PRINTER'S NO. 1718
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1360
Session of
2017
INTRODUCED BY M. QUINN, ELLIS, D. COSTA, DeLUCA, DOWLING,
EVERETT, PHILLIPS-HILL, McNEILL, MILLARD, NEILSON, C. QUINN,
READSHAW, ROEBUCK AND WATSON, MAY 11, 2017
REFERRED TO COMMITTEE ON COMMERCE, MAY 11, 2017
AN ACT
Amending the act of December 19, 1990 (P.L.1200, No.202),
entitled "An act providing for the registration and
regulation of solicitations by charitable organizations,
professional fundraisers and other solicitors; imposing
additional powers on the Department of State and the Office
of Attorney General; prescribing civil and criminal
penalties; and making a repeal," further providing for
definitions, for powers and duties of secretary and for
registration of charitable organizations, financial reports,
fees and failure to file; providing for supplemental
financial disclosure and for financial statements for
specific disaster relief solicitations; further providing for
exemptions from registration, for short form registration,
for registration of professional fundraising counsel and
contracts and for registration of professional solicitors,
contract and disclosure requirements, bonds, records and
books; providing for individual registration of professional
solicitor officers, employees and agents; further providing
for limitation on activities of charitable organizations and
disclosure requirements, for investigation, subpoenas,
injunctions and court orders, for administrative enforcement
and penalties and for criminal penalties; and establishing
the Charitable Organization Regulation Account.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "net proceeds" in section 3 of
the act of December 19, 1990 (P.L.1200, No.202), known as the
Solicitation of Funds for Charitable Purposes Act, is amended
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and the section is amended by adding definitions to read:
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Crisis." An event which garners widespread national or
global media coverage due to an actual or perceived threat or
harm to an individual, group or community.
* * *
"Disaster." A natural, technological or civil event,
including, but not limited to, an explosion, chemical spill,
earthquake, tsunami, landslide, volcanic activity, avalanche,
wildfire, tornado, hurricane, drought or flood, which affects
one or more countries and causes damage of sufficient severity
and magnitude to result in:
(1) an official declaration of a state of emergency; or
(2) an official request for international assistance.
* * *
"Gross national contributions." The total gross amount of
contributions received by a charitable organization from all
sources inside and outside Pennsylvania without any deduction or
reduction of costs incurred in the solicitation.
* * *
"Net proceeds." The total proceeds received from the
solicitation of gross national contributions reduced by the
direct cost of merchandise or other goods sold or fundraising
events of any kind.
* * *
"Program service costs." The costs of services or activities
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performed by the charitable organization which fulfill its
charitable purpose, including, but not limited to, donations,
grants, scholarships or similar amounts given out in fulfillment
of the organization's stated purpose. The term includes
administrative costs which are reasonably allocated to the
services or activities. The term does not include fundraising
costs.
* * *
Section 2. Section 4 of the act is amended by adding a
paragraph to read:
Section 4. Powers and duties of secretary.
The secretary shall have the following powers and duties to:
* * *
(2.1) Provide for the registration of professional
solicitors and certain employees thereof.
* * *
Section 3. Section 5(f), (p) and (q) of the act are amended
and the section is amended by adding subsections to read:
Section 5. Registration of charitable organizations; financial
reports; fees; failure to file.
* * *
(f) Audit of certain financial reports.--The financial
report of every charitable organization which receives annual
gross national contributions of $300,000 or more shall be
audited by an independent certified public accountant or public
accountant. Every charitable organization which receives annual
gross national contributions of at least $100,000, but less than
$300,000, shall be required to have a review or audit of their
financial statements performed by an independent certified
public accountant or public accountant. Every charitable
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organization which receives gross national annual contributions
of at least $50,000, but less than $100,000, shall be required
to have a compilation, review or audit of their financial
statements performed by an independent certified public
accountant or public accountant. A compilation, audit or review
is optional for any charitable organization which receives gross
national annual contributions of less than $50,000. Audits shall
be performed in accordance with generally accepted auditing
standards, including the Statements on Auditing Standards of the
American Institute of Certified Public Accountants, whereas
reviews shall be performed in accordance with the Statements on
Standards for Accounting and Review Services of the American
Institute of Certified Public Accountants.
