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SENATE AMENDED
PRIOR PRINTER'S NO. 1570
PRINTER'S NO. 2575
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1222
Session of
2019
INTRODUCED BY LEWIS, MILLARD, BERNSTINE, MOUL AND CIRESI,
APRIL 26, 2019
SENATOR PHILLIPS-HILL, STATE GOVERNMENT, IN SENATE, AS AMENDED,
SEPTEMBER 24, 2019
AN ACT
Amending Title 10 (Charities) of the Pennsylvania Consolidated
Statutes, consolidating the Solicitation of Funds for
Charitable Purposes Act and the Institutions of Purely Public
Charity Act; and making related repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 10 of the Pennsylvania Consolidated
Statutes is amended by adding parts to read:
PART I
PRELIMINARY PROVISIONS
Chapter
1. General Provisions
CHAPTER 1
GENERAL PROVISIONS
Sec.
101. Scope of title.
§ 101. Scope of title.
This title relates to charities.
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PART II
GAMES
(Reserved)
PART III
OPERATION
Chapter
11. General Provisions (Reserved)
13. Solicitation of Funds for Charitable Purposes
CHAPTER 11
GENERAL PROVISIONS
(Reserved)
CHAPTER 13
SOLICITATION OF FUNDS FOR CHARITABLE PURPOSES
Sec.
1301. Scope of chapter.
1302. Legislative intent.
1303. Definitions.
1304. Powers and duties of secretary.
1305. Registration of charitable organizations; financial
reports; fees; failure to file.
1306. Exemptions from registration.
1307. Short form registration.
1308. Registration of professional fundraising counsel and
contracts.
1309. Registration of professional solicitors and contracts.
1310. Contracts voidable by charitable organizations.
1311. Information filed to become public records.
1312. Records to be kept by charitable organizations,
professional fundraising counsels and professional
solicitors.
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1313. Limitation on activities of charitable organizations and
disclosure requirements.
1314. Reciprocal agreements.
1315. Prohibited acts.
1316. Investigation.
1317. Administrative enforcement and penalties.
1318. Criminal penalties.
1319. Civil penalties.
1320. Additional regulations by counties, municipalities or
consolidated government.
1321. Charitable organizations deemed fiduciary.
1322. Prior registration unaffected.
1323. Regulations.
§ 1301. Scope of chapter.
This chapter relates to solicitation of funds for charitable
purposes.
§ 1302. Legislative intent.
It is the intention of the General Assembly that this chapter
shall not only require proper registration of charitable
organizations, professional fundraisers and professional
solicitors, but shall protect the citizens of this Commonwealth
by requiring full public disclosure of the identity of persons
who solicit contributions from the public, the purposes for
which the contributions are solicited and the manner in which
they are actually used, by promoting consumer education about
charitable concerns, by providing civil and criminal penalties
for deception and dishonest statements and conduct in the
solicitation and reporting of contributions for or in the name
of charitable purposes and by publicizing matters relating to
fraud, deception and misrepresentation perpetrated in the name
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of charity. This chapter shall not be construed to be exclusive
in its purview, and its application shall not operate as a bar
or otherwise prevent the contemporaneous or subsequent
application of other relevant acts.
§ 1303. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Administrative costs." Management and general costs of a
charitable organization, not identifiable with a single program
or fundraising activity, but indispensable to the conduct of the
programs and activities and to an organization's existence,
including expenses for the overall direction of the
organization, business management, general recordkeeping,
budgeting, financial reporting and related activities, salaries,
rent, supplies, equipment and general overhead expenses.
"Affiliate." A chapter, branch, auxiliary or other
subordinate unit of any charitable organization, notwithstanding
its designation, whose policies, fundraising activities and
expenditures are supervised or controlled by the parent
organization.
"Bureau." The Bureau of Corporations and Charitable
Organizations of the Department of State.
"Charitable organization." A person granted tax exempt
status under section 501(c)(3) of the Internal Revenue Code of
1986 or a person who is or holds himself or herself out to be
established for a charitable purpose or a person who in a manner
employs a charitable appeal as the basis of any solicitation or
an appeal which has a tendency to suggest that there is a
charitable purpose to any solicitation. An affiliate of a
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charitable organization which has its principal place of
business outside this Commonwealth shall be a charitable
organization for the purposes of this chapter. The term shall
not include:
(1) A bona fide duly constituted organization of law
enforcement personnel, firefighters or other persons who
protect the public safety whose stated purpose in the
solicitation does not include a benefit to a person outside
the actual active membership of the organization.
(2) A bona fide duly constituted religious institution
and separate group or corporation which forms an integral
part of a religious institution, if all of the following
apply:
(i) The religious institution, group or corporation
is tax exempt under the Internal Revenue Code of 1986.
(ii) No part of the institution's, group's or
corporation's net income inures to the direct benefit of
an individual.
(iii) The institution's, group's or corporation's
conduct is primarily supported by government grants or
contracts, funds solicited from their own memberships,
congregations or previous donors and fees charged for
services rendered.
"Charitable promotion." An advertising or sales campaign,
event or performance, conducted, produced, promoted,
underwritten, arranged or sponsored by a commercial coventurer ,
which represents that the purchase or use of goods or services
or attendance at events or performances offered or sponsored by
the commercial coventurer will benefit, in whole or in part, a
charitable organization or purpose.
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"Charitable purpose." A benevolent, educational,
philanthropic, humane, scientific, patriotic, social welfare or
advocacy, public health, environmental conservation, civic or
other eleemosynary objective, including an objective of a bona
fide duly constituted organization of law enforcement personnel,
firefighters or other persons who protect the public safety if a
stated purpose of the solicitation includes a benefit to a
person outside the actual active membership of the organization.
"Commercial coventurer." A person who for profit is
regularly and primarily engaged in trade or commerce other than
in connection with the raising of funds or any other thing of
value when offered at the usual retail price comparable to
similar goods or services in the market for a charitable
organization and who advertises that the purchase or use of
goods, services, entertainment or any other thing of value will
benefit a charitable organization.
"Contribution." The promise, grant or pledge of money,
credit, property, financial assistance or other thing of any
kind or value, excluding volunteer services, in response to a
solicitation, including the payment or promise to pay in
consideration of a performance, event or sale of a good or
service. The term shall not include the following:
(1) Payment by members of an organization for membership
fees, dues, fines or assessments or for services rendered to
individual members, if the fees, dues, fines or assessments
confer a bona fide right, privilege, professional standing,
honor or other direct benefit if membership is not conferred
solely as consideration for making a contribution in response
to a solicitation.
(2) Government grants or contracts.
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"Department." The Department of State of the Commonwealth.
"Federated fundraising organization." A federation of
independent charitable organizations which have voluntarily
joined together, including, but not limited to, a united way or
community chest, for purposes of raising and distributing money
for and among themselves and if membership does not confer upon
the federation operating authority and control of the individual
agencies.
"Firefighter." A person who is or represents or holds itself
out to represent, aid, train or otherwise benefit a paid or
volunteer firefighter, active or retired, or the firefighter's
family.
"Fundraising costs." Costs incurred in inducing others to
make contributions to a charitable organization for which the
contributors will receive no direct economic benefit, such as
salaries, rent, acquiring and maintaining mailing lists,
printing, mailing and direct and indirect costs of soliciting
and the cost of unsolicited merchandise sent to encourage
contributions. The term shall not include the direct cost of
merchandise or goods sold or the direct cost of fundraising
dinners, bazaars, shows, circuses, banquets, dinners, theater
parties or any other form of benefit performances.
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Law enforcement personnel." A person who is or represents
or holds itself out to represent, aid, train or otherwise
benefit a police officer, sheriff or deputy sheriff, constable
or deputy constable, county detective, fire police or other
person who is empowered to make arrests, serve warrants, issue
summons or enforce the laws of this Commonwealth to include
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retired law enforcement personnel and the families of law
enforcement personnel.
"Net proceeds." The total proceeds received from the
solicitation of contributions reduced by the direct cost of
merchandise or other goods sold or fundraising events of any
kind.
"Owner." A person who has a direct or indirect interest in a
professional fundraising counsel or professional solicitor.
"Parent organization." The part of a charitable organization
which coordinates, supervises or exercises control of policy,
fundraising and expenditure, or assists or receives funds from
or advises one or more affiliates.
"Person." An individual, organization, corporation,
association, partnership, trust, foundation or any other entity
however styled.
"Professional fundraising counsel." A person who is retained
by a charitable organization for a fixed fee or rate under a
written agreement to plan, manage, advise, consult or prepare
material for or with respect to the solicitation in this
Commonwealth of contributions for a charitable organization, but
who does not solicit contributions or employ, procure or engage
a compensated person to solicit contributions and who does not
have custody or control of contributions. The term shall not
include a bona fide salaried officer or regular, nontemporary
employee of a charitable organization if the individual is not
employed or engaged as professional fundraising counsel or as a
professional solicitor by another person.
"Professional solicitor." As follows:
(1) Any person who is retained for financial or other
consideration by a charitable organization to solicit in this
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Commonwealth contributions for charitable purposes directly
or in the form of payment for goods, services or admission to
fundraising events, whether the solicitation is performed
personally or through the person's agents, servants or
employees or through agents, servants or employees especially
employed by or for a charitable organization who are engaged
in the solicitation of contributions, the sale of goods or
services or the production of fundraising events under the
direction of the person, or a person who plans, conducts,
manages, carries on, advises, consults, whether directly or
indirectly, in connection with the solicitation of
contributions, sale of goods or services or the production of
fundraising events for or on behalf of any charitable
organization, but does not qualify as a professional
fundraising counsel within the meaning of this chapter.
(2) The term shall include a person who is otherwise a
professional fundraising counsel if the person's compensation
is related to the amount of contributions received.
(3) The term shall not include a bona fide salaried
officer or regular, nontemporary employee of a charitable
organization if the individual is not employed or engaged as
professional fundraising counsel or as a professional
solicitor by any other person.
"Secretary." The Secretary of State of the Commonwealth.
"Solicitation." A direct or indirect request for a
contribution on the representation that the contribution will be
used in whole or in part for a charitable purpose, including,
but not limited to, any of the following:
(1) An oral request that is made in person, by
telephone, radio or television or other advertising or
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communication media.
(2) A written or otherwise recorded or published request
that is mailed, sent, delivered, circulated, distributed,
posted in a public place or advertised or communicated by
press, telegraph, television or other media.
(3) A sale of, offer or attempt to sell an
advertisement, advertising space, sponsorship, book, card,
chance, coupon, device, food, magazine, merchandise,
newspaper, subscription, ticket or other service or tangible
good, thing or item of value.
(4) An announcement requesting the public to attend an
appeal, assemblage, athletic or competitive event, carnival,
circus, concert, contest, dance, entertainment, exhibition,
exposition, game, lecture, meal, party, show, social
gathering or other performance or event of any kind.
§ 1304. Powers and duties of secretary.
The secretary shall have the following powers and duties to:
(1) Provide for and regulate the registration of
charitable organizations, professional fundraising counselors
and professional solicitors.
(2) Decide matters relating to the issuance, renewal,
suspension or revocation of registrations.
(3) Promulgate, adopt and enforce the rules and
regulations necessary to carry out this chapter.
(4) Promulgate regulations altering fees and fines
established under this chapter sufficient to meet
expenditures of the bureau.
(5) Take appropriate action to initiate civil or
criminal proceedings necessary to enforce this chapter, in
accordance with the act of October 15, 1980 (P.L.950,
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No.164) , known as the Commonwealth Attorneys Act.
(6) Conduct hearings and make adjudications.
(7) Keep a record showing the names and addresses of
each registered charitable organization, professional
fundraising counsel and professional solicitor.
(8) Submit annually, on or before September 30, to the
Governor, the State Government Committee of the Senate and
the State Government Committee of the House of
Representatives, and to interested parties, a report on the
number of registered charities, the number of charities
ordered to cease and desist solicitation, the number of
charities contracting with professional solicitors and the
compensation of professional solicitors for each solicitation
campaign in relation to the funds raised and administrative
costs.
(9) Delegate to a division director of the office the
powers and duties under this chapter as the secretary may
deem appropriate.
(10) Exercise other authority accorded to the secretary
by this chapter.
§ 1305. Registration of charitable organizations; financial
reports; fees; failure to file.
(a) Registration and approval required.--A charitable
organization, unless exempted from registration requirements
under section 1306 (relating to exemptions from registration),
shall file a registration statement with the department. The
statement must be refiled annually within 135 days after AND
POSTMARKED BY THE FIFTEENTH DAY OF THE FIFTH MONTH FOLLOWING the
close of its fiscal year in which the charitable organization
was engaged in solicitation activities. The department shall
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review the statement under subsection (r). A charitable
organization may not solicit contributions or have contributions
solicited on the charitable organization's behalf before
approval of its registration statement by the department.
