirety and within five days of its receipt, be deposited,
28maintained and administered in an account at a bank or other
29federally insured financial institution. The account shall be in
30the name of the charitable organization, which shall have sole

1control of all account withdrawals.

2§ 1314.  Reciprocal agreements.

3(a)  Authorization.--The secretary may enter into reciprocal
4agreements with the appropriate authority of any other state for
5the purpose of exchanging information with respect to charitable
6organizations, professional fundraising counsel and professional
7solicitors.

8(b)  Effect.--Pursuant to any reciprocal agreement, the
9secretary may accept information filed by a charitable
10organization, professional fundraising counsel or professional
11solicitor with the appropriate authority of another state in
12lieu of the information required to be filed in accordance with
13this chapter, if the information is substantially similar to the
14information required under this chapter.

15(c)  Annual registration exemption.--The secretary may grant
16exemptions from the requirements for the filing of annual
17registration statements with the department to a charitable
18organization if the following apply:

19(1)  It is organized under the laws of another state.

20(2)  It has its principal place of business outside this
21Commonwealth.

22(3)  Its funds are derived principally from sources
23outside this Commonwealth.

24(4)  It has been exempted from the filing of registration
25statements by the state under whose laws it is organized if
26the state has a statute similar in substance to the
27provisions of this chapter.

28§ 1315.  Prohibited acts.

29(a)  General rule.--Regardless of a person's intent or the
30lack of injury, the following acts and practices are prohibited

1in the planning, conduct or execution of a solicitation or
2charitable sales promotion:

3(1)  Operating in violation of, or failing to comply
4with, any requirement of this chapter, regulation of the
5department or order of the secretary.

6(2)  Soliciting contributions after registration with the
7department has expired or has been suspended or revoked.

8(3)  Soliciting contributions prior to the solicitation
9notice and contract having been approved by the department.

10(4)  Utilizing any unfair or deceptive acts or practices
11or engaging in any fraudulent conduct which creates a
12likelihood of confusion or of misunderstanding.

13(5)  Conveying any representation that implies the
14contribution is for or on behalf of a charitable organization
15or utilizing an emblem, device or printed matter belonging to
16or associated with a charitable organization without first
17being authorized in writing to do so by the charitable
18organization.

19(6)  Utilizing a name, symbol or statement so closely
20related or similar to that used by another charitable
21organization or other person that the use would tend to
22confuse or mislead a solicited person.

23(7)  Misrepresenting or misleading anyone in any manner
24to believe that the person on whose behalf a solicitation or
25charitable sales promotion is being conducted is a charitable
26organization or that the proceeds of the solicitation or
27charitable sales promotion will be used for charitable
28purposes when this is not the fact.

29(8)  Misrepresenting to or misleading anyone in any
30manner so as to allow the belief that another person

1sponsors, endorses or approves the solicitation or charitable
2sales promotion when in fact the other person has not given
3consent in writing to the use of that person's name for these
4purposes.

5(9)  Misrepresenting to or misleading anyone in any
6manner so as to allow the belief that goods or services have
7sponsorship, approval, characteristics, ingredients, uses,
8benefits or qualities that they do not have or that a person
9has a sponsorship, approval, status, affiliation or
10connection that the person in fact does not have.

11(10)  Utilizing or exploiting the fact of registration so
12as to lead a person to believe that the registration in any
13manner constitutes an endorsement or approval by the
14Commonwealth. The use of the following statement shall not be
15deemed a prohibited exploitation:

16The official registration and financial information of
17(insert the legal name of the charity as registered with
18the department) may be obtained from the Pennsylvania
19Department of State by calling toll free, within
20Pennsylvania, 1 (800) 732-0999. Registration does not
21imply endorsement.

22(11)  Representing directly or by implication that a
23charitable organization will receive an amount greater than
24the actual net proceeds reasonably estimated to be retained
25by the charity for its use.

26(12)  With respect to solicitations by professional
27solicitors on behalf of law enforcement personnel,
28firefighters or other persons who protect the public safety,
29issuing, offering, giving, delivering or distributing
30honorary membership cards, courtesy cards or similar cards,

1or any stickers, emblems, plates or other items which could
2be used for display on a motor vehicle.

3(13)  Violating the following:

4(i)  Soliciting for advertising to appear in a for-
5profit publication which relates to, purports to relate
6to or which could reasonably be construed to relate to
7any charitable purpose without making the following
8disclosures at the time of solicitation:

9(A)  The publication is a for-profit, commercial
10enterprise.

11(B)  The true name of the solicitor and the fact
12that the solicitor is a professional solicitor.

13(C)  The publication is not directly affiliated
14or sponsored by any charitable organization.

15(ii)  Where a sale of advertising has been made, the
16solicitor, prior to accepting any money for the sale,
17shall present the purchaser with the same disclosures as
18are set forth in subparagraph (i), in written form and in
19conspicuous type.

20(14)  Representing that a part of contributions received
21will be given or donated to another charitable organization
22unless that organization has consented in writing to the use
23of its name prior to the solicitation. The written consent
24shall be signed by two authorized officers, directors or
25trustees of the charitable organization.

26(15)  Representing that tickets to events will be donated
27for use by another, unless all of the following requirements
28have been met:

29(i)  The charitable organization or professional
30solicitor has commitments, in writing, from charitable

1organizations stating that they will accept donated
2tickets and specifying the number of tickets they are
3willing to accept.

4(ii)  The charitable organization or professional
5solicitor does not solicit or accept more contributions
6of donated tickets than the lesser of:

7(A)  the number of ticket commitments it has
8received from charitable associations; or

9(B)  the total attendance capacity of the site of
10the event.

11(iii)  A ticket commitment alone, as described in
12this subsection, does not constitute written consent to
13use the organization's name in the solicitation campaign.

14(b)  Criteria to determine unfairness.--In determining
15whether or not a practice is unfair, deceptive, fraudulent or
16misleading under this section, definitions, standards or
17interpretations relating to the practice under the act of
18December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade
19Practices and Consumer Protection Law, shall apply.

20§ 1316.  Investigation; subpoenas; injunctions; court orders.

21(a)  Permissible investigations.--The Attorney General, the
22secretary or a district attorney with jurisdiction may make or
23cause to be made an investigation of any person as deemed
24necessary. In conducting the investigation, the official may:

25(1)  Require or permit a person to file a statement in
26writing, under oath or otherwise, as to all the facts and
27circumstances concerning the matter being investigated.

28(2)  Administer oaths or affirmations.

29(3)  Take testimony under oath.

30(4)  Require the attendance and testimony of witnesses

1and the production of books, accounts, papers, records,
2documents, audits and files relating to a solicitation or
3practice subject to this chapter or the regulations of the
4department promulgated pursuant to the authority of this
5chapter.

6(5)  Issue subpoenas.

7(6)  Conduct private or public hearings.

8(7)  Examine witnesses and receive evidence during an
9investigation or public or private hearings.

10(b)  Notice.--Notice of the time and place for the
11examination of documentary material shall be given by the
12Attorney General, the secretary or the district attorney at
13least ten days prior to the date of the examination or taking of
14testimony.

15(c)  Contents of notice.--Each notice shall:

16(1)  State the time and place for the taking of testimony
17or the examination and the name and address of the person to
18be examined, if known, or if the name is not known, a general
19description sufficient to identify the person or the
20particular class or group to which the person belongs.

21(2)  State the statute, if any, proscribing the alleged
22violation which is under investigation and state the general
23subject matter of the investigation.

24(3)  Describe the class or classes of documentary
25material to be produced under the notice with reasonable
26specificity, so as to fairly indicate the material demanded.

27(4)  Prescribe a return date within which the documentary
28material is to be produced.

29(5)  Identify the members of the Office of Attorney
30General's staff, the secretary's staff or the district

1attorney's staff to whom the documentary material is to be
2made available for inspection and copying.

3(d)  Restrictions on notices.--No notice shall contain any
4requirement which would be unreasonable or improper if contained
5in a subpoena duces tecum issued by a court of the Commonwealth.