* * *
(p) Annual registration fees.--A charitable organization
which submits a short form registration statement pursuant to
section 7 or receives gross national contributions of $25,000 or
less during the immediately preceding fiscal year shall pay an
annual registration fee of [$15] $30. A charitable organization
which receives gross national contributions in excess of $25,000
but less than $100,000 during the immediately preceding fiscal
year shall pay an annual registration fee of [$100] $200. A
charitable organization which receives gross national
contributions in excess of $100,000 but not exceeding $500,000
during the immediately preceding fiscal year shall pay an annual
registration fee of [$150] $300. A charitable organization which
receives gross national contributions in excess of $500,000
during the immediately preceding fiscal year shall pay an annual
registration fee of [$250] $500. A parent organization filing on
behalf of one or more affiliates and a federated fundraising
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organization filing on behalf of its member agencies shall pay a
single annual registration fee for itself and such other
affiliates or member agencies included in the registration
statement.
(q) Late filing fees.--In addition to the registration fee,
an organization failing to file a registration application by
the due date shall pay an additional fee of [$25] $50 for each
month or part of the month after the date on which the
registration statement and financial report were due to be filed
or after the period of extension granted for such filing.
* * *
(u) Prohibited conduct.--An officer, director, trustee,
employee, volunteer or independent contractor of a charitable
organization may not solicit contributions on behalf of the
charitable organization or have control or custody of
contributions if the officer, director, trustee, employee,
volunteer or independent contractor has been convicted by a
Federal or state court of any felony or of any misdemeanor
involving dishonesty or arising from the conduct of a
solicitation for a charitable organization or purpose.
(v) Denial or revocation of registration.--The department
may deny or revoke the registration of a charitable organization
if the charitable organization, or an officer, director or
trustee thereof, has had the right to solicit contributions
revoked in a state or has been ordered by a court or
governmental agency to cease soliciting contributions within a
state.
(w) Duty to notify department.--A charitable organization
registered under this section which ends solicitation activities
or participation in charitable sales promotions in this State
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shall immediately notify the department in writing within 30
days of the date such activities ceased.
(x) Accounting method.--Unless otherwise required by this
act, the organization shall use the same accounting method for
reporting information to the department that it uses to prepare
its Internal Revenue Service Form 990. If no Form 990 is filed
with the Internal Revenue Service, the organization shall report
revenue and expenses using the accounting method that it
regularly uses to keep its books and records. The method of
accounting must clearly reflect income and expenses.
Section 4. The act is amended by adding sections to read:
Section 5.1. Supplemental financial disclosure.
(a) Duty to file.--If, for the immediately preceding fiscal
year, a charitable organization had more than $1,000,000 in
gross national contributions and spent less than 25% of the
organization's total expenses on program service costs, in
addition to a registration statement or financial report
required under section 5, the charitable organization shall file
the following supplemental financial information on a form
prescribed by the department:
(1) The dollar amount and the percentage of gross
national contributions received which were allocated to
funding each of the following functions:
(i) Total salaries, wages, other compensation and
employee benefits paid to all fiduciaries, including, but
not limited to, any officer, director, trustee or
employee, including compensation reported on Forms W-2
and 1099.
(ii) Fundraising costs, including the names of
professional solicitors, amounts paid to professional
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solicitors and contributions received from professional
solicitors' campaigns.
(iii) Travel expenses, including, but not limited
to:
(A) Transportation costs, including fares,
mileage allowances and automobile expenses.
(B) Meals.
(C) Lodging.
(D) Per diem payments.
(iv) Administrative costs, including, but not
limited to, expenses that relate to the charitable
organization's overall operations and management.
(v) Program service costs.
(2) The names of and specific sums earned by or paid to
all employees or consultants who earned or were paid more
than $50,000 during the immediately preceding fiscal year.
(3) The names of and specific sums paid to all
independent contractors who were paid more than $50,000
during the immediately preceding fiscal year and a brief
description of the services provided.
(4) A description, dollar amount and percentage of gross
national contributions allocated to each of the
organization's five largest programs as measured by total
expenses incurred. Description of the programs must be clear,
concise and complete.