(b) Filing of statement.--It shall be the duty of the
president, chairperson or principal officer of each charitable
organization to file the registration statement, financial
report and fee required under this section. The registration
statement shall be made by two authorized officers subject to 18
Pa.C.S. § 4904 (relating to unsworn falsification to
authorities), including the chief fiscal officer of the
charitable organization, and shall contain the following
information:
(1) The name of the charitable organization and any
other name or names under which it intends to solicit
contributions.
(2) The principal address and telephone number of the
charitable organization and the addresses and telephone
numbers of offices in this Commonwealth. If the charitable
organization does not maintain an office, the name and
address of the individual having custody of the charitable
organization's financial records.
(3) The names and addresses of any affiliates which
share in the contributions or other revenue raised in this
Commonwealth.
(4) The names and addresses of the officers, directors
and trustees and the principal salaried executive staff
officers.
(5) A copy of the financial report required under
subsection (e).
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(6) A copy of any determination of the charitable
organization's tax-exempt status under the Internal Revenue
Code of 1986 and, for charitable organizations granted tax-
exempt status under section 501(c)(3) of the Internal Revenue
Code of 1986, a copy of the last filed Internal Revenue
Service Form 990 and Schedule A for every charitable
organization and parent organization.
(7) The date when the charitable organization's fiscal
year begins.
(8) Whether:
(i) The charitable organization is authorized by any
other governmental authority to solicit contributions.
(ii) The charitable organization or any of its
present officers, directors, executive personnel or
trustees are or have ever been enjoined in any
jurisdiction from soliciting contributions or have been
found to have engaged in unlawful practices in the
solicitation of contributions or administration of
charitable assets.
(iii) The charitable organization's registration or
license has been denied, suspended or revoked by any
governmental agency, together with the reasons for the
denial, suspension or revocation.
(iv) The charitable organization has voluntarily
entered into an assurance of voluntary discontinuance or
agreement similar to that set forth in section 1319(b)
(relating to civil penalties), together with a copy of
that agreement.
(9) A clear description of the specific programs for
which contributions will be used and a statement whether the
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programs are planned or in existence.
(10) The names and addresses of professional solicitors,
professional fundraising counsels and commercial coventurers
who are acting or have agreed to act on behalf of the
charitable organization.
(11) The names of the individuals or officers of the
organization who are in charge of any solicitation
activities, who will have final responsibility for the
custody of the contributions and who will be responsible for
the final distribution of the contributions.
(12) Whether any of the charitable organization's
officers, directors, trustees or employees are related by
blood, marriage or adoption to each other or to officers,
agents or employees of a professional fundraising counsel or
professional solicitor under contract to the organization or
to a supplier or vendor providing goods or services to the
charitable organization, and the names and business and
residence addresses of related parties. Where the number of
employees or vendors renders it impractical for the
registrant to contact them on an individual basis regarding
the existence of the relationships set forth under this
section, the registrant may file an affidavit stating which
relationships, if any, exist to the best of the affiant's
information and belief.
(13) Other information required by the regulations of
the department.
(c) Additional filings.--With the initial registration only,
each charitable organization required to be registered shall
also file with the department the following documents:
(1) A copy of the charitable organization's charter,
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articles of organization, agreement of association,
instrument of trust, constitution or other organizational
instrument and bylaws.
(2) A statement setting forth where and the date when
the charitable organization was legally established, the form
of its organization and its tax-exempt status, together with
a copy of the letter of exemption, if any, issued by the
Internal Revenue Service.
(d) Federal tax exemption determination.--Each charitable
organization registered with the department shall file with the
department a copy of a Federal tax exemption determination
letter received after the initial registration within 30 days
after receipt, and any amendments to its organizational
instrument within 30 days after adoption.
(e) Financial report.--With each registration statement
filed under this section, a charitable organization must file a
financial report for the immediately preceding fiscal year,
which shall contain a balance sheet and statements of revenue,
expenses and changes in fund balances indicating the charitable
organization's gross revenue, the amount of funds received from
solicitations or other fundraising activities and expenditures
for supplies, equipment, goods, services, programs, activities
or other expenses, a detailed list of salaries and wages paid
and expenses allowed to an officer or employee, if the
charitable organization is not required to file an Internal
Revenue Service Form 990, and the disposition of the net
proceeds received from solicited contributions or other
fundraising activities.
(f) Audit of certain financial reports.--The financial
report of every charitable organization which receives annual
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contributions of $300,000 $750,000 or more shall be audited by
an independent certified public accountant or public accountant.
Every charitable organization which receives annual
contributions of at least $100,000 $250,000 , but less than
$300,000 $750,000 , 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 organization which receives annual contributions of
at least $50,000 $100,000 , but less than $100,000 $250,000 ,
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 a charitable organization which receives
annual contributions of less than $50,000 $100,000 . 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. Reviews
shall be performed in accordance with the Statements on
Standards for Accounting and Review Services of the American
Institute of Certified Public Accountants.
(g) Governmental audits.--Government audits of government
grants shall be accepted and shall be included as part of the
financial statements.
(h) Other acceptable reports.--The department may accept a
copy of a current financial report previously prepared by a
charitable organization for a governmental agency in another
jurisdiction in compliance with the laws of that jurisdiction if
the report filed with the other governmental agency shall be
substantially similar in content to the report required by this
section.
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(i) Reports to accompany audit.--Audited and reviewed
financial statements must be accompanied by the report prepared
and signed by the independent public accountant.
(j) Optional departmental action.--The department shall have
the discretion to:
(1) Require that an audit or review be submitted by a
charitable organization which files a registration statement.
(2) Accept the financial statement submitted by the
organization in lieu of an audit or review if special facts
and circumstances are presented.
(k) Time extension for filings.--For good cause shown, the
department may extend the time for the annual filing of a
registration statement or financial report for a period TO A
MAILING DATE not to exceed 180 days THE FIFTEENTH DAY OF THE
ELEVENTH MONTH FOLLOWING THE CLOSE OF THE FISCAL YEAR during
which time the previous registration remains in effect.
(l) Cancellation of registration.--The registration of a
charitable organization may not continue in effect after the
date the charitable organization should have filed, but failed
to file, its financial report in accordance with this section. A
charitable organization may not file a new registration
statement until the charitable organization has filed the
required financial report with the department.
(m) Reports by affiliates.--
(1) Each affiliate whose parent organization has its
principal place of business in this Commonwealth may
separately file the registration statement or financial
information required by this section, or report the required
information to its parent organization which shall then file
a combined registration statement and financial report for
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its Pennsylvania affiliates. There shall be appended to each
combined report a schedule, containing information as
prescribed in the regulations of the department, reflecting
the activities of each affiliate, which shall contain a
certification, under oath, by an official of the
organization, that the information contained in the schedule
is true. The failure of a parent organization to file a
combined registration statement and financial report shall
not excuse either the parent organization or its affiliates
from complying with the requirements of this section.
(2) If an affiliate is soliciting in this Commonwealth
but its parent organization has its principal place of
business outside this Commonwealth, both the affiliate and
the parent organization shall independently comply with the
registration requirements of this section.
(n) Federated organizations.--An independent member agency
of a federated fundraising organization shall independently
comply with the provisions of this section unless specifically
exempted or unless it receives allocations solely from the
federated fundraising organization and does not independently
solicit contributions. Donor choice programs are deemed to be
independent solicitations.
(o) Retention of records.--Each charitable organization
required to register shall maintain records, books and reports
for at least three years after the end of the period of
registration to which the charitable organizations relate, which
shall be available for inspection upon demand by the department
and Office of Attorney General.
(p) Annual registration fees.--A charitable organization
which submits a short form registration statement under section
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1307 (relating to short form registration) or receives
contributions of $25,000 or less during the immediately
preceding fiscal year shall pay an annual registration fee of
$15. A charitable organization which receives 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. A charitable organization which
receives 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. A charitable organization
which receives contributions in excess of $500,000 during the
immediately preceding fiscal year shall pay an annual
registration fee of $250. A parent organization filing on behalf
of one or more affiliates and a federated fundraising
organization filing on behalf of its member agencies shall pay a
single annual registration fee for itself and 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 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 the filing.
(r) Department review.--The department shall examine each
registration statement and supporting documents filed by a
charitable organization and shall determine whether the
registration requirements are satisfied. If the department
determines that the registration requirements are not satisfied,
the department must notify the charitable organization within 10
15 working days of its receipt of the registration statement.
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Otherwise, the registration statement is deemed to be approved.
Within seven 15 days after receipt of a notification that the
registration requirements are not satisfied, the charitable
organization may request a hearing. The hearing must be held
within seven 15 days of receipt of the request, and a
determination must be rendered within three working days of the
hearing.
(s) Administration of charitable contributions.--A
charitable organization shall maintain and administer the
contributions raised on the charitable organization's behalf
through an account in the name of the charitable organization
and under the charitable organization's sole control.
(t) Updating information.--A material change in information
filed with the department under this section shall be reported
in writing by the registrant to the department not more than 30
days after the change occurs.
§ 1306. Exemptions from registration.
(a) General rule.--The following charitable organizations
shall be exempt from the registration requirements of this
chapter:
(1) Educational institutions, the curricula of which, in
whole or in part, are registered with or approved by the
Department of Education, either directly or by acceptance of
accreditation by an accrediting body recognized by the
Department of Education, and any auxiliary associations,
foundations and support groups that are directly responsible
to educational institutions.
(2) Hospitals which are subject to regulation by the
Department of Health or the Department of Human Services and
the hospital foundation, if any, which is an integral part of
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the hospitals.
(3) A local post, camp, chapter or similarly designated
element or a county unit of the elements of:
(i) any veterans' organization chartered under
Federal law and any service foundation recognized in the
bylaws of the organization;
(ii) a bona fide organization of volunteer firemen;
(iii) a bona fide ambulance association;
(iv) a bona fide rescue squad association; or
(v) a bona fide auxiliary or affiliate of any
organization or association under subparagraph (i), (ii),
(iii) or (iv);
provided that all fundraising activities are carried on by
volunteers, members or an auxiliary or affiliate of the
organization or association and that they receive no
compensation directly or indirectly for the fundraising
activities.
(4) Public nonprofit library organizations which receive
financial aid from State and municipal governments and file
an annual fiscal report with the State Library System.
(5) Senior citizen centers and nursing homes which are
nonprofit and charitable and which have been granted tax-
exempt status under the Internal Revenue Code of 1986,
provided that all fundraising activities are carried on by
volunteers, members or officers of the senior citizen center
and that those volunteers, members or officers receive no
compensation, directly or indirectly, for the fundraising
activities.
(6) Bona fide parent-teacher associations or parent-
teacher organizations as recognized in a notarized letter
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from the school district in which they are located.
(7) Any corporation established by an act of the
Congress of the United States that is required by Federal law
to submit annual reports of its activities to Congress
containing itemized accounts of all receipts and expenditures
after being fully audited by the Department of Defense.
(8) Any charitable organization which receives
contributions of $25,000 or less annually, provided that the
organization does not compensate any person who conducts
solicitations. Charitable organizations that receive more
than $25,000 in contributions shall file the appropriate
registration statement within 30 days after the contributions
are received.
(b) Effect of exemption.--Exemption from the registration
requirements of this chapter shall in no way limit the
applicability of other provisions of this part to a charitable
organization or any professional solicitor or professional
fundraising counsel acting on its behalf, except that written
notice under sections 1309(k) (relating to registration of
professional solicitors and contracts) and 1313(c) (relating to
limitation on activities of charitable organizations and
disclosure requirements) shall not apply.
§ 1307. 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 1305 (relating to
registration of charitable organizations; financial reports;
fees; failure to file):
(1) Persons or charitable organizations accepting
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contributions for the relief of any individual specified by
name at the time of acceptance or solicitation when all of
the contributions collected without any deductions whatsoever
are turned over to the named beneficiary for the
beneficiary's use, provided that all contributions collected
shall be held in trust and shall be subject to the provisions
of 20 Pa.C.S. Ch. 77 (relating to trusts). The secretary, the
Attorney General, any contributor or any person who provides
any goods or services for which funds are expressly or
implicitly solicited shall have the right to petition the
court of common pleas of the county in which the trust is
located for an accounting of all contributions. For purposes
of this paragraph, the trust shall be deemed to be located in
the county where the principal place of business of the
charitable organization is located. If a charitable
organization has its principal place of business outside this
Commonwealth, all of the following shall apply:
(i) If an affiliate is soliciting contributions
within this Commonwealth, the trust shall be deemed to be
located in the county where the principal place of
business of the affiliate is located.