6(e)  Restriction on materials.--

7(1)  Except as provided under paragraph (2), any
8documentary material or other information produced by a
9person in accordance with this section shall not, unless
10otherwise ordered by a court of competent jurisdiction for
11good cause shown, be produced for inspection or copying by or
12be disclosed to a person other than the authorized
13representative of the Attorney General, the secretary or the
14district attorney without the consent of the person who
15produced the material.

16(2)  Under reasonable terms and conditions that the
17Attorney General, the secretary or the district attorney
18shall prescribe, documentary material in paragraph (1) shall
19be available for inspection and copying by the person who
20produced the material or a duly authorized representative of
21the person. The Attorney General, the secretary or the
22district attorney or a duly authorized representative may use
23the documentary material or copies as the official may
24determine is necessary in the enforcement of this chapter,
25including production at a subsequent administrative or
26judicial proceeding.

27(f)  Compliance.--A person upon whom a notice is served
28pursuant to this section shall comply with the terms of the
29notice unless otherwise provided by an order of court. The
30Attorney General or the district attorney may petition for an

1order of court for enforcement of this section. Additionally,
2the secretary may take appropriate action to petition for an
3order of court for the enforcement of this section in accordance
4with the act of October 15, 1980 (P.L.950, No.164), known as the
5Commonwealth Attorneys Act.

6(g)  Contempt of final order.--Any disobedience of a final
7order entered under this section by a court shall be punishable
8as contempt.

9(h)  Civil penalties.--Any person shall be assessed a civil
10penalty of not more than $5,000 if the person does any of the
11following:

12(1)  Fails to appear.

13(2)  With intent, avoids, evades or prevents compliance
14with, in whole or in part, any civil investigation under this
15chapter.

16(3)  Removes from any place, conceals, withholds or
17destroys, mutilates, alters or by any other means falsifies
18any documentary material in the possession, custody or
19control of a person subject to any notice.

20(4)  Knowingly conceals any relevant information.

21(i)  Service.--Service of a subpoena may be made in any of
22the following ways:

23(1)  Delivering a duly executed copy to the person to be
24served or to a partner or to any officer or agent authorized
25by appointment or by law to receive service of process on
26behalf of the person.

27(2)  Delivering a duly executed copy to the principal
28place of business in this Commonwealth of the person to be
29served.

30(3)  Mailing by registered or certified mail a duly

1executed copy addressed to the person to be served at the
2person's principal place of business in this Commonwealth or,
3if the person has no place of business in this Commonwealth,
4to the last address of the person known to the secretary.

5(4)  Appointing the Secretary of State as its agent, if
6the charitable organization, fundraising counsel or
7professional solicitor has its principal place of business
8outside this Commonwealth or is organized under and by virtue
9of the laws of a foreign state, which is subject to the
10provisions of this chapter. The Secretary of State shall be
11deemed its irrevocable agent upon whom may be served any
12summons, subpoena duces tecum or other process directed to
13the charitable organization, fundraising counsel or
14professional solicitor, or any partner, principal officer or
15director of it, in an action or proceeding brought under the
16provisions of this chapter. Service of process upon the
17Secretary of State shall be made by personally delivering to
18and leaving with the secretary a copy of the process at the
19secretary's office in Harrisburg, Pennsylvania. This service
20shall be sufficient, provided notice of service and a copy of
21the process shall be sent by the secretary by registered mail
22to the charitable organization, fundraising counsel,
23professional solicitor or other person to whom it is
24directed, with return receipt requested, at the last address
25known to the secretary.

26§ 1317.  Administrative enforcement and penalties.

27(a)  General rule.--The secretary may refuse to register or
28revoke or suspend the registration of a charitable organization,
29professional fundraising counsel or professional solicitor
30whenever he finds that a charitable organization, professional

1fundraising counsel or professional solicitor, or an agent,
2servant or employee:

3(1)  Has violated or is operating in violation of any 
4provision of this chapter, the regulations of the department
5promulgated under it or an order issued by the secretary.

6(2)  Has refused or failed or any of its principal
7officers has refused or failed, after notice, to produce any
8records of the organization or to disclose any information
9required to be disclosed under this chapter or the
10regulations of the department.

11(3)  Has made a material false statement in an
12application, statement or report required to be filed under
13this chapter.

14(b)  Additional actions.--When the secretary finds that the
15registration of a person may be refused, suspended or revoked
16under the terms of subsection (a), the secretary may:

17(1)  Revoke a grant of exemption to any of the provisions
18of this chapter.

19(2)  Issue an order directing that the person cease and
20desist specified fundraising activities.

21(3)  Impose an administrative fine not to exceed $1,000
22for each act or omission which constitutes a violation of
23this chapter and an additional penalty, not to exceed $100
24for each day during which the violation continues.
25Registration will be automatically suspended upon final
26affirmation of an administrative fine until the fine is paid
27or until the normal expiration date of the registration. No
28registration may be renewed until the fine is paid.

29(4)  Place a registrant on probation for a period of time
30and subject to conditions as the secretary may decide.

1(c)  Administrative procedures.--Actions of the secretary are
2subject to 2 Pa.C.S. Ch. 5 Subch. A (relating to practice and
3procedure of Commonwealth agencies) and Ch. 7 Subch. A (relating
4to judicial review of Commonwealth agency action).

5§ 1318.  Criminal penalties.

6(a)  Deceit or fraud violation.--A person who willfully and
7knowingly violates any provision of this chapter with intent to
8deceive or defraud a charity or individual, commits a
9misdemeanor of the first degree and shall, upon conviction, be
10sentenced to pay a fine not exceeding $10,000 or imprisonment
11for not more than five years, or both.

12(b)  Other violations.--Any other violation of this chapter
13shall constitute a misdemeanor of the third degree punishable,
14upon conviction, by a fine not exceeding $2,500 or imprisonment
15for not more than one year, or both.

16(c)  Location of offense.--An offense committed under this
17chapter involving a solicitation may be deemed to have been
18committed at either the place at which the solicitation was
19initiated or at the place where the solicitation was received.

20§ 1319.  Civil penalties.

21(a)  General rule.--Whenever the Attorney General or any
22district attorney shall have reason to believe, or shall be
23advised by the secretary, that a person is operating in
24violation of the provisions of this chapter, the Attorney
25General or district attorney may bring an action in the name of
26the Commonwealth against that person, to enjoin the person from
27continuing the violation and for other relief as the court deems
28appropriate. In a proceeding under this subsection, the court
29may make appropriate orders, including:

30(1)  the appointment of a master or receiver;

1(2)  the sequestration of assets;

2(3)  the reimbursement of persons from whom contributions
3have been unlawfully solicited;

4(4)  the distribution of contributions in accordance with
5the charitable purpose expressed in the registration
6statement or in accordance with the representations made to
7the person solicited;

8(5)  the reimbursement of the Commonwealth for attorney
9fees and the costs of investigation, including audit costs;

10(6)  the assessment of a civil penalty not exceeding
11$1,000 per violation of the act, which penalty shall be in
12addition to any other relief which may be granted; and

13(7)  the granting of other appropriate relief.

14(b)  Assurance of voluntary compliance.--In any case where
15the Attorney General or a district attorney has authority to
16institute an action or proceeding under this chapter, the
17official may accept an assurance of voluntary compliance through
18which a person alleged to be engaged in any method, act or
19practice in violation of this chapter agrees to discontinue the
20method, act or practice.

21(1)  An assurance of compliance:

22(i)  May, among other terms, include a stipulation of
23a voluntary payment by the person of the cost of the
24investigation or of an amount to be held in escrow
25pending the outcome of an action or as restitution to
26aggrieved persons, or both.

27(ii)  Shall be in writing.

28(iii)  Shall be filed with a court of the
29Commonwealth.

30(2)  (Reserved).

1(3)  In the event of an alleged violation of the
2assurance of voluntary compliance, the Attorney General or a
3district attorney may, at his discretion, either initiate
4contempt proceedings or proceed as if the assurance of
5voluntary compliance has not been accepted. Evidence of a
6violation of the assurance shall be prima facie evidence of a
7violation of this chapter in a subsequent proceeding brought
8by the Attorney General or district attorney.