(5) (i) The details of any economic or business
transaction between the charitable organization and:
(A) an officer, trustee or director of the
charitable organization;
(B) the immediate family of an officer, trustee
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or director of the charitable organization;
(C) an entity controlled by an officer, trustee
or director of the charitable organization;
(D) an entity controlled by the immediate family
of an officer, trustee or director of the charitable
organization;
(E) an entity that employed or engaged for
consultation an officer, trustee or director of the
charitable organization; and
(F) an entity that employed or engaged for
consultation the immediate family of an officer,
trustee or director of the charitable organization.
(ii) As used in this paragraph, the term "immediate
family" means a parent, spouse, child, sibling,
grandparent, grandchild, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, mother-in-law or father-in-
law.
(6) Any additional clarifying information.
(b) Time period for filing.--The supplemental financial
information required under subsection (a) shall be filed with
the department by the charitable organization within 60 days
after receiving a request for the information from the
department.
(c) Nature of information.--All information supplied under
subsection (a) must be complete and accurate.
Section 5.2. Financial statements for specific disaster relief
solicitations.
(a) Duty to file.--A charitable organization which solicits
contributions in this Commonwealth for a charitable purpose
related to a specific disaster or crisis and receives at least
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$50,000 in gross national contributions in response to the
solicitation shall file quarterly disaster relief financial
statements with the department on a form prescribed by the
department. The quarterly statements shall detail the
contributions secured as a result of the solicitation, the
manner in which the contributions were expended and a
description of the function served by the expenditure.
(b) Time period for filing.--The first quarterly statement
shall be filed on the last day of the third month following the
accrual of at least $50,000 in gross national contributions
after the commencement of solicitations for the specific
disaster or crisis. The charitable organization shall continue
to file quarterly statements with the department until the
quarter after all contributions raised in response to any
solicitation are expended.
(c) Public posting.--The department shall post notice on its
publicly accessible Internet website of each disaster or crisis
subject to the reporting requirements of this section within ten
days after the disaster or crisis.
(d) Exemption.--A charitable organization that has been
registered with the department for at least four consecutive
years immediately before soliciting contributions for a
charitable purpose related to a specific disaster or crisis
shall be exempt from the reporting requirements of this section.
Section 5. Sections 6(a)(8) and 7(a)(3) and (4) of the act
are amended to read:
Section 6. Exemptions from registration.
(a) General rule.--The following charitable organizations
shall be exempt from the registration requirements of this act:
* * *
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(8) Any charitable organization which receives
contributions of $25,000 or less annually, provided that such
organization does not compensate any person who conducts
solicitations. Charitable organizations which receive more
than $25,000 in gross national contributions shall file the
appropriate registration statement within 30 days after the
contributions are received.
* * *
Section 7. Short form registration.
(a) Organizations required to file.--The following
charitable organizations shall be required to file short form
annual registration statements with the department in lieu of
the registration statement required by section 5:
* * *
(3) Charitable organizations whose fundraising
activities are carried on by volunteers, members, officers or
permanent employees and which do not receive gross national
contributions in excess of $25,000 during a fiscal year, if
no part of their assets or income inures to the benefit of or
is paid to any officer or member, professional fundraising
counsel, professional solicitor or commercial coventurer.
Charitable organizations which do not intend to solicit and
receive in excess of $25,000, but do receive contributions in
excess of that amount shall file the financial report
required in section 5 within 30 days after contributions are
received in excess of that amount.
(4) Organizations described in section 6(a)(3) which do
not receive gross national contributions in excess of
$100,000 during a fiscal year if no part of their assets or
income inures to the benefit of or is paid to a professional
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solicitor.
* * *
Section 6. Section 8(b) of the act is amended and the
section is amended by adding subsections to read:
Section 8. Registration of professional fundraising counsel and
contracts.
* * *
(b) Registration fee.--The application for registration
shall be accompanied by a fee of [$250] $500. A professional
fundraising counsel which is a partnership or corporation may
register for and pay a single fee on behalf of all of its
partners, members, officers, directors, agents and employees.
Each registration shall be valid for one year and may be renewed
for additional one-year periods upon application to the
department and payment of the registration fee.
* * *
(d.1) Prohibited conduct.--No person may act as a
professional fundraising counsel if the person, including any
officer, director, trustee, employee, volunteer or independent
contractor, has been convicted by a Federal or state court of
any felony or of any misdemeanor involving dishonesty or arising
from the conduct of a solicitation for a charitable organization
or purpose.