(ii) If a person is soliciting contributions within
this Commonwealth, the trust shall be deemed to be
located in the county where the principal place of
business or the residence of the person is located.
(iii) If there is no place of business or residence
within this Commonwealth, the trust shall be deemed to be
located in Dauphin County.
(2) Organizations which only solicit within the
membership of the organization by the members of the
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organization provided that the term "membership" shall not
include those persons who are granted a membership solely
upon making a contribution as the result of solicitation. For
the purpose of this paragraph, "member" means a person having
membership in a nonprofit corporation, or other organization,
in accordance with the provisions of its articles of
incorporation, bylaws or other instruments creating its form
and organization and having bona fide rights and privileges
in the organization such as the right to vote, to elect
officers and directors or to hold office or position as
ordinarily conferred on members of the organizations.
(3) Charitable organizations whose fundraising
activities are carried out by volunteers, members, officers
or permanent employees and which do not receive 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 1305 within 30 days after contributions are received
in excess of that amount.
(4) Organizations described in section 1306(a)(3)
(relating to exemptions from registration) which do not
receive 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 solicitor.
(b) Contents of statement.--The short form annual
registration statements required to be filed under this section
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shall include any information required by the regulations of the
department.
(c) Financial report.--Charitable organizations which file a
short form registration statement need not file the financial
report required under section 1305.
(d) Updating of information.--Any material change in any
information filed with the department under this section shall
be reported in writing by the registrant to the department not
more than 30 days after the change occurs.
§ 1308. Registration of professional fundraising counsel and
contracts.
(a) Registration and approval required.--No person shall act
as a professional fundraising counsel before obtaining
department approval of a registration statement under subsection
(c) or after the expiration, suspension or revocation of
registration. A registration application shall be signed and
made by the principal officer of the professional fundraising
counsel subject to 18 Pa.C.S. § 4904 (relating to unsworn
falsification to authorities) and shall contain all of the
following information:
(1) The address of the principal place of business of
the applicant and any addresses within this Commonwealth, if
the principal place of business is located outside this
Commonwealth.
(2) The form of the applicant's business.
(3) The names and residence addresses of all principals
of the applicant, including all officers, directors and
owners.
(4) Whether any of the owners, directors, officers or
employees of the applicant are related by blood, marriage or
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adoption to any other directors, officers, owners or
employees of the applicant, any officer, director, trustee or
employee of any charitable organization under contract to the
applicant or any supplier or vendor providing goods or
services to any charitable organization under contract to the
applicant.
(5) The name of any person who is in charge of any
solicitation activity.
(6) Any other information required by the regulations of
the department.
(b) Registration fee.--The application for registration
shall be accompanied by a fee of $250. A professional
fundraising counsel that 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.
(c) Department review of registration statement.--The
department shall examine each registration statement and
supporting document filed by a professional fundraising counsel
and shall determine whether the registration requirements are
satisfied. If the department determines that the registration
requirements are not satisfied, the department must notify the
professional fundraising counsel within 10 15 working days of
the receipt of its registration statement, otherwise the
registration statement is deemed to be approved. Within seven 15
days after receipt of a notification that the registration
requirements are not satisfied, the professional fundraising
counsel may request a hearing. The hearing must be held within
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seven 15 days of receipt of the request, and a determination
must be rendered within three working days of the hearing.
(d) Written contract.--There shall be a written contract
between a charitable organization and a professional fundraising
counsel which shall be filed by the professional fundraising
counsel with the department at least 10 working days prior to
the performance by the professional fundraising counsel of any
service. No solicitation or services pursuant to the contract
shall begin before the department has approved the contract
under subsection (e). The contract must be signed by two
authorized officials of the charitable organization, one of whom
must be a member of the charitable organization's governing
body, and the authorized contracting officer for the
professional fundraising counsel. The contract shall contain all
of the following provisions:
(1) The legal name and address of the charitable
organization as registered with the department unless that
charitable organization is exempt from registration.
(2) A statement of the charitable purpose for which the
solicitation campaign is being conducted.
(3) A statement of the respective obligations of the
professional fundraising counsel and the charitable
organization.
(4) A clear statement of the fees which will be paid to
the professional fundraising counsel.
(5) The effective and termination dates of the contract.
If the contract does not have a set termination date, the
contract shall contain a clause allowing either party a
reasonable period of time to terminate the contract or notify
the other party if either party chooses not to renew. The
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contract shall also contain the date services will commence
with respect to solicitation in this Commonwealth of
contributions for a charitable organization.
(6) A statement that the professional fundraising
counsel will not at any time have custody or control of
contributions.
(7) A statement that the charitable organization
exercises control and approval over the content and volume of
any solicitation.
(8) Any other information required by the regulations of
the department.
(e) Department review of contract.--The department shall
examine each contract filed by a professional fundraising
counsel and shall determine whether the contract contains the
required information. If the department determines that the
requirements are not satisfied, the department must notify the
professional fundraising counsel within 10 working days of its
receipt of the contract. Otherwise, the contract is deemed to be
approved. Within seven days after receipt of a notification that
the requirements are not satisfied, the professional fundraising
counsel 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.
§ 1309. Registration of professional solicitors and contracts.
(a) Registration and approval required.--No person shall act
as a professional solicitor before obtaining department approval
of a registration statement under subsection (d) or after the
expiration, suspension or revocation of registration. A
registration application shall be signed and made by the
principal officer of the professional solicitor subject to 18
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Pa.C.S. § 4904 (relating to unsworn falsification to
authorities) and shall contain all of the following information:
(1) The address of the principal place of business of
the applicant and any addresses within this Commonwealth, if
the principal place of business is located outside this
Commonwealth.
(2) The form of the applicant's business.
(3) The names and residence addresses of all principals
of the applicant, including all officers, directors and
owners.
(4) Whether any of the owners, directors, officers or
employees of the applicant are related by blood, marriage or
adoption to any other directors, officers, owners or
employees of the applicant, any officer, director, trustee or
employee of any charitable organization under contract to the
applicant or any supplier or vendor providing goods or
services to any charitable organization under contract to the
applicant.
(5) The name of all persons in charge of any
solicitation activity.
(6) Any other information required by the regulations of
the department.
(b) Registration fee.--The application for registration
shall be accompanied by a fee of $250. A professional solicitor
that 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.
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(c) Bond.--A professional solicitor shall, at the time of
making application for registration or renewal of registration,
file with and have approved by the department a bond, in which
it shall be the principal obligor, in the sum of $25,000, or a
greater amount as prescribed by the regulations of the
department, and which shall have one or more sureties
satisfactory to the department whose liability in the aggregate
as sureties will at least equal that sum and maintain the bond
in effect as long as the registration is in effect. The bond
shall run to the Commonwealth for use of the secretary, Attorney
General and any person who may have a cause of action against
the obligor for any losses resulting from malfeasance,
nonfeasance or misfeasance in the conduct of solicitation
activities. A professional solicitor that is a partnership or
corporation may file one $25,000 bond or an amount specified by
regulation of the department on behalf of all of its partners,
members, officers, directors, agents and employees.
(d) Department review of registration statement.--The
department shall examine each registration statement and
supporting documents filed by a professional solicitor and shall
determine whether the registration requirements are satisfied.
If the department determines that the registration requirements
are not satisfied, the department must notify the professional
solicitor within 10 15 working days of its receipt of the
registration statement. Otherwise, the registration statement is
deemed to be approved. Within seven 15 days after receipt of a
notification that the regulation requirements are not satisfied,
the professional solicitor may request a hearing. The hearing
must be held within seven 15 days of receipt of the request and
a determination must be rendered within three working days of
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the hearing.
(e) Contract filing.--No less than 10 working days prior to
the commencement of each solicitation campaign, event or
services, a professional solicitor shall file with the
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 under subsection (g). The solicitation
notice shall be accompanied by a fee of $25 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 10 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 of each person
responsible for directing and supervising the conduct of the
campaign and each person who is to solicit during the
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.
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(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.
(8) Any other information required by the regulations of
the department.
(f) Written contract.--There shall be a written contract
between a professional solicitor and a charitable organization
for each solicitation campaign which shall be signed by two
authorized officials of the charitable organization, one of whom
must be a member of the charitable organization's governing
body, and the authorized contracting officer for the
professional solicitor. The contract shall contain all of the
following provisions:
(1) The legal name and address of the charitable
organization as registered with the department, unless that
charitable organization is exempt from registration.
(2) A statement of the charitable purpose for which the
solicitation campaign is being conducted.
(3) A statement of the respective obligations of the
professional solicitor and the charitable organization.
(4) A statement of the guaranteed minimum percentage of
the gross receipts from contributions which will be remitted
to or retained by the charitable organization, if any, or, if
the solicitation involves the sale of goods, services or
tickets to a fundraising event, the percentage of the
purchase price which will be remitted to the charitable
organization, if any. Any stated percentage shall exclude any
amount which the charitable organization is to pay as
fundraising costs.
(5) A statement of the percentage of the gross revenue
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which the professional solicitor will be compensated. The
stated percentage shall include any amount which the
professional solicitor is to be reimbursed as payment for
fundraising costs. If the compensation of the professional
solicitor is not contingent upon the number of contributions
or the amount of revenue received, the compensation shall be
expressed as a reasonable estimate of the percentage of the
gross revenue, and the contract shall clearly disclose the
assumptions upon which the estimate is based. The stated
assumptions shall be based upon all of the relevant facts
known to the professional solicitor regarding the
solicitation to be conducted by the professional solicitor.
(6) The effective and termination dates of the contract.
If the contract does not have a set termination date, the
contract shall contain a clause allowing either party a
reasonable period of time to terminate the contract or notify
the other party if either party chooses not to renew. The
contract shall also contain the date solicitation activity is
to commence within this Commonwealth.
(7) Any other information required by the regulations of
the department.
(g) Department review of contract.--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. If the department
determines that the requirements are not satisfied, the
department must notify the professional solicitor within 10
working days of its receipt of the contract and notice.
Otherwise, the contract and notice are deemed to be approved.
Within seven days after receipt of a notification that the
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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.
(h) Required disclosures.--Prior to orally requesting a
contribution or contemporaneously with a written request for a
contribution, a professional solicitor shall be responsible for
clearly and conspicuously disclosing:
(1) The name of the professional solicitor on file with
the department and that the solicitation is being conducted
by a professional solicitor who is being paid for the
solicitor's services.
(2) If the individual acting on behalf of the
professional solicitor is identified by name, the
individual's legal name.
(3) The legal name of the charitable organization as
registered with the department and a description of how the
contributions raised by the solicitation will be utilized for
a charitable purpose or, if there is no charitable
organization, a description as to how the contributions
raised by the solicitation will be utilized for a charitable
purpose.
(i) Responses.--Any responses given by or on behalf of a
professional solicitor to an oral or written request for
information shall be truthful.
(j) Information on disclosure.--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 has contributed or has pledged to contribute
shall include a clear and conspicuous disclosure of the
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information required by subsection (h).
(k) Notice.--In addition to the information required by
subsection (j), any written confirmation, receipt and reminder
of a contribution made under 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. Registration does 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.
(m) Retention of records.--A professional solicitor shall
maintain during each solicitation campaign and for not less than
three years after the completion of the campaign the following
records, which shall be available for inspection upon demand by
the department or the Office of Attorney General:
(1) The date and amount of each contribution received
and the name and address of each contributor.
(2) The name and residence of each employee, agent or
other person involved in the solicitation.
(3) Records of all revenue received and expenses
incurred in the course of the solicitation campaign.
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(4) The location and account number of each bank or
other financial institution account in which the professional
solicitor has deposited revenue from the solicitation
campaign.
(n) Records from ticket sales.--If the professional
solicitor sells tickets to an event and represents that tickets
will be donated for use by another, the professional solicitor
shall maintain, for not less than three years after the
completion of the event, the following records, which shall be
available for inspection upon demand by the department or the
Office of Attorney General:
(1) The number of tickets purchased and donated by each
contributor.
(2) The name and address of all organizations receiving
donated tickets for use by others, including the number of
tickets received by each organization.
(o) Deposit of contributions.--Each contribution in the
control or custody of the professional solicitor shall, in its
entirety and within five days of its receipt, be deposited in an
account at a bank or other federally insured financial
institution which shall be in the name of the charitable
organization. The charitable organization shall maintain and
administer the account and shall have sole control of all
withdrawals.
(p) Updating of information.--Any material change in any
information filed with the department under this section shall
be reported in writing by the professional solicitor to the
department not more than seven days after the change occurs.