9(4)  Matters closed may be reopened at any time by the
10court for further proceedings in the public interest.

11§ 1320.  Additional regulations by counties, municipalities or
12consolidated government.

13Nothing contained in this chapter shall serve to deny the
14right to a county, municipality or consolidated government to
15pass ordinances, rules and regulations as may be deemed
16appropriate to regulate further the soliciting of contributions
17within the county, municipality or consolidated government. The
18ordinance may not alter any of the obligations set forth in this
19chapter or the regulations of the department but may add other
20requirements and rules as appear to be proper to the county,
21municipality or consolidated government involved.

22§ 1321.  Charitable organizations deemed fiduciary.

23Every person soliciting, collecting or expending
24contributions for charitable purposes and every officer,
25director, trustee and employee of the person concerned with the
26solicitation, collection or expenditure of the contribution
27shall be deemed to be a fiduciary and acting in a fiduciary
28capacity.

29§ 1322.  Prior registration unaffected.

30A person who is registered with the department under the

1former act of April 30, 1986 (P.L.107, No.36), known as the
2Charitable Organization Reform Act, prior to February 19, 1991,
3shall, on and after February 19, 1991, be deemed to be
4registered with the department as provided for in this chapter.
5Registration shall be reissued in accordance with this chapter.

6§ 1323.  Regulations.

7Regulations promulgated under the former act of April 30,
81986 (P.L.107, No.36), known as the Charitable Organization
9Reform Act, and in effect on February 19, 1991, shall remain in
10effect until amended in accordance with the provisions of this
11chapter.

12PART IV

13TAX

14Chapter

1519.  General Provisions (Reserved)

1621.  Charitable Gift Annuity Exemptions (Reserved)

1723.  Institutions of Purely Public Charity

18CHAPTER 19

19GENERAL PROVISIONS

20(RESERVED)

21CHAPTER 21

22CHARITABLE GIFT ANNUITY EXEMPTIONS

23(RESERVED)

24CHAPTER 23

25INSTITUTIONS OF PURELY PUBLIC CHARITY

26Sec.

272301.  Scope of chapter.

282302.  Legislative intent.

292303.  Definitions.

302304.  State-related universities.

12305.  Criteria for institutions of purely public charity.

22306.  Presumption process.

32307.  Voluntary agreements.

42308.  Unfair competition with small businesses.

52309.  Accountability and disclosure.

62310.  Exemption for Federal Government instrumentality.

72311.  Prohibited act.

82312.  Compliance.

92313.  Civil penalty.

102314.  Repeals.

112315.  Applicability.

12§ 2301.  Scope of chapter.

13This chapter relates to institutions of purely public
14charity.

15§ 2302.  Legislative intent.

16(a)  Findings.--The General Assembly finds and declares as
17follows:

18(1)  It is in the best interest of the Commonwealth and
19its citizens that the recognition of tax-exempt status be
20accomplished in an orderly, uniform and economical manner.

21(2)  For more than 100 years, it has been the policy of
22the Commonwealth to foster the organization and operation of
23institutions of purely public charity by exempting them from
24taxation.

25(3)  Because institutions of purely public charity
26contribute to the common good or lessen the burden of
27government, the historic policy of exempting these
28institutions from taxation should be continued.

29(4)  Lack of specific legislative standards defining the
30term "institutions of purely public charity" has led to

1increasing confusion and confrontation among traditionally
2tax-exempt institutions and political subdivisions to the
3detriment of the public.

4(5)  There is increasing concern that the eligibility
5standards for charitable tax exemptions are being applied
6inconsistently, which may violate the uniformity provision of
7the Constitution of Pennsylvania.

8(6)  Recognizing the interest of the taxpayers in a fair
9and equitable system of property tax assessment and the
10attendant statutory requirements for the political
11subdivision responsible for maintaining real property
12assessment rolls to administer the system of property
13assessment, this chapter shall not in any way limit the
14responsibilities, prerogatives or abilities of political
15subdivisions with respect to the determination of or
16challenges to the taxable status of a parcel of property
17based on the use of the parcel or part of the parcel of
18property.

19(7)  Institutions of purely public charity benefit
20substantially from local government services. These
21institutions have significant value to the Commonwealth and
22its citizens, and the need exists for revenues to maintain
23local government services provided for the benefit of all
24citizens, including institutions of purely public charity. It
25is the intent of this chapter to encourage financially secure
26institutions of purely public charity to enter into voluntary
27agreements or to maintain existing or continuing agreements
28for the purpose of defraying some of the cost of various
29local government services. Payments made under the agreements
30shall be deemed to be in compliance with any fiduciary

1obligation pertaining to the institutions of purely public
2charity, its officers or directors.

3(b)  Intent.--It is the intent of the General Assembly to
4eliminate inconsistent application of eligibility standards for
5charitable tax exemptions, reduce confusion and confrontation
6among traditionally tax-exempt institutions and political
7subdivisions and ensure that charitable and public funds are not
8unnecessarily diverted from the public good to litigate
9eligibility for tax-exempt status by providing standards to be
10applied uniformly in all proceedings throughout this
11Commonwealth for determining eligibility for exemption from
12State and local taxation which are consistent with traditional
13legislative and judicial applications of the constitutional term
14"institutions of purely public charity."

15§ 2303.  Definitions.

16The following words and phrases when used in this chapter
17shall have the meanings given to them in this section unless the
18context clearly indicates otherwise:

19"Affiliate."  A domestic or foreign corporation, association,
20trust or other organization which owns a 10% or greater interest
21in an institution of purely public charity. A domestic or
22foreign corporation, association, trust or other organization in
23which an institution of purely public charity owns a 10% or
24greater interest.

25"Annual return."  The annual information return required to 
26be filed with the Internal Revenue Service by institutions 
27exempt from tax under section 501(a) of the Internal Revenue 
28Code of 1986 (Public Law 99-514, 26 U.S.C. § 501(a)). The annual 
29information return consists of Internal Revenue Service Form 990 
30or Form 990EZ and Schedule A or any succeeding form used for the 

1same or similar purpose. For an institution which is not 
2required to file the returns, the institution's annual financial 
3statement with reported income shall constitute its annual 
4return.

5"Bureau."  The Bureau of Charitable Organizations of the
6Department of State of the Commonwealth.

7"Commercial business."  The sale of products or services that
8are principally the same as those offered by an existing small
9business in the same community.

10"Contribution."  The promise, grant, pledge or gift of money,
11property, goods, services, financial assistance or other similar
12remittance.

13"Goods or services."  Goods or services which promote any of
14the enumerated purposes under section 2305(b) (relating to
15criteria for institutions of purely public charity) and which
16are valued in accordance with generally accepted accounting
17principles applicable to the institution.

18"Government agency."  Any Commonwealth agency or any
19political subdivision or municipal or other local authority or
20any officer or agency of any political subdivision or local
21authority.

22"Institution."  A domestic or foreign nonprofit corporation,
23association or trust or other similar entity.

24"Institution of purely public charity."  An institution which
25meets the criteria under section 2305 (relating to criteria for
26institutions of purely public charity).

27"Net operating income."  The amount of funds remaining after
28all operating expenses related to the provision of goods or
29services associated with the institution's charitable purpose
30are deducted from payments received for providing these goods or

1services, as determined in accordance with generally accepted
2accounting principles applicable to the institution.

3"Political subdivision."  Any county, city, borough, town,
4township, school district, vocational school district and county
5institution district.

6"Program service revenue."  Income earned from the provision
7of goods or services, including government fees and contracts
8associated with the institution's charitable purpose, which is
9reported on the annual return.

10"Small business."  Any self-employed individual, sole
11proprietorship, firm, corporation, partnership, association or
12other entity that:

13(1)  has fewer than 101 full-time employees; and

14(2)  is subject to income taxation under the act of March 
154, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.