(d.2) Denial or revocation of registration.--The department
may deny or revoke the registration of a professional
fundraising counsel if the professional fundraising counsel, or
any of its officers, directors or trustees, has had the right to
solicit contributions revoked in a state or has been ordered by
a court or governmental agency to cease soliciting contributions
within a state.
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* * *
Section 7. Section 9(a)(5), (b), (e), (g), (j), (k) and (l)
of the act are amended to read:
Section 9. Registration of professional solicitors; contract
and disclosure requirements; bonds; records; books.
(a) Registration and approval required.--No person shall act
as a professional solicitor before obtaining department approval
of a registration statement pursuant to subsection (d) or after
the expiration, suspension or revocation of such registration. A
registration application shall be signed and made by the
principal officer of the professional solicitor subject to 18
Pa.C.S. § 4904 (relating to unsworn falsification to
authorities) and shall contain all of the following information:
* * *
(5) The name of all persons in charge of any
solicitation activity and the names and license numbers of
all individuals required to register under section 9.1.
* * *
(b) Registration fee.--The application for registration
shall be accompanied by a fee of [$250] $500. A professional
solicitor which is a partnership or corporation may register for
and pay a single fee on behalf of all of its partners, members,
officers, directors, agents and employees. Each registration
shall be valid for one year and may be renewed for additional
one-year periods upon application to the department and payment
of the registration fee.
* * *
(e) Contract filing.--No less than ten working days prior to
the commencement of each solicitation campaign, event or
services, a professional solicitor shall file with the
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department a copy of the contract described in subsection (f)
and a written solicitation notice. No solicitation or services
pursuant to the contract shall begin before the department has
approved the contract pursuant to subsection (g). The
solicitation notice shall be accompanied by a fee of [$25] $50
and shall be signed and sworn to by the authorized contracting
officer for the professional solicitor. If more than one event
or campaign is conducted under a contract, then a solicitation
notice addendum must be filed no less than ten working days
prior to the commencement of each additional event or campaign.
No additional fee is required to file the addendum. The
solicitation notice and addendum shall contain all of the
following information:
(1) A description of the solicitation event or campaign.
(2) Each location and telephone number from which the
solicitation is to be conducted.
(3) The legal name [and], resident address and
registration number of each person responsible for directing
and supervising the conduct of the campaign and each person
who is to solicit during such campaign.
(4) A statement as to whether the professional solicitor
will at any time have custody or control of contributions.
(5) The account number and location of each bank account
where receipts from the campaign are to be deposited.
(6) A full and fair description of the charitable
program for which the solicitation campaign is being carried
out.
(7) The date the solicitation campaign or event will
begin or be held within this Commonwealth and the termination
date for each campaign or event.
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(8) Any other information required by the regulations of
the department.
* * *
(g) Department review of contract.--
(1) The department shall examine each contract and
solicitation notice filed by a professional solicitor and
shall determine whether the contract and notice contain the
required information.
(2) If the department determines that the contract and
notice contain the required information, the department shall
notify the professional solicitor within ten working days of
its approval of the contract and notice. The department shall
also post a copy of the contract on its publicly accessible
Internet website.
(3) If the department determines that the requirements
are not satisfied, the department must notify the
professional solicitor within ten working days of its receipt
of the contract and notice; otherwise the contract and notice
are deemed to be approved.
(4) Within seven days after receipt of a notification
that the requirements are not satisfied, the professional
solicitor may request a hearing. The hearing must be held
within seven days of receipt of the request, and a
determination must be rendered within three working days of
the hearing.
* * *
(j) Information on disclosure.--
(1) In the case of a solicitation campaign conducted
orally, whether by telephone or otherwise, any written
confirmation, receipt, and reminder sent to any person who
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has contributed or has pledged to contribute shall include a
clear and conspicuous disclosure of the information required
by subsection (h).