(q) Restrictions.--
(1) No person may act as a professional solicitor if the
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person, any officer or director, any person with a
controlling interest or any person the professional solicitor
employs, engages or procures to solicit for compensation has
been convicted, by a court of any state or the United States,
of any felony or of any misdemeanor involving dishonesty or
arising from the conduct of a solicitation for a charitable
organization or purpose.
(2) A professional solicitor shall not solicit in this
Commonwealth on behalf of a charitable organization unless
that charitable organization is registered or is exempt from
registration with the department.
§ 1310. Contracts voidable by charitable organizations.
(a) Contracts with registered groups.--No professional
fundraising counsel or professional solicitor shall contract
with a charitable organization unless the professional
fundraising counsel or professional solicitor is registered with
the department. A contract with an unregistered professional
fundraising counsel or professional solicitor shall be voidable
at the option of the charitable organization.
(b) Cancellation of contract.--Whenever a charitable
organization contracts with a professional fundraising counsel
or professional solicitor, the charitable organization shall
have the right to cancel the contract without cost, penalty or
liability for a period of 10 days following the date on which
that contract is executed. Any provision in the contract that is
intended to waive this right of cancellation shall be void and
unenforceable.
(c) Manner of cancellation.--A charitable organization may
cancel a contract under subsection (b) by serving a written
notice of cancellation on the professional fundraising counsel
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or professional solicitor. If mailed, service shall be by
certified mail, return receipt requested, and cancellation shall
be deemed effective upon receipt by the professional fundraising
counsel or professional solicitor. The notice shall be
sufficient if it indicates that the charitable organization does
not intend to be bound by the contract.
(d) Cancellation notice to department.--Whenever a
charitable organization cancels a contract under the provisions
of this section, it shall mail a duplicate copy of the notice of
cancellation to the department.
(e) Status of funds after cancellation.--Any funds collected
after effective notice that a contract has been canceled shall
be deemed to be held in trust for the benefit of the charitable
organization without deduction for costs or expenses of any
nature. A charitable organization shall be entitled to recover
all funds collected after the date of cancellation.
§ 1311. Information filed to become public records.
Except as otherwise provided in section 1312 (relating to
records to be kept by charitable organizations, professional
fundraising counsels and professional solicitors), registration
statements and applications, reports, notices, contracts or
agreements between charitable organizations and professional
fundraising counsel, professional solicitors and commercial
coventurers, and all other documents and information required to
be filed under this chapter with the department, shall become
public records in the office of the bureau and shall be open to
the general public at the time and under conditions the
department prescribes.
§ 1312. Records to be kept by charitable organizations,
professional fundraising counsels and professional
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solicitors.
(a) True and accurate fiscal records.--A charitable
organization, professional fundraising counsel and professional
solicitor subject to the provisions of this chapter shall, in
accordance with the rules and regulations prescribed by the
department, keep true fiscal records as to its activities in
this Commonwealth as may be covered under this chapter in a form
to enable them to accurately provide the information required
under this chapter.
(b) Availability for inspection.--Except as provided in
subsection (c), the records shall be made available for
inspection upon demand by the department or the Office of
Attorney General.
(c) Nonpublic records.--Notwithstanding subsection (b),
names, addresses and identities of contributors and amounts
contributed by them shall not be considered a matter of public
record. This information shall:
(1) Not be made available for public inspection.
(2) Not be used for a purpose inconsistent with this
chapter.
(3) Be removed from the records in the custody of the
department at the time that the information is no longer
necessary for the enforcement of this chapter.
(d) Term of record retention.--Records shall be maintained
for a period of at least three years after the end of the period
of registration to which they relate.
§ 1313. Limitation on activities of charitable organizations
and disclosure requirements.
(a) Solicitation limitation.--A charitable organization may
only solicit contributions for the charitable purpose expressed
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in a solicitation for contributions or the registration
statement of the charitable organization and may only apply
contributions in a manner substantially consistent with that
purpose.
(b) Solicitation disclosures.--A charitable organization
soliciting in this Commonwealth shall disclose the following at
the point of solicitation:
(1) Its legal name and address as registered with the
department. If different, the legal name and address of the
charitable organization, as registered with the department,
on whose behalf the solicitation is being conducted. Any use
of a project or program name in a solicitation must be
followed immediately by a disclosure of the legal, registered
name of the charitable organization.
(2) If requested, the name and address or telephone
number of a representative to whom inquiries could be
addressed.
(3) A full and fair description of the charitable
purpose or purposes for which the solicitation is being made
and a source from which written information is available.
(4) If requested, the source from which a financial
statement may be obtained. The financial statement shall:
(i) Be consistent with the annual financial report
requested under section 1305 (relating to registration of
charitable organizations; financial reports; fees;
failure to file).
(ii) Disclose assets, liabilities, fund balances,
revenue and expenses for the preceding fiscal year.
(iii) List expenses separately, under the categories
of program services, administrative costs and fundraising
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costs.
(c) Notice on printed solicitation.--On every printed
solicitation or written confirmation, receipt and reminder of a
contribution, the following statement must be printed
conspicuously, 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. Registration does not imply
endorsement.
(d) Misrepresentation.--A misrepresentation is accomplished
by words, conduct or failure to disclose a material fact. A
charitable organization may not misrepresent any of the
following:
(1) Its purpose.
(2) Its nature.
(3) The purpose of a solicitation.
(4) The beneficiary of a solicitation.
(e) Control over fundraising activities.--A charitable
organization must establish and exercise control over
fundraising activities conducted for the charitable
organization's benefit, including approval of all written
contracts and agreements, and must assure that fundraising
activities are conducted without coercion.
(f) Restrictions on certain contracts.--A charitable
organization shall not enter into a contract or agreement with
or employ any professional fundraising counsel or professional
solicitor unless the counsel or solicitor is registered with the
department.
(g) Registration with department required.--A charitable
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organization shall not enter into a contract or agreement with
or raise any funds for a charitable organization required to be
registered under this chapter unless both charitable
organizations are registered with the department.
(h) Deposit of contributions.--Each contribution in the
control or custody of a professional solicitor shall, in its
entirety and within five days of its receipt, be deposited,
maintained and administered in an account at a bank or other
federally insured financial institution. The account shall be in
the name of the charitable organization, which shall have sole
control of all account withdrawals.
§ 1314. Reciprocal agreements.
(a) Authorization.--The secretary may enter into reciprocal
agreements with the appropriate authority of any other state for
the purpose of exchanging information with respect to charitable
organizations, professional fundraising counsel and professional
solicitors.
(b) Effect.--Pursuant to any reciprocal agreement, the
secretary may accept information filed by a charitable
organization, professional fundraising counsel or professional
solicitor with the appropriate authority of another state in
lieu of the information required to be filed in accordance with
this chapter if the information is substantially similar to the
information required under this chapter.
(c) Annual registration exemption.--The secretary may grant
exemptions from the requirements for the filing of annual
registration statements with the department to a charitable
organization if the following apply:
(1) It is organized under the laws of another state.
(2) It has its principal place of business outside this
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Commonwealth.
(3) Its funds are derived principally from sources
outside this Commonwealth.
(4) It has been exempted from the filing of registration
statements by the state in which it is organized if the state
has a statute similar in substance to the provisions of this
chapter.
§ 1315. Prohibited acts.
(a) General rule.--Notwithstanding a person's intent or the
lack of injury, the following are prohibited in the planning,
conduct or execution of a solicitation or charitable sales
promotion:
(1) Operating in violation of or failing to comply with
any requirement of this chapter, regulation of the department
or order of the secretary.
(2) Soliciting contributions after registration with the
department has expired or has been suspended or revoked.
(3) Soliciting contributions prior to the solicitation
notice and contract having been approved by the department.
(4) Utilizing any unfair or deceptive acts or practices
or engaging in any fraudulent conduct which creates a
likelihood of confusion or misunderstanding.
(5) Conveying any representation that implies the
contribution is for or on behalf of a charitable organization
or utilizing an emblem, device or printed matter belonging to
or associated with a charitable organization without first
being authorized in writing to do so by the charitable
organization.
(6) Utilizing a name, symbol or statement so closely
related or similar to that used by another charitable
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organization or other person that the use would tend to
confuse or mislead a solicited person.
(7) Misrepresenting or misleading anyone in any manner
to believe that the person on whose behalf a solicitation or
charitable sales promotion is being conducted is a charitable
organization or that the proceeds of the solicitation or
charitable sales promotion will be used for charitable
purposes when this is not the fact.
(8) Misrepresenting to or misleading anyone in any
manner so as to allow the belief that another person
sponsors, endorses or approves the solicitation or charitable
sales promotion when in fact the other person has not given
consent in writing to the use of that person's name for these
purposes.
(9) Misrepresenting to or misleading anyone in any
manner so as to allow the belief that goods or services have
sponsorship, approval, characteristics, ingredients, uses,
benefits or qualities that they do not have or that a person
has a sponsorship, approval, status, affiliation or
connection that the person in fact does not have.
(10) Utilizing or exploiting the fact of registration so
as to lead a person to believe that the registration in any
manner constitutes an endorsement or approval by the
Commonwealth. The use of the following statement shall not be
deemed a prohibited exploitation:
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. Registration does not imply
endorsement.
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(11) Representing directly or by implication that a
charitable organization will receive an amount greater than
the actual net proceeds reasonably estimated to be retained
by the charity for its use.
(12) With respect to solicitations by professional
solicitors on behalf of law enforcement personnel,
firefighters or other persons who protect the public safety,
issuing, offering, giving, delivering or distributing
honorary membership cards, courtesy cards or similar cards or
any stickers, emblems, plates or other items which could be
used for display on a motor vehicle.
(13) Violating the following:
(i) Soliciting for advertising to appear in a for-
profit publication that relates to, purports to relate to
or that could reasonably be construed to relate to any
charitable purpose without making the following
disclosures at the time of solicitation:
(A) The publication is a for-profit, commercial
enterprise.
(B) The true name of the solicitor and the fact
that the solicitor is a professional solicitor.
(C) The publication is not directly affiliated
with or sponsored by any charitable organization.
(ii) Where a sale of advertising has been made, the
solicitor, prior to accepting any money for the sale,
shall present the purchaser with the same disclosures as
are set forth under subparagraph (i) in written form and
in conspicuous type.
(14) Representing that a part of contributions received
will be given or donated to another charitable organization
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unless that organization has consented in writing to the use
of its name prior to the solicitation. The written consent
shall be signed by two authorized officers, directors or
trustees of the charitable organization.
(15) (i) Representing that tickets to events will be
donated for use by another, unless all of the following
requirements have been met:
(A) The charitable organization or professional
solicitor has commitments, in writing, from
charitable organizations stating that they will
accept donated tickets and specifying the number of
tickets they are willing to accept.
(B) The charitable organization or professional
solicitor does not solicit or accept more
contributions of donated tickets than the lesser of:
(I) the number of ticket commitments it has
received from charitable associations; or
(II) the total attendance capacity of the
site of the event.
(ii) A ticket commitment alone, as described in this
paragraph, does not constitute written consent to use the
charitable organization's name in the solicitation
campaign.
(b) Criteria to determine unfairness.--In determining
whether or not a practice is unfair, deceptive, fraudulent or
misleading under this section, definitions, standards or
interpretations relating to the practice under the act of
December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade
Practices and Consumer Protection Law, shall apply.
§ 1316. Investigation.
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(a) Permissible investigations.--The Attorney General, the
secretary or a district attorney with jurisdiction may make or
cause to be made an investigation of any person as deemed
necessary. In conducting the investigation, the official may:
(1) Require or permit a person to file a statement in
writing, under oath or otherwise, as to all the facts and
circumstances concerning the matter being investigated.
(2) Administer oaths or affirmations.
(3) Take testimony under oath.
(4) Require the attendance and testimony of witnesses
and the production of books, accounts, papers, records,
documents, audits and files relating to a solicitation or
practice subject to this chapter or the regulations of the
department promulgated pursuant to the authority of this
chapter.
(5) Issue subpoenas.
(6) Conduct private or public hearings.
(7) Examine witnesses and receive evidence during an
investigation or public or private hearings.
(b) Notice.--Notice of the time and place for the
examination of documentary material shall be given by the
Attorney General, the secretary or the district attorney at
least 10 days prior to the date of the examination or taking of
testimony.
(c) Contents of notice.--Each notice shall:
(1) State the time and place for the taking of testimony
or the examination and the name and address of the person to
be examined, if known, or, if the name is not known, a
general description sufficient to identify the person or the
particular class or group to which the person belongs.