16"Total operating expenses."  The costs related to the
17provision of goods or services associated with the institution's
18charitable purpose, as determined in accordance with generally
19accepted accounting principles applicable to the institution.

20"Voluntary agreement."  An agreement, contract or other
21arrangement for the purpose of receiving contributions under
22section 2307 (relating to voluntary agreements) between a
23political subdivision and an institution seeking or possessing
24an exemption as an institution of purely public charity. These
25contributions are for the purpose of defraying some of the cost
26of various local government services. The term includes the
27establishment of public service foundations by institutions of
28purely public charity.

29§ 2304.  State-related universities.

30(a)  General rule.--It is the intent of the General Assembly

1to recognize that the State-related universities provide a
2direct public benefit and serve the public purposes of this
3Commonwealth by declaring the real property of State-related
4universities to be public property for purposes of exemption
5from State and local taxation when the property is actually and
6regularly used for public purposes, provided that nothing in
7this section is intended or shall be construed to affect the
8title to real property of State-related universities or the
9power and authority of the governing bodies of State-related
10universities with respect to the real property. Nothing in this
11section is intended or shall be construed to affect, impair or
12terminate any contract or agreement in effect on or before
13November 26, 1997, by and between a State-related university and
14any political subdivision where the State-related university
15pays real estate taxes, amounts in lieu of real estate taxes or
16other charges, fees or contributions for government services.

17(b)  Real property.--All real property owned by State-related
18universities or owned by the Commonwealth and used by a State-
19related university is and shall be deemed public property for
20purposes of the Constitution of Pennsylvania and the laws of
21this Commonwealth relating to the assessment, taxation and
22exemption of real estate and shall be exempt from all State and
23local taxation when actually and regularly used for public
24purposes.

25(c)  Exception.--This section shall not include the property
26of a State-related university, the possession and control of
27which has been transferred to a for-profit entity not otherwise
28entitled to tax-exempt status, irrespective of whether that
29entity is affiliated with the university. The execution of a
30management services contract with a third party entity to

1provide operational services to the university which would
2otherwise be provided or conducted directly by the university
3shall not, however, be considered a transfer of possession and
4control of real property within the meaning of this section.

5(d)  Definitions.--As used in this section, the following
6words and phrases shall have the meanings given to them in this
7subsection:

8"Public purposes."  All activities relating to the
9educational mission of State-related universities, including
10teaching, research, service and activities incident or ancillary
11to the educational mission which provide services to or for
12students, employees or the public.

13"State-related universities."  The Pennsylvania State
14University and its affiliates, the Pennsylvania College of
15Technology, the University of Pittsburgh, Temple University and
16its subsidiaries Temple University Hospital, Inc., and Temple
17University Children's Hospital, Inc., and Lincoln University.

18§ 2305.  Criteria for institutions of purely public charity.

19(a)  General rule.--An institution of purely public charity
20is an institution which meets the criteria set forth in
21subsections (b), (c), (d), (e) and (f). An institution which
22meets the criteria of this section shall be considered to be
23founded, endowed and maintained by public or private charity.

24(b)  Charitable purpose.--The institution must advance a
25charitable purpose. This criterion is satisfied if the
26institution is organized and operated primarily to fulfill any
27one or combination of the following purposes:

28(1)  Relief of poverty.

29(2)  Advancement and provision of education. This
30paragraph includes postsecondary education.

1(3)  Advancement of religion.

2(4)  Prevention and treatment of disease or injury,
3including mental retardation and mental disorders.

4(5)  Government or municipal purposes.

5(6)  Accomplishment of a purpose which is recognized as
6important and beneficial to the public and which advances
7social, moral or physical objectives.

8(c)  Private profit motive.--The institution must operate
9entirely free from private profit motive. Notwithstanding
10whether the institution's revenues exceed its expenses, this
11criterion is satisfied if the institution meets all of the
12following:

13(1)  Neither the institution's net earnings nor donations 
14which it receives inures to the benefit of private 
15shareholders or other individuals, as the private inurement 
16standard is interpreted under section 501(c)(3) of the 
17Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
18501(c)(3)).

19(2)  The institution applies or reserves all revenue,
20including contributions, in excess of expenses in furtherance
21of its charitable purpose or to fund other institutions which
22meet the provisions of subsection (b) and this subsection.

23(3)  Compensation, including benefits, of any director,
24officer or employee is not based primarily upon the financial
25performance of the institution.

26(4)  The governing body of the institution of purely
27public charity has adopted as part of its articles of
28incorporation or, if unincorporated, other governing legal
29documents a provision that expressly prohibits the use of any
30surplus funds for private inurement to any person in the

1event of a sale or dissolution of the institution of purely
2public charity.

3(d)  Community service.--The following shall apply:

4(1)  The institution must donate or render gratuitously a
5substantial portion of its services. This criterion is
6satisfied if the institution benefits the community by
7actually providing any one of the following:

8(i)  Goods or services to all who seek them without
9regard to a person's ability to pay for what the person
10receives if all of the following apply:

11(A)  The institution has a written policy to this
12effect.

13(B)  The institution has published this policy in
14a reasonable manner.

15(C)  The institution provides uncompensated goods
16or services at least equal to 75% of the
17institution's net operating income but not less than
183% of the institution's total operating expenses.

19(ii)  Goods or services for fees that are based upon
20the recipient's ability to pay for them if all of the
21following apply:

22(A)  The institution can demonstrate that it has
23implemented a written policy and a written schedule
24of fees based on individual or family income. An
25institution will meet the requirement of this clause
26if the institution consistently applies a formula to
27all individuals requesting consideration of reduced
28fees which is in part based on individual or family
29income.

30(B)  At least 20% of the individuals receiving

1goods or services from the institution pay no fee or
2a fee which is lower than the cost of the goods or
3services provided by the institution.

4(C)  At least 10% of the individuals receiving
5goods or services from the institution receive a
6reduction in fees of at least 10% of the cost of the
7goods or services provided to them.

8(D)  No individuals receiving goods or services
9from the institution pay a fee which is equal to or
10greater than the cost of the goods or services
11provided to them, or the goods or services provided
12to the individuals described in clause (B) are
13comparable in quality and quantity to the goods or
14services provided to those individuals who pay a fee
15which is equal to or greater than the cost of the
16goods or services provided to them.

17(iii)  Wholly gratuitous goods or services to at
18least 5% of those receiving similar goods or services
19from the institution.

20(iv)  Financial assistance or uncompensated goods or
21services to at least 20% of those receiving similar goods
22or services from the institution if at least 10% of the
23individuals receiving goods or services from the
24institution either paid no fees or fees which were 90% or
25less of the cost of the goods or services provided to
26them, after consideration of any financial assistance
27provided to them by the institution.

28(v)  Uncompensated goods or services which in the
29aggregate are equal to at least 5% of the institution's
30costs of providing goods or services.

1(vi)  Goods or services at no fee or reduced fees to
2government agencies or goods or services to individuals
3eligible for government programs if any one of the
4following applies:

5(A)  The institution receives 75% or more of its
6gross operating revenue from grants or fee-for-
7service payments by government agencies and if the
8aggregate amount of fee-for-service payments from
9government agencies does not exceed 95% of the
10institution's costs of providing goods or services to
11the individuals for whom the fee-for-services
12payments are made.

13(B)  The institution provides goods or services
14to individuals with mental retardation, to
15individuals who need mental health services, to
16members of an individual's family or guardian in
17support of the goods or services or to individuals
18who are dependent, neglected or delinquent children,
19as long as the institution performs duties that would
20otherwise be the responsibility of government and the
21institution is restricted in its ability to retain
22revenue over expenses or voluntary contributions by
23any one of the following statutes or regulations or
24by contractual limitations with county children and
25youth offices in this Commonwealth:

26(I)  Sections 1905(d) and 1915(c) of the 
27Social Security Act (49 Stat. 620, 42 U.S.C. §§ 
281396d(d) and 1396n(c)).

29(II)  42 CFR 440.150 (relating to
30intermediate care facility (ICF/IIDICF/IID)

1services).