(2) If requested by a person being solicited, the
professional solicitor shall:
(i) (A) provide in writing, within 14 days after
receipt of the request, the fixed percentage of the
gross revenue or the reasonable estimate of the
percentage of the gross revenue that the charitable
organization will receive as a benefit from the
solicitation campaign; or
(B) immediately notify the person being
solicited that the information is available on the
department's publicly accessible Internet website or
by calling the department's toll-free telephone
number; and
(ii) provide in writing, within 14 days after
receipt of the request, the percentage of the
contribution which may be deducted as a charitable
contribution under Federal income tax laws.
(k) Notice.--In addition to the information required by
subsection (j), any written confirmation, receipt and reminder
of a contribution made pursuant to an oral solicitation and any
written solicitation shall conspicuously state verbatim:
The official registration and financial information of
(insert the legal name of the charity as registered with
the department) may be obtained from the Pennsylvania
Department of State by visiting the department's publicly
accessible Internet website or by calling toll free,
within Pennsylvania, 1 (800) 000-0000. Registration does
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not imply endorsement.
(l) Financial reports.--Within 90 days after a solicitation
campaign or event has been completed and on the anniversary of
the commencement of a solicitation campaign lasting more than
one year, a professional solicitor shall file with the
department a financial report for the campaign, including gross
revenue and an itemization of all expenses incurred. This report
shall be signed and sworn to by the authorized contracting agent
for the professional solicitor and two authorized officials of
the charitable organization. The report shall be posted on the
department's publicly accessible Internet website.
* * *
Section 8. The act is amended by adding a section to read:
Section 9.1. Individual registration of professional solicitor
officers, employees and agents.
(a) General rule.--No individual shall do any of the
following without obtaining department approval of a
registration statement under this section or after the
expiration, suspension or revocation of such registration:
(1) Own a professional solicitor.
(2) Serve as director or officer of a professional
solicitor.
(3) Contact prospective contributions on behalf of the
professional solicitor.
(4) Collect, process or manage contributions on behalf
of the professional solicitor.
(b) Application.--An individual required to obtain an
individual solicitor registration shall submit a written
application in a form prescribed by the department which
application shall be subject to the penalties under 18 Pa.C.S. §
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4904 (relating to unsworn falsification to authorities). The
application form shall require disclosure of criminal
convictions as specified in subsection (d), and any consent
orders, fines or disciplinary action imposed by a registration
or licensing authority in a state.
(c) Fees.--The application shall be accompanied by a fee,
the amount of which shall be established by regulation by the
department. An individual solicitor registration shall be valid
for one year and may be renewed for additional one-year periods
upon application to the department and payment of the
registration fee.
(d) Denial of registration.--The department may deny or
revoke an individual solicitor registration if the individual
has been convicted by a Federal or state court of a felony or
misdemeanor involving dishonesty or arising from the conduct of
a solicitation for a charitable organization or purpose.
Section 9. Sections 13(c), 16(f), 17, 18 and 19(a)(6) of the
act are amended to read:
Section 13. Limitation on activities of charitable
organizations; disclosure requirements.
* * *
(c) Notice on printed solicitation.--On every printed
solicitation or written confirmation, receipt and reminder of a
contribution, the following statement must be conspicuously
printed verbatim:
The official registration and financial information of
(insert the legal name of the charity as registered with
the department) may be obtained from the Pennsylvania
Department of State by visiting the department's publicly
accessible Internet website or by calling toll free,
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within Pennsylvania, 1 (800) 000-0000. Registration does
not imply endorsement.
* * *
Section 16. Investigation; subpoenas; injunctions; court
orders.
* * *
(f) Compliance.--Any person upon whom a notice is served
pursuant to this section shall comply with the terms thereof
unless otherwise provided by an order of court. Any person who
fails to appear or, with intent to avoid, evade or prevent
compliance, in whole or in part, with any civil investigation
under this act, removes from any place, conceals, withholds or
destroys, mutilates, alters or by any other means falsifies any
documentary material in the possession, custody or control of
any person subject to any notice, or knowingly conceals any
relevant information, shall be assessed a civil penalty of not
more than [$5,000] $10,000. The Attorney General or the district
attorney may petition for an order of court for enforcement of
this section. Additionally, the secretary may take appropriate
action to petition for an order of court for the enforcement of
this section in accordance with the act of October 15, 1980
(P.L.950, No.164), known as the Commonwealth Attorneys Act. Any
disobedience of any final order entered under this section by
any court shall be punished as contempt thereof.