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(2) State the statute, if any, proscribing the alleged
violation that is under investigation and the general subject
matter of the investigation.
(3) Describe the class or classes of documentary
material to be produced under the notice with reasonable
specificity, so as to fairly indicate the material demanded.
(4) Prescribe a return date within which the documentary
material is to be produced.
(5) Identify the members of the Office of Attorney
General's staff, the secretary's staff or the district
attorney's staff to whom the documentary material is to be
made available for inspection and copying.
(d) Restrictions on notices.--No notice shall contain any
requirement that would be unreasonable or improper if contained
in a subpoena duces tecum issued by a court of the Commonwealth.
(e) Restriction on materials.--
(1) Except as provided under paragraph (2), any
documentary material or other information produced by a
person in accordance with this section shall not, unless
otherwise ordered by a court of competent jurisdiction for
good cause shown, be produced for inspection or copying by or
disclosed to a person other than the authorized
representative of the Attorney General, the secretary or the
district attorney without the consent of the person who
produced the material.
(2) Under reasonable terms and conditions that the
Attorney General, the secretary or the district attorney
shall prescribe, documentary material in paragraph (1) shall
be available for inspection and copying by the person who
produced the material or a duly authorized representative of
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the person. The Attorney General, the secretary or the
district attorney or a duly authorized representative may use
the documentary material or copies as the official may
determine is necessary in the enforcement of this chapter,
including production at a subsequent administrative or
judicial proceeding.
(f) Compliance.--A person upon whom a notice is served
pursuant to this section shall comply with the terms of the
notice unless otherwise provided by an order of court. 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.
(g) Contempt of final order.--Any disobedience of a final
order entered under this section by a court shall be punishable
as contempt.
(h) Civil penalties.--Any person shall be assessed a civil
penalty of not more than $5,000 if the person does any of the
following:
(1) Fails to appear.
(2) With intent, avoids, evades or prevents compliance
with, in whole or in part, any civil investigation under this
chapter.
(3) 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 a person subject to any notice.
(4) Knowingly conceals any relevant information.
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(i) Service.--Service of a subpoena may be made in any of
the following ways:
(1) Delivering a duly executed copy to the person to be
served or to a partner or to any officer or agent authorized
by appointment or by law to receive service of process on
behalf of the person.
(2) Delivering a duly executed copy to the principal
place of business in this Commonwealth of the person to be
served.
(3) Mailing by registered or certified mail a duly
executed copy addressed to the person to be served at the
person's principal place of business in this Commonwealth or,
if the person has no place of business in this Commonwealth,
to the last address of the person known to the secretary.
(4) Appointing the secretary as its agent if the
charitable organization, fundraising counsel or professional
solicitor has its principal place of business outside this
Commonwealth or is organized under and by virtue of the laws
of a foreign state, which is subject to the provisions of
this chapter. The secretary shall be deemed its irrevocable
agent upon whom may be served any summons, subpoena duces
tecum or other process directed to the charitable
organization, fundraising counsel or professional solicitor,
or any partner, principal officer or director of the
charitable organization, in an action or proceeding brought
under the provisions of this chapter. Service of process upon
the secretary shall be made by personally delivering to and
leaving with the secretary a copy of the process at the
secretary's office in Harrisburg, Pennsylvania. The service
shall be sufficient if notice of service and a copy of the
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process is sent by the secretary by registered mail to the
charitable organization, fundraising counsel, professional
solicitor or other person to whom the notice of service and
the copy of the process is directed, with return receipt
requested, at the last address known to the secretary.
§ 1317. Administrative enforcement and penalties.
(a) General rule.--The secretary may revoke, suspend or
refuse to register the registration of a charitable
organization, professional fundraising counsel or professional
solicitor whenever the secretary finds that a charitable
organization, professional fundraising counsel or professional
solicitor, or an agent, servant or employee:
(1) Has violated or is operating in violation of any
provision of this chapter, the regulations of the department
promulgated under this chapter 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 the organization or to disclose any information
required to be disclosed under this chapter 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 chapter.
(b) Additional actions.--When the secretary finds that the
registration of a 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 chapter.
(2) Issue an order directing that the person cease and
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desist specified fundraising activities.
(3) Impose an administrative fine not to exceed $1,000
for each act or omission which constitutes a violation of
this chapter and an additional penalty not to exceed $100 for
each day during which the 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
may be renewed until the fine is paid.
(4) Place a registrant on probation for a period of time
and subject to conditions as the secretary may decide.
(c) Administrative procedures.--Actions of the secretary are
subject to 2 Pa.C.S. Chs. 5 Subch. A (relating to practice and
procedure of Commonwealth agencies) and 7 Subch. A (relating to
judicial review of Commonwealth agency action).
§ 1318. Criminal penalties.
(a) Deceit or fraud violation.--A person who willfully and
knowingly violates any provision of this chapter with intent to
deceive or defraud a charity or individual commits a misdemeanor
of the first degree and shall, upon conviction, be sentenced to
pay a fine not exceeding $10,000 or to imprisonment for not more
than five years, or both.
(b) Other violations.--Any other violation of this chapter
shall constitute a misdemeanor of the third degree punishable,
upon conviction, by a fine not exceeding $2,500 or to
imprisonment for not more than one year, or both.
(c) Location of offense.--An offense committed under this
chapter 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.
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§ 1319. 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 a person is operating in
violation of the provisions of this chapter, the Attorney
General or district attorney may bring an action in the name of
the Commonwealth against that person to enjoin the person from
continuing the violation and for other relief as the court deems
appropriate. In a proceeding under this subsection, the court
may make appropriate orders, including:
(1) the appointment of a master or receiver;
(2) the sequestration of assets;
(3) the reimbursement of persons from whom contributions
have been unlawfully solicited;
(4) the distribution of contributions in accordance with
the charitable purpose expressed in the registration
statement or in accordance with the representations made to
the person solicited;
(5) the reimbursement of the Commonwealth for attorney
fees and the costs of investigation, including audit costs;
(6) the assessment of a civil penalty not exceeding
$1,000 per violation of this act, which penalty shall be in
addition to any other relief which may be granted; and
(7) the granting of other appropriate relief.
(b) Assurance of voluntary compliance.--In any case where
the Attorney General or a district attorney has authority to
institute an action or proceeding under this chapter, the
official may accept an assurance of voluntary compliance through
which a person alleged to be engaged in any method, act or
practice in violation of this chapter agrees to discontinue the
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method, act or practice.
(1) An assurance of compliance:
(i) May, among other terms, include a stipulation of
a voluntary payment by the person of the cost of the
investigation or of an amount to be held in escrow
pending the outcome of an action or as restitution to
aggrieved persons, or both.
(ii) Shall be in writing.
(iii) Shall be filed with a court of the
Commonwealth.
(2) In the event of an alleged violation of the
assurance of voluntary compliance, the Attorney General or a
district attorney may either initiate contempt proceedings or
proceed as if the assurance of voluntary compliance has not
been accepted. Evidence of a violation of the assurance shall
be prima facie evidence of a violation of this chapter in a
subsequent proceeding brought by the Attorney General or
district attorney.
(3) Matters closed may be reopened at any time by the
court for further proceedings in the public interest.
§ 1320. Additional regulations by counties, municipalities or
consolidated government.
Nothing contained in this chapter shall serve to deny the
right to a county, municipality or consolidated government to
pass ordinances, rules and regulations as may be deemed
appropriate to regulate further the soliciting of contributions
within the county, municipality or consolidated government. The
ordinance may not alter any of the obligations set forth in this
chapter or the regulations of the department but may add other
requirements and rules as appear to be proper to the county,
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municipality or consolidated government involved.
§ 1321. Charitable organizations deemed fiduciary.
Every person soliciting, collecting or expending
contributions for charitable purposes and every officer,
director, trustee and employee of the person concerned with the
solicitation, collection or expenditure of the contribution
shall be deemed to be a fiduciary and acting in a fiduciary
capacity.
§ 1322. Prior registration unaffected.
A person who is registered with the department under the
former act of April 30, 1986 (P.L.107, No.36), known as the
Charitable Organization Reform Act, prior to February 19, 1991,
shall, on and after February 19, 1991, be deemed to be
registered with the department as provided for in this chapter.
Registration shall be reissued in accordance with this chapter.
§ 1323. Regulations.
Regulations promulgated under the former act of April 30,
1986 (P.L.107, No.36), known as the Charitable Organization
Reform Act, and in effect on February 19, 1991, shall remain in
effect until amended in accordance with the provisions of this
chapter.
PART IV
TAX
Chapter
19. General Provisions (Reserved)
21. Charitable Gift Annuity Exemptions (Reserved)
23. Institutions of Purely Public Charity
CHAPTER 19
GENERAL PROVISIONS
(Reserved)
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CHAPTER 21
CHARITABLE GIFT ANNUITY EXEMPTIONS
(Reserved)
CHAPTER 23
INSTITUTIONS OF PURELY PUBLIC CHARITY
Sec.
2301. Scope of chapter.
2302. Legislative intent.
2303. Definitions.
2304. State-related universities.
2305. Criteria for institutions of purely public charity.
2306. Presumption process.
2307. Voluntary agreements.
2308. Unfair competition with small businesses.
2309. Accountability and disclosure.
2310. Exemption for Federal Government instrumentality.
2311. Prohibited act.
2312. Compliance.
2313. Civil penalty.
2314. Repeals.
2315. Applicability.
§ 2301. Scope of chapter.
This chapter relates to institutions of purely public
charity.
§ 2302. Legislative intent.
(a) Findings.--The General Assembly finds and declares as
follows:
(1) It is in the best interest of the Commonwealth and
its citizens that the recognition of tax-exempt status be
accomplished in an orderly, uniform and economical manner.
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(2) For more than 100 years, it has been the policy of
the Commonwealth to foster the organization and operation of
institutions of purely public charity by exempting them from
taxation.
(3) Because institutions of purely public charity
contribute to the common good or lessen the burden of
government, the historic policy of exempting these
institutions from taxation should be continued.
(4) Lack of specific legislative standards defining the
term "institutions of purely public charity" has led to
increasing confusion and confrontation among traditionally
tax-exempt institutions and political subdivisions to the
detriment of the public.
(5) There is increasing concern that the eligibility
standards for charitable tax exemptions are being applied
inconsistently, which may violate the uniformity provision of
the Constitution of Pennsylvania.
(6) Recognizing the interest of the taxpayers in a fair
and equitable system of property tax assessment and the
attendant statutory requirements for the political
subdivision responsible for maintaining real property
assessment rolls to administer the system of property
assessment, this chapter shall not in any way limit the
responsibilities, prerogatives or abilities of political
subdivisions with respect to the determination of or
challenges to the taxable status of a parcel of property
based on the use of the parcel or part of the parcel of
property.
(7) Institutions of purely public charity benefit
substantially from local government services. These
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institutions have significant value to the Commonwealth and
its citizens, and the need exists for revenues to maintain
local government services provided for the benefit of all
citizens, including institutions of purely public charity. It
is the intent of this chapter to encourage financially secure
institutions of purely public charity to enter into voluntary
agreements or to maintain existing or continuing agreements
for the purpose of defraying some of the cost of various
local government services. Payments made under the agreements
shall be deemed to be in compliance with any fiduciary
obligation pertaining to the institutions of purely public
charity, its officers or directors.
(b) Intent.--It is the intent of the General Assembly to
eliminate inconsistent application of eligibility standards for
charitable tax exemptions, reduce confusion and confrontation
among traditionally tax-exempt institutions and political
subdivisions and ensure that charitable and public funds are not
unnecessarily diverted from the public good to litigate
eligibility for tax-exempt status by providing standards to be
applied uniformly in all proceedings throughout this
Commonwealth for determining eligibility for exemption from
State and local taxation which are consistent with traditional
legislative and judicial applications of the constitutional term
"institutions of purely public charity."
§ 2303. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Affiliate." The term includes:
(1) A domestic or foreign corporation, association,
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trust or other organization which owns a 10% or greater
interest in an institution of purely public charity.
(2) A domestic or foreign corporation, association,
trust or other organization in which an institution of purely
public charity owns a 10% or greater interest.
"Annual return." The annual information return required to
be filed with the Internal Revenue Service by institutions
exempt from tax under section 501(a) of the Internal Revenue
Code of 1986 consisting of Internal Revenue Service Form 990 or
Form 990EZ and Schedule A or any succeeding form used for the
same or similar purpose. For an institution which is not
required to file the returns, the institution's annual financial
statement with reported income shall constitute its annual
return.
"Bureau." The Bureau of Corporations and Charitable
Organizations of the Department of State of the Commonwealth.