2(III)  42 CFR Pt. 483 Subpt. I (relating to
3conditions of participation for intermediate care
4facilities for individuals with intellectual
5disabilities).

6(IV)  The act of October 20, 1966 (3rd 
7Sp.Sess., P.L.96, No.6), known as the Mental 
8Health and Mental Retardation Act of 1966.

9(V)  Articles II, VII, IX and X of the act of 
10June 13, 1967 (P.L.31, No.21), known as the 
11Public Welfare Code.

12(VI)  23 Pa.C.S. Ch. 63 (relating to child 
13protective services).

14(VII)  42 Pa.C.S. Ch. 63 (relating to 
15juvenile matters).

16(VIII)  55 Pa. Code Chs. 3170 (relating to
17allowable costs and procedures for county
18children and youth social service programs), 3680
19(relating to administration and operation of a
20children and youth social service agency), 4300
21(relating to county mental health and mental
22retardation fiscal manual), 6210 (relating to
23participation requirements for the intermediate
24care facilities for the mentally retarded
25program), 6211 (relating to allowable cost
26reimbursement for non-State operated intermediate
27care facilities for persons with an intellectual
28disability), 6400 (relating to community homes
29for individuals with mental retardation), 6500
30(relating to family living homes) and 6600

1(relating to intermediate care facilities for the
2mentally retarded).

3(vii)  Fundraising on behalf of or grants to an
4institution of purely public charity, an entity similarly
5recognized by another state or foreign jurisdiction, a
6qualifying religious organization or a government agency
7and actual contribution of a substantial portion of the
8funds raised or contributions received to an institution
9of purely public charity, an entity similarly recognized
10by another state or foreign jurisdiction, a qualifying
11religious organization or a government agency.

12(2)  The institution may elect to average the applicable
13data for its five most recently completed fiscal years for
14the purposes of calculating any formula or meeting any
15quantitative standard in paragraph (1).

16(3)  For purposes of calculating the number of
17individuals for use in the percentage calculations in this
18subsection, educational institutions may use full-time
19equivalent students as defined by the Department of
20Education.

21(4)  For purposes of this subsection, the term
22"uncompensated goods or services" shall be limited to any of
23the following:

24(i)  The full cost of all goods or services provided
25by the institution for which the institution has not
26received monetary compensation or the difference between
27the full cost and any lesser fee received for the goods
28or services, including the cost of the goods or services
29provided to individuals unable to pay.

30(ii)  The difference between the full cost of

1education and research programs provided by or
2participated in by the institution and the payment made
3to the institution to support the education and research
4programs.

5(iii)  The difference between the full cost of
6providing the goods or services and the payment made to
7the institution under any government program, including
8individuals covered by Medicare or Medicaid.

9(iv)  The difference between the full cost of the
10community services which the institution provides or
11participates in and the payment made to the institution
12to support the community services.

13(v)  The reasonable value of any moneys, property,
14goods or services donated by a primary donor to an
15institution of purely public charity or to a government
16agency or the reasonable value of the net donation made
17by a secondary donor to a primary donor. As used in this
18subparagraph, the following words and phrases shall have
19the following meanings:

20(A)  "Net donation."  In the case of a donation
21of money, property or identical goods and services
22made by a secondary donor, the difference between the
23value of the donation made by the secondary donor and
24the value of the donation made by the primary donor,
25provided the value is positive.

26(B)  "Primary donor."  An institution which makes
27a donation of any money, property, goods or services
28to an institution of purely public charity.

29(C)  "Secondary donor."  An institution which
30receives a donation of any money, property, goods or

1services from a primary donor and then makes a
2donation back to that primary donor within three
3years of having received the donation.

4(vi)  The reasonable value of volunteer assistance 
5donated by individuals who are involved or assist in the 
6provision of goods or services by the institution. The 
7reasonable value of volunteer assistance, computed on an 
8hourly basis, shall not exceed the Statewide average 
9weekly wage as defined in section 105.1 of the act of 
10June 2, 1915 (P.L.736, No.338), known as the Workers' 
11Compensation Act, divided by 40.

12(vii)  The cost of goods or services provided by an
13institution licensed by the Department of Health or the
14Department of Public Welfare to individuals who are
15unable to pay, provided that reasonable and customary
16collection efforts have been made by the institution.

17(viii)  The value of any voluntary agreement as set
18forth in section 2307(c) (relating to voluntary
19agreements).

20(e)  Charity to persons.--The following shall apply:

21(1)  The institution must benefit a substantial and
22indefinite class of persons who are legitimate subjects of
23charity.

24(2)  As used in this subsection, the following words and
25phrases shall have the meanings given to them in this
26paragraph:

27(i)  "Legitimate subjects of charity."  Those
28individuals who are unable to provide themselves with
29what the institution provides for them.

30(ii)  "Substantial and indefinite class of persons."  

1Persons not predetermined in number, provided that, where 
2the goods or services are received primarily by members 
3of the institution, membership cannot be predetermined in 
4number and cannot be arbitrarily denied by a vote of the 
5existing members. This subsection specifically recognizes 
6that the use of admissions criteria and enrollment 
7limitations by educational institutions does not 
8constitute predetermined membership or arbitrary 
9restrictions on membership so as to violate this section 
10and recognizes that an institution may reasonably deny 
11membership based on the types of services it provides, as 
12long as denial is not in violation of Federal or State 
13antidiscrimination laws, such as the Civil Rights Act of 
141964 (Public Law 88-352, 78 Stat. 241) and the act of 
15October 27, 1955 (P.L.744, No.222), known as the 
16Pennsylvania Human Relations Act.

17(3)  An institution shall be considered to benefit a
18substantial and indefinite class of persons who are
19legitimate subjects of charity if the institution is
20primarily engaged in fundraising on behalf of or making
21grants to an institution of purely public charity, an entity
22similarly recognized by another state or foreign
23jurisdiction, a qualifying religious organization or a
24government agency and there is actual contribution of a
25substantial portion of the funds raised or contributions
26received to an institution of purely public charity, an
27entity similarly recognized by another state or foreign
28jurisdiction, a qualifying religious organization or a
29government agency.

30(4)  An institution which operates exclusively on a

1voluntary basis to provide emergency health and safety
2services to the community or an institution which provides
3funds and support exclusively to volunteer institutions which
4provide emergency health and safety services to the community
5shall be considered to benefit a substantial and indefinite
6class of persons who are legitimate subjects of charity.

7(5)  An institution shall not be considered to benefit a
8substantial and indefinite class of persons who are
9legitimate subjects of charity if:

10(i)  the institution is not qualified under section
11501(c)(3) of the Internal Revenue Code of 1986; and

12(ii)  the institution is qualified under section 
13501(c)(4), (5), (6), (7), (8) or (9) of the Internal 
14Revenue Code of 1986 (26 U.S.C. § 501(c)(4), (5), (6), 
15(7), (8) or (9)) as any of the following:

16(A)  An association of employees, the membership
17of which is limited to the employees of a designated
18person or persons.

19(B)  A labor organization.

20(C)  An agricultural or horticultural
21organization.

22(D)  A business league, chamber of commerce, real
23estate board, board of trade or professional sports
24league.

25(E)  A club organized for pleasure or recreation.

26(F)  A fraternal beneficiary society, order or
27association.

28(f)  Government service.--The institution must relieve the
29government of some of its burden. This criterion is satisfied if
30the institution meets any one of the following:

1(1)  Provides a service to the public that the government
2would otherwise be obliged to fund or to provide directly or
3indirectly or to assure that a similar institution exists to
4provide the service.

5(2)  Provides services in furtherance of its charitable
6purpose which are either the responsibility of the government
7by law or which historically have been assumed or offered or
8funded by the government.

9(3)  Receives on a regular basis payments for services
10rendered under a government program if the payments are less
11than the full costs incurred by the institution, as
12determined by generally accepted accounting principles.

13(4)  Provides a service to the public which directly or
14indirectly reduces dependence on government programs or
15relieves or lessens the burden borne by government for the
16advancement of social, moral, educational or physical
17objectives.