* * *
Section 17. Administrative enforcement and penalties.
(a) General rule.--The secretary may refuse to register or
may revoke or suspend the registration of any charitable
organization, professional fundraising counsel or professional
solicitor whenever he finds that a charitable organization,
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professional fundraising counsel or professional solicitor, or
an agent, servant or employee thereof:
(1) Has violated or is operating in violation of any of
the provisions of this act, the regulations of the
department, or an order issued by the secretary.
(2) Has refused or failed or any of its principal
officers has refused or failed, after notice, to produce any
records of such organization or to disclose any information
required to be disclosed under this act or the regulations of
the department.
(3) Has made a material false statement in an
application, statement or report required to be filed under
this act.
(b) Additional actions.--When the secretary finds that the
registration of any person may be refused, suspended or revoked
under the terms of subsection (a), the secretary may:
(1) Revoke a grant of exemption to any of the provisions
of this act.
(2) Issue an order directing that the person cease and
desist specified fundraising activities.
(3) Impose an administrative fine not to exceed [$1,000]
$2,000 for each act or omission which constitutes a violation
of this act and an additional penalty, not to exceed [$100]
$200 for each day during which such violation continues.
Registration will be automatically suspended upon final
affirmation of an administrative fine until the fine is paid
or until the normal expiration date of the registration. No
registration shall be renewed until the fine is paid.
(4) Place the registrant on probation for such period of
time and subject to such conditions as he may decide.
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(c) Administrative procedures.--All actions of the secretary
shall be taken subject to the right of notice, hearing and
adjudication and the right of appeal therefrom in accordance
with Title 2 of the Pennsylvania Consolidated Statutes (relating
to administrative law and procedure).
Section 18. Criminal penalties.
(a) Deceit or fraud violation.--Any person who willfully and
knowingly violates any provisions of this act with intent to
deceive or defraud any charity or individual, commits a
misdemeanor of the first degree and shall, upon conviction, be
sentenced to pay a fine not exceeding [$10,000] $50,000 or
imprisonment for not more than five years, or both.
(b) Other violations.--Any other violation of this act shall
constitute a misdemeanor of the third degree punishable, upon
conviction, by a fine not exceeding [$2,500] $5,000 or
imprisonment for not more than one year, or both.
(c) Location of offense.--Any offense committed under this
act involving a solicitation may be deemed to have been
committed at either the place at which the solicitation was
initiated or at the place where the solicitation was received.
Section 19. Civil penalties.
(a) General rule.--Whenever the Attorney General or any
district attorney shall have reason to believe, or shall be
advised by the secretary, that the person is operating in
violation of the provisions of this act, the Attorney General or
district attorney may bring an action in the name of the
Commonwealth against such person who has violated this act, to
enjoin such person from continuing such violation and for such
other relief as the court deems appropriate. In any proceeding
under this subsection, the court may make appropriate orders,
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including:
* * *
(6) the assessment of a civil penalty not exceeding
[$1,000] $2,000 per violation of the act, which penalty shall
be in addition to any other relief which may be granted; and
* * *
Section 10. The act is amended by adding a section to read:
Section 22.1. Charitable Organization Regulation Account.
(a) Establishment.--The Charitable Organization Regulation
Account is established as a restricted account within the
General Fund.
(b) Funding sources.--The Charitable Organization Regulation
Account shall be funded from the following sources:
(1) Ten percent of the fees collected under sections 5,
8 and 9.
(2) All fees collected under section 9.1.
(3) Any funds appropriated or transferred to the
Charitable Organization Regulation Account.
(c) Appropriation.--The money in the Charitable Organization
Regulation Account is appropriated to the department on a
continuing basis for the purpose of enforcement, registration
requirements and enhanced investigations of charitable
organizations, professional fundraising counsels, professional
solicitors and individual solicitors as provided in this act.
Section 11. This act shall apply as follows:
(1) No person shall be required to register as an
individual solicitor under section 9.1 of the act until six
months after the Department of State has promulgated final
regulations relating to fees and registration of individual
solicitors.
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(2) Within 18 months of the effective date of this
section, the department shall promulgate final regulations to
implement the addition of section 9.1 of the act.
Section 12. This act shall take effect in 60 days.
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