"Commercial business." The sale of products or services that
are principally the same as those offered by an existing small
business in the same community.
"Contribution." The promise, grant, pledge or gift of money,
property, goods, services, financial assistance or other similar
remittance.
"Department." Department of State of the Commonwealth.
"Goods or services." Goods or services that promote any of
the enumerated purposes under section 2305(b) (relating to
criteria for institutions of purely public charity) and which
are valued in accordance with generally accepted accounting
principles applicable to the institution.
"Government agency." Any Commonwealth agency or any
political subdivision or municipal or other local authority or
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any officer or agency of any political subdivision or local
authority.
"Institution." A domestic or foreign nonprofit corporation,
association or trust or other similar entity.
"Institution of purely public charity." An institution which
meets the criteria under section 2305.
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Net operating income." The amount of funds remaining after
all operating expenses related to the provision of goods or
services associated with the institution's charitable purpose
are deducted from payments received for providing these goods or
services, as determined in accordance with generally accepted
accounting principles applicable to the institution.
"Program service revenue." Income earned from the provision
of goods or services, including government fees and contracts
associated with the institution's charitable purpose, that is
reported on the annual return.
"Small business." Any self-employed individual, sole
proprietorship, firm, corporation, partnership, association or
other entity that:
(1) has fewer than 101 full-time employees; and
(2) is subject to income taxation under the act of March
4, 1971 (P.L.6, No.2) , known as the Tax Reform Code of 1971.
"Total operating expenses." The costs related to the
provision of goods or services associated with the institution's
charitable purpose, as determined in accordance with generally
accepted accounting principles applicable to the institution.
"Voluntary agreement." An agreement, contract or other
arrangement for the purpose of receiving contributions under
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section 2307 (relating to voluntary agreements) between a
political subdivision and an institution seeking or possessing
an exemption as an institution of purely public charity. These
contributions are for the purpose of defraying some of the cost
of various local government services. The term includes the
establishment of public service foundations by institutions of
purely public charity.
§ 2304. State-related universities.
(a) General rule.--It is the intent of the General Assembly
to recognize that State-related universities provide a direct
public benefit and serve the public purposes of this
Commonwealth by declaring the real property of State-related
universities to be public property for purposes of exemption
from State and local taxation when the property is actually and
regularly used for public purposes, provided that nothing in
this section is intended or shall be construed to affect the
title to real property of State-related universities or the
power and authority of the governing bodies of State-related
universities with respect to the real property. Nothing in this
section is intended or shall be construed to affect, impair or
terminate any contract or agreement in effect on or before
November 26, 1997, by and between a State-related university and
any political subdivision where the State-related university
pays real estate taxes, amounts in lieu of real estate taxes or
other charges, fees or contributions for government services.
(b) Real property.--All real property owned by State-related
universities or owned by the Commonwealth and used by a State-
related university is and shall be deemed public property for
purposes of the Constitution of Pennsylvania and the laws of
this Commonwealth relating to the assessment, taxation and
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exemption of real estate and shall be exempt from all State and
local taxation when actually and regularly used for public
purposes.
(c) Exception.--This section shall not include the property
of a State-related university, the possession and control of
which has been transferred to a for-profit entity not otherwise
entitled to tax-exempt status, irrespective of whether that
entity is affiliated with the university. The execution of a
management services contract with a third-party entity to
provide operational services to the university which would
otherwise be provided or conducted directly by the university
shall not, however, be considered a transfer of possession and
control of real property within the meaning of this section.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Public purposes." All activities relating to the
educational mission of State-related universities, including
teaching, research, service and activities incident or ancillary
to the educational mission that provide services to or for
students, employees or the public.
"State-related universities." The Pennsylvania State
University and its affiliates, the Pennsylvania College of
Technology, the University of Pittsburgh, Temple University and
its subsidiaries, Temple University Hospital, Inc., and Temple
University Children's Hospital, Inc., and Lincoln University.
§ 2305. Criteria for institutions of purely public charity.
(a) General rule.--An institution of purely public charity
is an institution that meets the criteria set forth in
subsections (b), (c), (d), (e) and (f). An institution that
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meets the criteria of this section shall be considered to be
founded, endowed and maintained by public or private charity.
(b) Charitable purpose.--The institution must advance a
charitable purpose. This criterion is satisfied if the
institution is organized and operated primarily to fulfill any
one or combination of the following purposes:
(1) Relief of poverty.
(2) Advancement and provision of education. This
paragraph includes postsecondary education.
(3) Advancement of religion.
(4) Prevention and treatment of disease or injury,
including intellectual disabilities and mental disorders.
(5) Government or municipal purposes.
(6) Accomplishment of a purpose which is recognized as
important and beneficial to the public and that advances
social, moral or physical objectives.
(c) Private profit motive.--The institution must operate
entirely free from private profit motive. Notwithstanding
whether the institution's revenues exceed its expenses, this
criterion is satisfied if the institution meets all of the
following:
(1) Neither the institution's net earnings nor donations
that it receives inures to the benefit of private
shareholders or other individuals, as the private inurement
standard is interpreted under section 501(c)(3) of the
Internal Revenue Code of 1986.
(2) The institution applies or reserves all revenue,
including contributions, in excess of expenses in furtherance
of its charitable purpose or to fund other institutions which
meet the provisions of subsection (b) and this subsection.
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(3) Compensation, including benefits, of any director,
officer or employee is not based primarily upon the financial
performance of the institution.
(4) The governing body of the institution of purely
public charity has adopted as part of its articles of
incorporation or, if unincorporated, other governing legal
documents a provision that expressly prohibits the use of any
surplus funds for private inurement to any person in the
event of a sale or dissolution of the institution of purely
public charity.
(d) Community service.--The following shall apply:
(1) The institution must donate or render gratuitously a
substantial portion of its services. This criterion is
satisfied if the institution benefits the community by
actually providing any one of the following:
(i) Goods or services to all who seek them without
regard to a person's ability to pay for what the person
receives if all of the following apply:
(A) The institution has a written policy to this
effect.
(B) The institution has published this policy in
a reasonable manner.
(C) The institution provides uncompensated goods
or services at least equal to 75% of the
institution's net operating income, but not less than
3% of the institution's total operating expenses.
(ii) Goods or services for fees that are based upon
the recipient's ability to pay for them if all of the
following apply:
(A) The institution can demonstrate that it has
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implemented a written policy and a written schedule
of fees based on individual or family income. An
institution will meet the requirement of this clause
if the institution consistently applies a formula to
all individuals requesting consideration of reduced
fees which is in part based on individual or family
income.
(B) At least 20% of the individuals receiving
goods or services from the institution pay no fee or
a fee which is lower than the cost of the goods or
services provided by the institution.
(C) At least 10% of the individuals receiving
goods or services from the institution receive a
reduction in fees of at least 10% of the cost of the
goods or services provided to them.
(D) No individuals receiving goods or services
from the institution pay a fee that is equal to or
greater than the cost of the goods or services
provided to them or the goods or services provided to
the individuals described in clause (B) are
comparable in quality and quantity to the goods or
services provided to those individuals who pay a fee
that is equal to or greater than the cost of the
goods or services provided to them.
(iii) Wholly gratuitous goods or services to at
least 5% of those receiving similar goods or services
from the institution.
(iv) Financial assistance or uncompensated goods or
services to at least 20% of those receiving similar goods
or services from the institution if at least 10% of the
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individuals receiving goods or services from the
institution either paid no fees or fees which were 90% or
less of the cost of the goods or services provided to
them, after consideration of any financial assistance
provided to them by the institution.
(v) Uncompensated goods or services which in the
aggregate are equal to at least 5% of the institution's
costs of providing goods or services.
(vi) Goods or services at no fee or reduced fees to
government agencies or goods or services to individuals
eligible for government programs if any one of the
following applies:
(A) The institution receives 75% or more of its
gross operating revenue from grants or fee-for-
service payments by government agencies and if the
aggregate amount of fee-for-service payments from
government agencies does not exceed 95% of the
institution's costs of providing goods or services to
the individuals for whom the fee-for-services
payments are made.
(B) The institution provides goods or services
to individuals with intellectual disabilities, to
individuals who need mental health services, to
members of an individual's family or guardian in
support of the goods or services or to individuals
who are dependent, neglected or delinquent children,
as long as the institution performs duties that would
otherwise be the responsibility of government and the
institution is restricted in its ability to retain
revenue over expenses or voluntary contributions by
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any one of the following statutes or regulations or
by contractual limitations with county children and
youth offices in this Commonwealth:
(I) Sections 1905(d) and 1915(c) of the
Social Security Act ( 49 Stat. 620, 42 U.S.C. §§
1396d(d) and 1396n(c)).
(II) 42 CFR 440.150 (relating to
intermediate care facility (ICF/IID) services).
(III) 42 CFR Pt. 483 Subpt. I (relating to
conditions of participation for intermediate care
facilities for individuals with intellectual
disabilities).
(IV) The act of October 20, 1966 (3rd
Sp.Sess., P.L.96, No.6) , known as the Mental
Health and Intellectual Disability Act of 1966.
(V) Articles II, VII, IX and X of the act of
June 13, 1967 (P.L.31, No.21) , known as the Human
Services Code.
(VI) 23 Pa.C.S. Ch. 63 (relating to child
protective services).
(VII) 42 Pa.C.S. Ch. 63 (relating to
juvenile matters).
(VIII) 55 Pa. Code Chs. 3170 (relating to
allowable costs and procedures for county
children and youth social service programs), 3680
(relating to administration and operation of a
children and youth social service agency), 4300
(relating to county mental health and
intellectual disability fiscal manual), 6210
(relating to participation requirements for the
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intermediate care facilities for the intellectual
disability program), 6211 (relating to allowable
cost reimbursement for non-State operated
intermediate care facilities for individuals with
an intellectual disability), 6400 (relating to
community homes for individuals with an
intellectual disability), 6500 (relating to
family living homes) and 6600 (relating to
intermediate care facilities for individuals with
an intellectual disability).
(vii) Fundraising on behalf of or grants to an
institution of purely public charity, an entity similarly
recognized by another state or foreign jurisdiction, a
qualifying religious organization or a government agency
and actual contribution of a substantial portion of the
funds raised or contributions received to an institution
of purely public charity, an entity similarly recognized
by another state or foreign jurisdiction, a qualifying
religious organization or a government agency.
(2) The institution may elect to average the applicable
data for its five most recently completed fiscal years for
the purposes of calculating any formula or meeting any
quantitative standard in paragraph (1).
(3) For purposes of calculating the number of
individuals for use in the percentage calculations in this
subsection, educational institutions may use full-time
equivalent students as defined by the Department of
Education.
(4) For purposes of this subsection, the term
"uncompensated goods or services" shall be limited to any of
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the following:
(i) The full cost of all goods or services provided
by the institution for which the institution has not
received monetary compensation or the difference between
the full cost and any lesser fee received for the goods
or services, including the cost of the goods or services
provided to individuals unable to pay.
(ii) The difference between the full cost of
education and research programs provided by or
participated in by the institution and the payment made
to the institution to support the education and research
programs.
(iii) The difference between the full cost of
providing the goods or services and the payment made to
the institution under any government program, including
individuals covered by Medicare or Medicaid.
(iv) The difference between the full cost of the
community services that the institution provides or
participates in and the payment made to the institution
to support the community services.
(v) The reasonable value of any money, property,
goods or services donated by a primary donor to an
institution of purely public charity or to a government
agency or the reasonable value of the net donation made
by a secondary donor to a primary donor. As used in this
subparagraph, the following words and phrases shall have
the following meanings:
(A) "Net donation." In the case of a donation
of money, property or identical goods or services
made by a secondary donor, the difference between the
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value of the donation made by the secondary donor and
the value of the donation made by the primary donor,
provided the value is positive.
(B) "Primary donor." An institution which makes
a donation of any money, property, goods or services
to an institution of purely public charity.
(C) "Secondary donor." An institution which
receives a donation of any money, property, goods or
services from a primary donor and then makes a
donation back to that primary donor within three
years of having received the donation.
(vi) The reasonable value of volunteer assistance
donated by individuals who are involved or assist in the
provision of goods or services by the institution. The
reasonable value of volunteer assistance, computed on an
hourly basis, shall not exceed the Statewide average
weekly wage as defined in section 105.1 of the act of
June 2, 1915 (P.L.736, No.338) , known as the Workers'
Compensation Act, divided by 40.
(vii) The cost of goods or services provided by an
institution licensed by the Department of Health or the
Department of Human Services to individuals who are
unable to pay, provided that reasonable and customary
collection efforts have been made by the institution.