18(5)  Advances or promotes religion and is owned and
19operated by a corporation or other entity as a religious
20ministry and otherwise satisfies the criteria set forth in
21this section.

22(6)  Has a voluntary agreement under section 2307.

23(g)  Other nonprofit entities.--A nonprofit parent
24corporation, together with all of its subsidiary nonprofit
25corporations, may elect to be considered as a single institution
26in meeting the criteria set forth in this section as long as all
27of the following are met:

28(1)  Each subsidiary:

29(i)  is a nonstock corporation of which the nonprofit
30parent corporation is the only member; and

1(ii)  meets the requirements of this section.

2(2)  The parent:

3(i)  is a nonstock corporation;

4(ii)  is qualified by the Internal Revenue Service as
5meeting the requirements of section 501(c)(3) of the
6Internal Revenue Code of 1986;

7(iii)  meets the requirements of subsection (b) and
8(c); and

9(iv)  except for services that meet the requirements
10of this section, does not render services for a fee to an
11individual or entity that does not meet the requirements
12of paragraph (1).

13(h)  Parcel review.--The following shall apply:

14(1)  Nothing in this chapter shall affect, impair or
15hinder the responsibilities or prerogatives of the political
16subdivision responsible for maintaining real property
17assessment rolls to make a determination whether a parcel of
18property or a portion of a parcel of property is being used
19to advance the charitable purpose of an institution of purely
20public charity or to assess the parcel or part of the parcel
21of property as taxable based on the use of the parcel or part
22of the parcel for purposes other than the charitable purpose
23of that institution.

24(2)  Nothing in this chapter shall prohibit a political
25subdivision from filing challenges or making determinations
26as to whether a particular parcel of property is being used
27to advance the charitable purpose of an institution of purely
28public charity.

29(i)  Standards.--An institution of purely public charity may
30conduct activities intended to influence legislation provided

1that no substantial part of the activities of an institution of
2purely public charity shall consist of carrying on propaganda,
3except as otherwise provided in section 501(h) of the Internal
4Revenue Code of 1986, or participating in or intervening in,
5including the publishing or distributing of statements, any
6political campaign on behalf of or in opposition to any
7candidate for public office as the limitations are interpreted
8under section 501 of the Internal Revenue Code of 1986.

9§ 2306.  Presumption process.

10(a)  Presumption determination.--An institution of purely 
11public charity possessing a valid exemption from the tax imposed 
12by Article II of the act of March 4, 1971 (P.L.6, No.2), known 
13as the Tax Reform Code of 1971, shall be entitled to assert a 
14rebuttable presumption regarding that institution's compliance 
15with the criteria set forth in section 2305 (relating to 
16criteria for institutions of purely public charity) as follows:

17(1)  An institution of purely public charity that has
18annual program service revenue less than $10,000,000 shall be
19entitled to assert the presumption if the institution
20possesses a valid exemption under section 204(10) of the Tax
21Reform Code of 1971.

22(2)  An institution of purely public charity that has
23annual program service revenue equal to or exceeding
24$10,000,000 shall be entitled to assert the presumption if
25all of the following apply:

26(i)  the institution possesses a valid exemption
27under section 204(10) of the Tax Reform Code of 1971; and

28(ii)  the institution has a voluntary agreement as
29provided under section 2307 (relating to voluntary
30agreements) with a political subdivision in which that

1institution conducts substantial business operations.

2(3)  The presumption under paragraph (2) may be asserted
3by an institution of purely public charity only with regard
4to a challenge made by a political subdivision with which
5that institution has a voluntary agreement in effect under
6section 2307.

7(4)  For the purpose of calculating annual program
8service revenue under this section, an institution of purely
9public charity may elect to average annual program service
10revenue for its two most recently completed fiscal years.

11(5)  Commencing July 1, 1999, and every year thereafter,
12the Department of Revenue shall increase the amount set forth
13in paragraphs (1) and (2) by 1%. The department shall
14transmit notice of the adjustment to the Legislative
15Reference Bureau for publication in the Pennsylvania
16Bulletin.

17(b)  Burden of proof.--If an institution of purely public
18charity asserts a presumption under subsection (a), a political
19subdivision challenging that institution before a government
20agency or court shall bear the burden, by a preponderance of the
21evidence, of proving that the institution of purely public
22charity does not comply with the requirements of section 2305.

23(c)  Issuance of written order.--The department shall furnish
24a written order to any institution applying for exemption under
25section 204(10) of the Tax Reform Code of 1971 approving or
26denying the exemption. An order denying an exemption shall
27include specific information concerning that institution's
28failure to comply with at least one of the criteria under
29section 2305.

30(d)  Waiver of confidentiality.--An institution of purely

1public charity asserting a presumption under subsection (a)
2shall be deemed to have waived any right to confidentiality with
3regard to all records in the possession of the department
4relating to the application for exemption. These records shall
5be deemed public records that the department must furnish to any
6person upon request. A political subdivision challenging the
7presumption may request from the institution of purely public
8charity all relevant financial statements, records and documents
9used to obtain the exemption under section 204(10) of the Tax
10Reform Code of 1971. Failure by that institution to supply or,
11at its option, to permit inspection of the information in its
12possession within 30 days shall eliminate the presumption with
13respect to that challenge.

14(e)  Department involvement.--A determination made under this
15section shall not in any way subject the department to
16participation in any controversy, discovery or litigation
17between a political subdivision and an institution claiming the
18exemption as an institution of purely public charity, other than
19providing a copy of its written order and any supporting
20documentation supplied to the department by that institution.

21§ 2307.  Voluntary agreements.

22(a)  General rule.--A political subdivision may execute a
23voluntary agreement with an institution that owns real property
24within the political subdivision. All contributions received
25from the voluntary agreements shall be used to help ensure that
26essential governmental, public or community services will
27continue to be provided in a manner that will permit an
28institution to continue to fulfill its charitable mission.
29Nothing in this section shall be construed to prohibit a
30political subdivision from sharing with another political

1subdivision a portion of the proceeds derived from a voluntary
2agreement upon the mutual agreement of all affected parties.

3(b)  Public service foundations.--Institutions of purely
4public charity may establish a public service foundation, upon
5mutual agreement with a political subdivision, for the purpose
6of receiving contributions from institutions of purely public
7charity. Upon agreement, the foundation shall make distributions
8or grants to a participating political subdivision to help
9ensure that essential governmental, public or community services
10will continue to be provided in a manner that will permit an
11institution to continue to fulfill its charitable mission. A
12political subdivision which receives a distribution or grant
13from a public service foundation shall not assess or seek a
14separate contribution for services from institutions of purely
15public charity participating in a foundation.

16(c)  Additional credit for voluntary agreements.--An
17institution which has entered into a voluntary agreement may
18credit the following percentage of the reasonable value of its
19contribution for purposes of computing the community service
20criteria set forth in section 2305(d)(4)(viii) (relating to
21criteria for institutions of purely public charity):

22(1)  If the reasonable value of the institution's
23contribution is equal to or less than 0.15% of its program
24service revenue, the institution may credit the entire
25contribution at 150% of its value.

26(2)  If the reasonable value of the institution's
27contribution is greater than 0.15% but less than 0.25% of its
28program service revenue, the institution may credit the
29entire contribution at 250% of its value.

30(3)  If the reasonable value of the institution's

1contribution is equal to or greater than 0.25% of its program
2service revenue, the institution may credit the entire
3contribution at 350% of its value.

4(d)  Existing agreements.--Nothing in this chapter shall be
5construed to affect, impair, terminate or supersede any
6contract, agreement or other arrangement on or before November
727, 1997, between an institution and a political subdivision
8which authorizes or requires payment of taxes, amounts in lieu
9of taxes or other charges or fees for the services of a
10political subdivision.

11(e)  New agreements.--Nothing in this chapter shall be
12construed to impair or otherwise inhibit the right or ability of
13any institution seeking or possessing an exemption as an
14institution of purely public charity, a public service
15foundation or a political subdivision from executing voluntary
16agreements after November 26, 1997.

17§ 2308.  Unfair competition with small businesses.

18(a)  Intent.--It is the policy of this chapter that
19institutions of purely public charity shall not use their tax-
20exempt status to compete unfairly with small business.

21(b)  General rule.--An institution of purely public charity
22may not fund, capitalize, guarantee the indebtedness of, lease
23obligations of or subsidize a commercial business that is
24unrelated to the institution's charitable purpose as stated in
25the institution's charter or governing legal documents.

26(c)  Exceptions.--Institutions of purely public charity are
27not in violation of subsection (b) if any of the following
28apply:

29(1)  The commercial business is intended only for the use
30of its employees, staff, alumni, faculty, members, students,

1clients, volunteers, patients or residents. For purposes of
2this paragraph, a person shall not be considered an employee,
3staff, member, alumnus, faculty, student, client, volunteer,
4patient or resident if the person's only relationship with
5the institution of purely public charity is to receive
6products or services resulting from the commercial business.

7(2)  The commercial business results in sales to the
8general public that are incidental or periodic rather than
9permanent and ongoing.

10(d)  Support for other charities.--Nothing in this section
11shall be construed as prohibiting or limiting the ability of an
12institution of purely public charity to fund, capitalize,
13guarantee the indebtedness of or otherwise subsidize another
14institution of purely public charity.

15(e)  Investments.--The investment in publicly traded stocks
16and bonds; real estate, whether directly or indirectly; or other
17investments by an institution of purely public charity does not
18violate subsection (b).

19(f)  Educational functions.--Use of facilities to host groups
20for educational purposes by an institution of purely public
21charity does not violate subsection (b).

22(g)  Government functions.--An institution of purely public
23charity may engage in a new commercial business that may
24otherwise be in violation of subsection (b) if the institution
25is formally requested to do so by the Commonwealth or a
26political subdivision.

27(h)  Existing business arrangements.--An institution of
28purely public charity that prior to March 26, 1998, funded,
29capitalized, guaranteed the indebtedness of, leased obligations
30of or subsidized a commercial business may continue to own and

1operate the businesses without violating subsection (b) as long
2as the institution does not substantially expand the scope of
3the commercial business. In the event an injunction is issued
4under subsection (i), the effect of the injunction shall be
5limited to restraining the substantial expansion of the scope of
6the commercial business which was initiated after March 26,
71998.

8(i)  Remedies.--The Department of State shall establish a
9system of mandatory arbitration for the purpose of receiving all
10complaints from aggrieved small businesses relating to an
11institution of purely public charity's alleged violation of this
12section. Upon receipt of the complaint, the department shall
13direct that the complaint be resolved as follows:

14(1)  All complaints shall be in the form of a sworn
15statement setting forth all allegations and requests for
16relief and shall be filed with the department, together with
17a fee as prescribed by the department.

18(2)  Within ten days of filing the complaint with the
19department, the aggrieved small business shall serve a copy
20of the complaint on the institution of purely public charity
21against which the complaint is filed. The institution of
22purely public charity must respond to the complaint within 30
23days of its receipt by the institution of purely public
24charity.

25(3)  Within 30 days following the period of time allotted
26to the institution of purely public charity to respond to the
27complaint, the department shall provide an unbiased and
28qualified arbitrator who possesses sufficient knowledge
29regarding the institutions to adjudicate the matter. If the
30institution of purely public charity does not participate in

1the arbitration, the arbitrator may issue an order to compel
2the participation. An order shall be enforceable by the court
3of common pleas in the judicial district where the
4arbitration takes place.

5(4)  The arbitration shall take place in the judicial
6district in which the aggrieved small business is located.
7The department shall provide the arbitrator all relevant
8material regarding the complaint, including the original
9complaint, the institution of purely public charity's
10response to the complaint and copies of any other relevant
11information which the department may possess. The arbitration
12shall be completed within one year from the date on which the
13arbitrator was assigned.

14(5)  Within 30 days of the arbitrator's assignment, the
15arbitrator shall determine if the complaint sets forth prima
16facie evidence that a violation of this section has occurred.
17If the arbitrator determines that the complaint does not
18contain prima facie evidence, the arbitrator shall issue a
19written report detailing the findings and shall terminate the
20arbitration. A small business may appeal a determination as
21provided in paragraph (9).

22(6)  The arbitrator shall determine if the activity of
23the institution of purely public charity is in violation of
24this section. In making this determination, the arbitrator
25shall review all relevant law, including previous
26arbitrators' decisions, regulations and the charter or
27governing legal documents of the institution of purely public
28charity.

29(7)  The decision of the arbitrator shall be set forth in
30a written decision issued to each party specifying findings

1of fact and conclusions of law. If the arbitrator finds a
2violation of this section, the arbitrator may include an
3order or injunction as part of the decision, provided that no
4damages may be assessed against an institution of purely
5public charity.

6(8)  Upon agreement of the parties, the decision of the
7arbitrator shall be final and binding as to all matters of
8fact and law and shall be entered by the arbitrator as a
9final judgment in the court of common pleas of the judicial
10district in which the arbitration took place. A copy of the
11arbitrator's final decision shall also be filed with the
12department.

13(9)  Either party may initiate a de novo appeal from the
14arbitrator's decision in the court of common pleas of the
15judicial district in which the arbitration took place within
1630 days of the arbitrator's decision.

17(10)  The department may provide for the system of
18arbitration by maintaining a list of qualified arbitrators or
19by contracting for qualified arbitration services.

20(11)  The department may adopt regulations necessary to
21implement this section.

22(12)  The cost of an arbitration proceeding, including
23the arbitrator's fee, shall be borne by the complainant,
24unless the arbitrator directs otherwise. Each party shall be
25responsible for its attorney fees and other costs incurred.

26(13)  Except as set forth in this section or in 
27regulations promulgated by the department under this section, 
28the arbitration shall be governed by 42 Pa.C.S. Ch. 73 Subch. 
29A (relating to statutory arbitration).

30(14)  The remedies set forth in this subsection shall be

1the exclusive remedies available to an aggrieved small
2business.

3§ 2309.  Accountability and disclosure.

4(a)  Reporting.--An institution of purely public charity that
5does not register with the Department of State under Ch. 13
6(relating to solicitation of funds for charitable purposes),
7including institutions exempt under section 1306(a) (relating to
8exemptions from registration), shall file an annual report with
9the bureau. The report shall be filed within 135 days after the
10close of the institution's fiscal year unless an extension is
11granted by the department. The report shall be in a format
12approved by the department and shall include:

13(1)  A copy of the annual return filed or required to be
14filed with the Internal Revenue Service.

15(2)  The date the institution of purely public charity
16was organized under applicable law.

17(3)  Any revocation of tax-exempt status by the Internal
18Revenue Service.

19(4)  The following information on each affiliate of the
20institution of purely public charity:

21(i)  The name and type of organization.

22(ii)  Whether the affiliate is organized on a for-
23profit or nonprofit basis.

24(iii)  The relationship of each affiliate to the
25institution of purely public charity making the report.

26(5)  The relationship of the institution of purely public
27charity with any other nonprofit corporation or
28unincorporated association if the relationship involves
29formal governance or the sharing of revenue.

30(b)  Regulations.--The department shall promulgate 

1regulations to require institutions of purely public charity 
2which register under section 5 of the act of December 19, 1990 
3(P.L.1200, No.202), known as the Solicitation of Funds for 
4Charitable Purposes Act, to include the information set forth in 
5subsection (a).

6(c)  Amendments to annual returns.--An institution of purely
7public charity which files an amended annual return with the
8Internal Revenue Service shall file a copy of the amended annual
9return with the bureau within ten days of its filing with the
10Internal Revenue Service.

11(d)  Exemption from filing.--Each of the following
12institutions of purely public charity shall be exempt from the
13reporting requirements of this section:

14(1)  A bona fide duly constituted religious institution 
15and the separate groups or corporations which form an 
16integral part of a religious institution and are exempt from 
17filing an annual return pursuant to the Internal Revenue Code 
18of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

19(2)  An institution of purely public charity which
20receives contributions of less than $25,000 per year provided
21that the institution's program service revenue does not equal
22or exceed $5,000,000.