(viii) The value of any voluntary agreement as set
forth in section 2307(c) (relating to voluntary
agreements).
(e) Charity to persons.--The following shall apply:
(1) The institution must benefit a substantial and
indefinite class of persons who are legitimate subjects of
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charity.
(2) An institution shall be considered to benefit a
substantial and indefinite class of persons who are
legitimate subjects of charity if the institution is
primarily engaged in fundraising on behalf of or making
grants to an institution of purely public charity, an entity
similarly recognized by another state or foreign
jurisdiction, a qualifying religious organization or a
government agency and there is actual contribution of a
substantial portion of the funds raised or contributions
received to an institution of purely public charity, an
entity similarly recognized by another state or foreign
jurisdiction, a qualifying religious organization or a
government agency.
(3) An institution that operates exclusively on a
voluntary basis to provide emergency health and safety
services to the community or an institution that provides
funds and support exclusively to volunteer institutions that
provide emergency health and safety services to the community
shall be considered to benefit a substantial and indefinite
class of persons who are legitimate subjects of charity.
(4) An institution shall not be considered to benefit a
substantial and indefinite class of persons who are
legitimate subjects of charity if:
(i) the institution is not qualified under section
501(c)(3) of the Internal Revenue Code of 1986; and
(ii) the institution is qualified under section
501(c)(4), (5), (6), (7), (8) or (9) of the Internal
Revenue Code of 1986 as any of the following:
(A) An association of employees, the membership
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of which is limited to the employees of a designated
person or persons.
(B) A labor organization.
(C) An agricultural or horticultural
organization.
(D) A business league, chamber of commerce, real
estate board, board of trade or professional sports
league.
(E) A club organized for pleasure or recreation.
(F) A fraternal beneficiary society, order or
association.
(5) As used in this subsection, the following words and
phrases shall have the meanings given to them in this
paragraph:
(i) "Legitimate subjects of charity." Those
individuals who are unable to provide themselves with
what the institution provides for them.
(ii) "Substantial and indefinite class of persons."
Persons not predetermined in number, provided that, where
the goods or services are received primarily by members
of the institution, membership cannot be predetermined in
number and cannot be arbitrarily denied by a vote of the
existing members. This subsection specifically recognizes
that the use of admissions criteria and enrollment
limitations by educational institutions does not
constitute predetermined membership or arbitrary
restrictions on membership so as to violate this section
and recognizes that an institution may reasonably deny
membership based on the types of services it provides, as
long as denial is not in violation of Federal or State
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antidiscrimination laws, such as the Civil Rights Act of
1964 (Public Law 88-352, 78 Stat. 241) and the act of
October 27, 1955 (P.L.744, No.222) , known as the
Pennsylvania Human Relations Act.
(f) Government service.--The institution must relieve the
government of some of its burden. This criterion is satisfied if
the institution meets any one of the following:
(1) Provides a service to the public that the government
would otherwise be obliged to fund or to provide directly or
indirectly or to assure that a similar institution exists to
provide the service.
(2) Provides services in furtherance of its charitable
purpose that are either the responsibility of the government
by law or that historically have been assumed or offered or
funded by the government.
(3) Receives on a regular basis payments for services
rendered under a government program if the payments are less
than the full costs incurred by the institution, as
determined by generally accepted accounting principles.
(4) Provides a service to the public that directly or
indirectly reduces dependence on government programs or
relieves or lessens the burden borne by government for the
advancement of social, moral, educational or physical
objectives.
(5) Advances or promotes religion and is owned and
operated by a corporation or other entity as a religious
ministry and otherwise satisfies the criteria set forth in
this section.
(6) Has a voluntary agreement under section 2307.
(g) Other nonprofit entities.--A nonprofit parent
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corporation, together with all of its subsidiary nonprofit
corporations, may elect to be considered as a single institution
in meeting the criteria set forth in this section as long as all
of the following are met:
(1) Each subsidiary:
(i) is a nonstock corporation of which the nonprofit
parent corporation is the only member; and
(ii) meets the requirements of this section.
(2) The parent:
(i) is a nonstock corporation;
(ii) is qualified by the Internal Revenue Service as
meeting the requirements of section 501(c)(3) of the
Internal Revenue Code of 1986;
(iii) meets the requirements of subsections (b) and
(c); and
(iv) except for services that meet the requirements
of this section, does not render services for a fee to an
individual or entity that does not meet the requirements
of paragraph (1).
(h) Parcel review.--The following shall apply:
(1) Nothing in this chapter shall affect, impair or
hinder the responsibilities or prerogatives of the political
subdivision responsible for maintaining real property
assessment rolls to make a determination whether a parcel of
property or a portion of a parcel of property is being used
to advance the charitable purpose of an institution of purely
public charity or to assess the parcel or part of the parcel
of property as taxable based on the use of the parcel or part
of the parcel for purposes other than the charitable purpose
of that institution.
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(2) Nothing in this chapter shall prohibit a political
subdivision from filing challenges or making determinations
as to whether a particular parcel of property is being used
to advance the charitable purpose of an institution of purely
public charity.
(i) Standards.--An institution of purely public charity may
conduct activities intended to influence legislation provided
that no substantial part of the activities of an institution of
purely public charity shall consist of carrying on propaganda,
except as otherwise provided in section 501(h) of the Internal
Revenue Code of 1986, or participating in or intervening in,
including the publishing or distributing of statements, any
political campaign on behalf of or in opposition to any
candidate for public office as the limitations are interpreted
under section 501 of the Internal Revenue Code of 1986.
§ 2306. Presumption process.
(a) Presumption determination.--An institution of purely
public charity possessing a valid exemption from the tax imposed
by Article II of the act of March 4, 1971 (P.L.6, No.2) , known
as the Tax Reform Code of 1971, shall be entitled to assert a
rebuttable presumption regarding that institution's compliance
with the criteria set forth in section 2305 (relating to
criteria for institutions of purely public charity) as follows:
(1) An institution of purely public charity that has
annual program service revenue less than $10,000,000 shall be
entitled to assert the presumption if the institution
possesses a valid exemption under section 204(10) of the Tax
Reform Code of 1971.
(2) An institution of purely public charity that has
annual program service revenue equal to or exceeding
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$10,000,000 shall be entitled to assert the presumption if
all of the following apply:
(i) the institution possesses a valid exemption
under section 204(10) of the Tax Reform Code of 1971; and
(ii) the institution has a voluntary agreement as
provided under section 2307 (relating to voluntary
agreements) with a political subdivision in which that
institution conducts substantial business operations.
(3) The presumption under paragraph (2) may be asserted
by an institution of purely public charity only with regard
to a challenge made by a political subdivision with which
that institution has a voluntary agreement in effect under
section 2307.
(4) For the purpose of calculating annual program
service revenue under this section, an institution of purely
public charity may elect to average annual program service
revenue for its two most recently completed fiscal years.
(5) Commencing July 1, 1999, and every year thereafter,
the Department of Revenue shall increase the amount set forth
in paragraphs (1) and (2) by 1%. The department shall
transmit notice of the adjustment to the Legislative
Reference Bureau for publication in the Pennsylvania
Bulletin.
(b) Burden of proof.--If an institution of purely public
charity asserts a presumption under subsection (a), a political
subdivision challenging that institution before a government
agency or court shall bear the burden, by a preponderance of the
evidence, of proving that the institution of purely public
charity does not comply with the requirements of section 2305.
(c) Issuance of written order.--The department shall furnish
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a written order to any institution applying for exemption under
section 204(10) of the Tax Reform Code of 1971 approving or
denying the exemption. An order denying an exemption shall
include specific information concerning that institution's
failure to comply with at least one of the criteria under
section 2305.
(d) Waiver of confidentiality.--An institution of purely
public charity asserting a presumption under subsection (a)
shall be deemed to have waived any right to confidentiality with
regard to all records in the possession of the department
relating to the application for exemption. These records shall
be deemed public records that the department must furnish to any
person upon request. A political subdivision challenging the
presumption may request from the institution of purely public
charity all relevant financial statements, records and documents
used to obtain the exemption under section 204(10) of the Tax
Reform Code of 1971. Failure by that institution to supply or,
at its option, to permit inspection of the information in its
possession within 30 days shall eliminate the presumption with
respect to that challenge.
(e) Department involvement.--A determination made under this
section shall not in any way subject the department to
participation in any controversy, discovery or litigation
between a political subdivision and an institution claiming the
exemption as an institution of purely public charity, other than
providing a copy of its written order and any supporting
documentation supplied to the department by that institution.
§ 2307. Voluntary agreements.
(a) General rule.--A political subdivision may execute a
voluntary agreement with an institution that owns real property
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within the political subdivision. All contributions received
from the voluntary agreements shall be used to help ensure that
essential governmental, public or community services will
continue to be provided in a manner that will permit an
institution to continue to fulfill its charitable mission.
Nothing in this section shall be construed to prohibit a
political subdivision from sharing with another political
subdivision a portion of the proceeds derived from a voluntary
agreement upon the mutual agreement of all affected parties.
(b) Public service foundations.--Institutions of purely
public charity may establish a public service foundation, upon
mutual agreement with a political subdivision, for the purpose
of receiving contributions from institutions of purely public
charity. Upon agreement, the foundation shall make distributions
or grants to a participating political subdivision to help
ensure that essential governmental, public or community services
will continue to be provided in a manner that will permit an
institution to continue to fulfill its charitable mission. A
political subdivision which receives a distribution or grant
from a public service foundation shall not assess or seek a
separate contribution for services from institutions of purely
public charity participating in a foundation.
(c) Additional credit for voluntary agreements.--An
institution that has entered into a voluntary agreement may
credit the following percentage of the reasonable value of its
contribution for purposes of computing the community service
criteria set forth in section 2305(d)(4) (relating to criteria
for institutions of purely public charity):
(1) If the reasonable value of the institution's
contribution is equal to or less than 0.15% of its program
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service revenue, the institution may credit the entire
contribution at 150% of its value.
(2) If the reasonable value of the institution's
contribution is greater than 0.15% but less than 0.25% of its
program service revenue, the institution may credit the
entire contribution at 250% of its value.
(3) If the reasonable value of the institution's
contribution is equal to or greater than 0.25% of its program
service revenue, the institution may credit the entire
contribution at 350% of its value.
(d) Existing agreements.--Nothing in this chapter shall be
construed to affect, impair, terminate or supersede any
contract, agreement or other arrangement on or before November
27, 1997, between an institution and a political subdivision
that authorizes or requires payment of taxes, amounts in lieu of
taxes or other charges or fees for the services of a political
subdivision.
(e) New agreements.--Nothing in this chapter shall be
construed to impair or otherwise inhibit the right or ability of
any institution seeking or possessing an exemption as an
institution of purely public charity, a public service
foundation or a political subdivision from executing voluntary
agreements after November 26, 1997.
§ 2308. Unfair competition with small businesses.
(a) Intent.--It is the policy of this chapter that
institutions of purely public charity shall not use their tax-
exempt status to compete unfairly with small businesses.
(b) General rule.--An institution of purely public charity
may not fund, capitalize, guarantee the indebtedness of, lease
obligations of or subsidize a commercial business that is
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unrelated to the institution's charitable purpose as stated in
the institution's charter or governing legal documents.
(c) Exceptions.--Institutions of purely public charity are
not in violation of subsection (b) if any of the following
apply:
(1) The commercial business is intended only for the use
of its employees, staff, alumni, faculty, members, students,
clients, volunteers, patients or residents. For purposes of
this paragraph, a person shall not be considered an employee,
staff, member, alumnus, faculty, student, client, volunteer,
patient or resident if the person's only relationship with
the institution of purely public charity is to receive
products or services resulting from the commercial business.
(2) The commercial business results in sales to the
general public that are incidental or periodic rather than
permanent and ongoing.
(d) Support for other charities.--Nothing in this section
shall be construed as prohibiting or limiting the ability of an
institution of purely public charity to fund, capitalize,
guarantee the indebtedness of or otherwise subsidize another
institution of purely public charity.
(e) Investments.--The investment in publicly traded stocks
and bonds, real estate, whether directly or indirectly, or other
investments by an institution of purely public charity does not
violate subsection (b).
(f) Educational functions.--Use of facilities to host groups
for educational purposes by an institution of purely public
charity does not violate subsection (b).
(g) Government functions.--An institution of purely public
charity may engage in a new commercial business that may
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otherwise be in violation of subsection (b) if the institution
is formally requested to do so by the Commonwealth or a
political subdivision.