23(e)  Filing fee.--An institution of purely public charity
24which is required to file a report under subsection (a) shall
25pay an annual filing fee of $15. All fees collected under this
26chapter and under the Solicitation of Funds for Charitable
27Purposes Act shall be deposited in the State Treasury. The
28amount of the filing fee under this subsection may be adjusted
29by the department by regulation. All fines, penalties, attorney
30fees and costs of investigation collected under this chapter and

1under the Solicitation of Funds for Charitable Purposes Act
2shall be paid as follows:

3(1)  Amounts collected by the bureau shall be paid to the
4State Treasury.

5(2)  Amounts collected by the action or litigation of
6another government agency shall be paid directly to that
7agency.

8(f)  Paperwork reduction.--The department shall allow an
9institution of purely public charity to certify that the
10information required in subsection (a)(2), (3), (4) and (5) has
11not changed since the prior report in lieu of providing the same
12information in the report required by subsection (a). The
13department may obtain from the Internal Revenue Service copies
14of annual returns of institutions of purely public charity which
15file annual returns with the Internal Revenue Service on
16computer disk or other electronic or paper media.

17(g)  Retention of records.--The department shall retain the
18reporting information required by this section for three years
19from the date the reports are required to be filed.

20(h)  Utilization of reports.--The department shall make 
21reports submitted under this section available for public 
22inspection to the extent that the information is available for 
23public inspection under section 6104 of the Internal Revenue 
24Code of 1986 (26 U.S.C. § 6104). The department shall provide 
25any government agency a copy of the report filed under this 
26section upon request. Nothing in this subsection shall prevent a 
27government agency from requiring any institution seeking 
28exemption as an institution of purely public charity to provide 
29the information described in subsection (a) to that agency as 
30part of a determination of the tax-exempt status of the 

1institution.

2(i)  Administrative penalty.--The department may impose an
3administrative penalty not to exceed $500 for any of the
4following:

5(1)  Knowingly failing to file the report required by
6this section.

7(2)  Knowingly making a false statement which is material
8in a report required by this section.

9§ 2310.  Exemption for Federal Government instrumentality.

10All real property owned by any corporation established by an
11act of the Congress of the United States that is required to
12submit annual reports of its activities to Congress containing
13itemized accounts of all receipts and expenditures after being
14fully audited by the Department of Defense, for purposes of the
15Constitution of Pennsylvania and the laws of this Commonwealth
16relating to the assessment and taxation of real estate, is
17deemed to be property of a Federal Government instrumentality
18and thus exempt from all State and local taxation.

19§ 2311.  Prohibited act.

20No institution may claim an exemption from sales and use tax
21as an institution of purely public charity unless the
22institution has received an order from the Department of Revenue
23approving and authorizing the exemption.

24§ 2312.  Compliance.

25Institutions of purely public charity shall comply with the 
26provisions of this chapter and with the provisions of Article II 
27of the act of March 4, 1971 (P.L.6, No.2), known as the Tax 
28Reform Code of 1971.

29§ 2313.  Civil penalty.

30In addition to any penalties authorized by the act of March 

14, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, for 
2violations of that act, the Department of Revenue may impose an 
3administrative penalty not to exceed $500 for any willful and 
4knowing violation of this chapter. This section shall not apply 
5to any violation of section 2308 (relating to unfair competition 
6with small businesses).

7§ 2314.  Repeals.

8(a)  Absolute.--(Reserved).

9(b)  General.--All other acts and parts of acts are repealed 
10insofar as they are inconsistent with this chapter except for 
11section 204(a)(3) of the act of May 22, 1933 (P.L.853, No.155), 
12known as The General County Assessment Law, as it applies to 
13charitable organizations providing residential housing services.

14§ 2315.  Applicability.

15(a)  General.--This chapter shall not apply to nor affect 40 
16Pa.C.S. § 6103 (relating to exemptions applicable to certified 
17hospital plan corporations) or 6307 (relating to exemptions 
18applicable to certificated professional health service 
19corporations) or the entities subject to those sections.

20(b)  Existing sales and use tax exemptions.--An exemption 
21from tax under section 204(10) of the act of March 4, 1971 
22(P.L.6, No.2), known as the Tax Reform Code of 1971, existing on 
23November 26, 1997, shall remain in effect until the expiration 
24of that exemption.

25(c)  Presumption.--No institution of purely public charity
26may assert a presumption under section 2306 (relating to
27presumption process) until that institution's exemption under
28section 204(10) of the Tax Reform Code of 1971 is granted or
29renewed after March 25, 1998.

30Section 2.  Repeals are as follows:

1(1)  The General Assembly declares that the repeal under
2paragraph (2) is necessary to effectuate the addition of 10
3Pa.C.S. Ch 13.

4(2)  The act of December 19, 1990 (P.L.1200, No.202),
5known as the Solicitation of Funds for Charitable Purposes
6Act, is repealed.

7(3)  The General Assembly declares that the repeal under
8paragraph (4) is necessary to effectuate the addition of 10
9Pa.C.S. Ch. 23.

10(4)  The act of November 26, 1997 (P.L.508, No.55), known
11as the Institutions of Purely Public Charity Act, is
12repealed.

13Section 3.  The addition of 10 Pa.C.S. Ch. 13 is a
14continuation of the act of December 19, 1990 (P.L.1200, No.202),
15known as the Solicitation of Funds for Charitable Purposes Act.
16The following apply:

17(1)  Except as otherwise provided in 10 Pa.C.S. Ch. 13,
18all activities initiated under the Solicitation of Funds for
19Charitable Purposes Act shall continue and remain in full
20force and effect and may be completed under 10 Pa.C.S. Ch.
2113. Orders, regulations, rules and decisions which were made
22under the the Solicitation of Funds for Charitable Purposes
23Act and which are in effect on the effective date of section
242(2) of this act shall remain in full force and effect until
25revoked, vacated or modified under 10 Pa.C.S. Ch. 13.
26Contracts, obligations and collective bargaining agreements
27entered into under the Solicitation of Funds for Charitable
28Purposes Act are not affected nor impaired by the repeal of
29the Solicitation of Funds for Charitable Purposes Act.

30(2)  Except as set forth in paragraph (3), any difference

1in language between 10 Pa.C.S. Ch. 13 and the Solicitation of
2Funds for Charitable Purposes Act is intended only to conform
3to the style of the Pennsylvania Consolidated Statutes and is
4not intended to change or affect the legislative intent,
5judicial construction or administration and implementation of
6the Solicitation of Funds for Charitable Purposes Act.

7(3)  (Reserved).

8Section 4.  The addition of 10 Pa.C.S. Ch. 23 is a
9continuation of the act of November 26, 1997 (P.L.508, No.55),
10known as the Institutions of Purely Public Charity Act. The
11following apply:

12(1)  Except as otherwise provided in 10 Pa.C.S. Ch. 23,
13all activities initiated under the Institutions of Purely
14Public Charity Act shall continue and remain in full force
15and effect and may be completed under 10 Pa.C.S. Ch. 23.
16Orders, regulations, rules and decisions which were made
17under the Institutions of Purely Public Charity Act and which
18are in effect on the effective date of section 2(4) of this
19act shall remain in full force and effect until revoked,
20vacated or modified under 10 Pa.C.S. Ch. 23. Contracts,
21obligations and collective bargaining agreements entered into
22under the Institutions of Purely Public Charity Act are not
23affected nor impaired by the repeal of the Institutions of
24Purely Public Charity Act.

25(2)  Except as set forth in paragraph (3), any difference
26in language between 10 Pa.C.S. Ch. 23 and the Institutions of
27Purely Public Charity Act is intended only to conform to the
28style of the Pennsylvania Consolidated Statutes and is not
29intended to change or affect the legislative intent, judicial
30construction or administration and implementation of the

1Institutions of Purely Public Charity Act.

2(3)  (Reserved).

3Section 5.  This act shall take effect in 60 days.