(h) Existing business arrangements.--An institution of
purely public charity that prior to March 26, 1998, funded,
capitalized, guaranteed the indebtedness of, leased obligations
of or subsidized a commercial business may continue to own and
operate the businesses without violating subsection (b) as long
as the institution does not substantially expand the scope of
the commercial business. In the event an injunction is issued
under subsection (i), the effect of the injunction shall be
limited to restraining the substantial expansion of the scope of
the commercial business which was initiated after March 26,
1998.
(i) Remedies.--The Department of State shall establish a
system of mandatory arbitration for the purpose of receiving all
complaints from aggrieved small businesses relating to an
institution of purely public charity's alleged violation of this
section. Upon receipt of the complaint, the department shall
direct that the complaint be resolved as follows:
(1) All complaints shall be in the form of a sworn
statement setting forth all allegations and requests for
relief and shall be filed with the department, together with
a fee as prescribed by the department.
(2) Within 10 days of filing the complaint with the
department, the aggrieved small business shall serve a copy
of the complaint on the institution of purely public charity
against which the complaint is filed. The institution of
purely public charity must respond to the complaint within 30
days of its receipt.
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(3) Within 30 days following the period of time allotted
to the institution of purely public charity to respond to the
complaint, the department shall provide an unbiased and
qualified arbitrator who possesses sufficient knowledge
regarding the institutions to adjudicate the matter. If the
institution of purely public charity does not participate in
the arbitration, the arbitrator may issue an order to compel
the participation. An order shall be enforceable by the court
of common pleas in the judicial district where the
arbitration takes place.
(4) The arbitration shall take place in the judicial
district in which the aggrieved small business is located.
The department shall provide the arbitrator all relevant
material regarding the complaint, including the original
complaint, the institution of purely public charity's
response to the complaint and copies of any other relevant
information which the department may possess. The arbitration
shall be completed within one year from the date on which the
arbitrator was assigned.
(5) Within 30 days of the arbitrator's assignment, the
arbitrator shall determine if the complaint sets forth prima
facie evidence that a violation of this section has occurred.
If the arbitrator determines that the complaint does not
contain prima facie evidence, the arbitrator shall issue a
written report detailing the findings and shall terminate the
arbitration. A small business may appeal a determination as
provided under paragraph (9).
(6) The arbitrator shall determine if the activity of
the institution of purely public charity is in violation of
this section. In making this determination, the arbitrator
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shall review all relevant law, including previous
arbitrators' decisions, regulations and the charter or
governing legal documents of the institution of purely public
charity.
(7) The decision of the arbitrator shall be set forth in
a written decision issued to each party specifying findings
of fact and conclusions of law. If the arbitrator finds a
violation of this section, the arbitrator may include an
order or injunction as part of the decision, provided that no
damages may be assessed against an institution of purely
public charity.
(8) Upon agreement of the parties, the decision of the
arbitrator shall be final and binding as to all matters of
fact and law and shall be entered by the arbitrator as a
final judgment in the court of common pleas of the judicial
district in which the arbitration took place. A copy of the
arbitrator's final decision shall also be filed with the
department.
(9) Either party may initiate a de novo appeal from the
arbitrator's decision in the court of common pleas of the
judicial district in which the arbitration took place within
30 days of the arbitrator's decision.
(10) The department may provide for the system of
arbitration by maintaining a list of qualified arbitrators or
by contracting for qualified arbitration services.
(11) The department may adopt regulations necessary to
implement this section.
(12) The cost of an arbitration proceeding, including
the arbitrator's fee, shall be borne by the complainant,
unless the arbitrator directs otherwise. Each party shall be
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responsible for its attorney fees and other costs incurred.
(13) Except as set forth in this section or in
regulations promulgated by the department under this section,
the arbitration shall be governed by 42 Pa.C.S. Ch. 73 Subch.
A (relating to statutory arbitration).
(14) The remedies set forth in this subsection shall be
the exclusive remedies available to an aggrieved small
business.
§ 2309. Accountability and disclosure.
(a) Reporting.--An institution of purely public charity that
does not register with the Department of State under Chapter 13
(relating to solicitation of funds for charitable purposes),
including institutions exempt under section 1306(a) (relating to
exemptions from registration), shall file an annual report with
the bureau. The report shall be filed within 135 days after the
close of the institution's fiscal year unless an extension is
granted by the department. The report shall be in a format
approved by the department and shall include:
(1) A copy of the annual return filed or required to be
filed with the Internal Revenue Service.
(2) The date the institution of purely public charity
was organized under applicable law.
(3) Any revocation of tax-exempt status by the Internal
Revenue Service.
(4) The following information on each affiliate of the
institution of purely public charity:
(i) The name and type of organization.
(ii) Whether the affiliate is organized on a for-
profit or nonprofit basis.
(iii) The relationship of each affiliate to the
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institution of purely public charity making the report.
(5) The relationship of the institution of purely public
charity with any other nonprofit corporation or
unincorporated association if the relationship involves
formal governance or the sharing of revenue.
(b) Regulations.--The department shall promulgate
regulations to require institutions of purely public charity
that register under section 1305 (relating to registration of
charitable organizations; financial reports; fees; failure to
file) to include the information set forth in subsection (a).
(c) Amendments to annual returns.--An institution of purely
public charity that files an amended annual return with the
Internal Revenue Service shall file a copy of the amended annual
return with the bureau within 10 days of its filing with the
Internal Revenue Service.
(d) Exemption from filing.--Each of the following
institutions of purely public charity shall be exempt from the
reporting requirements of this section:
(1) A bona fide duly constituted religious institution
and the separate groups or corporations that form an integral
part of a religious institution and are exempt from filing an
annual return under the Internal Revenue Code of 1986.
(2) An institution of purely public charity that
receives contributions of less than $25,000 per year,
provided that the institution's program service revenue does
not equal or exceed $5,000,000.
(e) Filing fee.--An institution of purely public charity
which is required to file a report under subsection (a) shall
pay an annual filing fee of $15. All fees collected under this
chapter and Chapter 13 shall be deposited in the State Treasury.
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The amount of the filing fee under this subsection may be
adjusted by the department by regulation. All fines, penalties,
attorney fees and costs of investigation collected under this
chapter and under Chapter 13 shall be paid as follows:
(1) Amounts collected by the bureau shall be paid to the
State Treasury.
(2) Amounts collected by the action or litigation of
another government agency shall be paid directly to that
agency.
(f) Paperwork reduction.--The department shall allow an
institution of purely public charity to certify that the
information required in subsection (a)(2), (3), (4) and (5) has
not changed since the prior report in lieu of providing the same
information in the report required by subsection (a). The
department may obtain from the Internal Revenue Service copies
of annual returns of institutions of purely public charity that
file annual returns with the Internal Revenue Service on
computer disk or other electronic or paper media.
(g) Retention of records.--The department shall retain the
reporting information required by this section for three years
from the date the reports are required to be filed.
(h) Utilization of reports.--The department shall make
reports submitted under this section available for public
inspection to the extent that the information is available for
public inspection under section 6104 of the Internal Revenue
Code of 1986. The department shall provide any government agency
a copy of the report filed under this section upon request.
Nothing in this subsection shall prevent a government agency
from requiring any institution seeking exemption as an
institution of purely public charity to provide the information
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described under subsection (a) to that agency as part of a
determination of the tax-exempt status of the institution.
(i) Administrative penalty.--The department may impose an
administrative penalty not to exceed $500 for any of the
following:
(1) Knowingly failing to file the report required by
this section.
(2) Knowingly making a false statement which is material
in a report required by this section.
§ 2310. Exemption for Federal Government instrumentality.
All real property owned by any corporation established by an
act of the Congress of the United States that is required to
submit annual reports of its activities to Congress containing
itemized accounts of all receipts and expenditures after being
fully audited by the Department of Defense, for purposes of the
Constitution of Pennsylvania and the laws of this Commonwealth
relating to the assessment and taxation of real estate, is
deemed to be property of a Federal Government instrumentality
and thus exempt from all State and local taxation.
§ 2311. Prohibited act.
No institution may claim an exemption from sales and use tax
as an institution of purely public charity unless the
institution has received an order from the Department of Revenue
approving and authorizing the exemption.
§ 2312. Compliance.
Institutions of purely public charity shall comply with the
provisions of this chapter and with the provisions of Article II
of the act of March 4, 1971 (P.L.6, No.2) , known as the Tax
Reform Code of 1971.
§ 2313. Civil penalty.
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In addition to any penalties authorized by the act of March
4, 1971 (P.L.6, No.2) , known as the Tax Reform Code of 1971, for
violations of that act, the Department of Revenue may impose an
administrative penalty not to exceed $500 for any willful and
knowing violation of this chapter. This section shall not apply
to any violation of section 2308 (relating to unfair competition
with small businesses).
§ 2314. Repeals.
(a) Absolute.--(Reserved).
(b) General.--All other acts and parts of acts are repealed
insofar as they are inconsistent with this chapter except for
section 204(a)(3) of the act of May 22, 1933 (P.L.853, No.155) ,
known as The General County Assessment Law, as it applies to
charitable organizations providing residential housing services.
§ 2315. Applicability.
(a) General.--This chapter shall not apply to nor affect 40
Pa.C.S. § 6103 (relating to exemptions applicable to certified
hospital plan corporations) or 6307 (relating to exemptions
applicable to certificated professional health service
corporations) or the entities subject to those sections.
(b) Existing sales and use tax exemptions.--An exemption
from tax under section 204(10) of the act of March 4, 1971
(P.L.6, No.2) , known as the Tax Reform Code of 1971, existing on
November 26, 1997, shall remain in effect until the expiration
of that exemption.
(c) Presumption.--No institution of purely public charity
may assert a presumption under section 2306 (relating to
presumption process) until that institution's exemption under
section 204(10) of the Tax Reform Code of 1971 is granted or
renewed after March 25, 1998.
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Section 2. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of 10
Pa.C.S. Ch. 13.
(2) The act of December 19, 1990 (P.L.1200, No.202),
known as the Solicitation of Funds for Charitable Purposes
Act, is repealed.
(3) The General Assembly declares that the repeal under
paragraph (4) is necessary to effectuate the addition of 10
Pa.C.S. Ch. 23.
(4) The act of November 26, 1997 (P.L.508, No.55), known
as the Institutions of Purely Public Charity Act, is
repealed.
Section 3. The addition of 10 Pa.C.S. Ch. 13 is a
continuation of the act of December 19, 1990 (P.L.1200, No.202),
known as the Solicitation of Funds for Charitable Purposes Act.
The following apply:
(1) Except as otherwise provided in 10 Pa.C.S. Ch. 13,
all activities initiated under the Solicitation of Funds for
Charitable Purposes Act shall continue and remain in full
force and effect and may be completed under 10 Pa.C.S. Ch.
13. Orders, regulations, rules and decisions that were made
under the the Solicitation of Funds for Charitable Purposes
Act and that are in effect on the effective date of this
section shall remain in full force and effect until revoked,
vacated or modified under 10 Pa.C.S. Ch. 13. Contracts,
obligations and collective bargaining agreements entered into
under the Solicitation of Funds for Charitable Purposes Act
are not affected nor impaired by the repeal of the
Solicitation of Funds for Charitable Purposes Act.
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(2) Any difference in language between 10 Pa.C.S. Ch. 13
and the Solicitation of Funds for Charitable Purposes Act is
intended only to conform to the style of the Pennsylvania
Consolidated Statutes and is not intended to change or affect
the legislative intent, judicial construction or
administration and implementation of the Solicitation of
Funds for Charitable Purposes Act.
Section 4. The addition of 10 Pa.C.S. Ch. 23 is a
continuation of the act of November 26, 1997 (P.L.508, No.55),
known as the Institutions of Purely Public Charity Act. The
following apply:
(1) Except as otherwise provided in 10 Pa.C.S. Ch. 23,
all activities initiated under the Institutions of Purely
Public Charity Act shall continue and remain in full force
and effect and may be completed under 10 Pa.C.S. Ch. 23.
Orders, regulations, rules and decisions that were made under
the Institutions of Purely Public Charity Act and that are in
effect on the effective date of this section shall remain in
full force and effect until revoked, vacated or modified
under 10 Pa.C.S. Ch. 23. Contracts, obligations and
collective bargaining agreements entered into under the
Institutions of Purely Public Charity Act are not affected
nor impaired by the repeal of the Institutions of Purely
Public Charity Act.
(2) Any difference in language between 10 Pa.C.S. Ch. 23
and the Institutions of Purely Public Charity Act is intended
only to conform to the style of the Pennsylvania Consolidated
Statutes and is not intended to change or affect the
legislative intent, judicial construction or administration
and implementation of the Institutions of Purely Public
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Charity Act.
Section 5. This act shall take effect in 60 days.
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