Amends TCA Title 48, Chapter 101, Part 5.

CHARITABLE ORGANIZATION DEFINITION<br /> <br /> As described in present law regarding the solicitation of charitable funds, a "charitable organization" means a group which is or holds itself out to be a benevolent, educational, voluntary health, philanthropic, humane, patriotic, religious or eleemosynary organization, or for the benefit of law enforcement personnel, firefighters, or other persons who protect the public safety, or any person who solicits or obtains contributions solicited from the public for charitable purposes. A chapter, branch, area, office or similar affiliate or any person soliciting contributions within the state for a charitable organization which has its principal place of business outside the state is a charitable organization. However, the term does not include any authorized individual who solicits, by authority of the organization, solely on behalf of a registered or exempt organization, or on behalf of an organization excluded from the definition of charitable organization.<br /> <br /> This bill adds to the definition of a "charitable organization" by including a person that is determined by the internal revenue service to be a tax-exempt organization pursuant to the Internal Revenue Code.<br /> <br /> DISASTERS<br /> <br /> Present law provides that any charitable organization, other than a bona fide religious institution, that solicits and receives contributions exceeding $25,000 for a charitable purpose related to a disaster in this state must file quarterly financial reports with the secretary of state detailing the money raised and expended by the organization as a result of the solicitation, until the funds are expended. The first quarterly report must be filed on the last day of the third month following the commencement of solicitations.<br /> <br /> Additionally, present law provides that any charitable organization other than a bona fide religious institution, which solicited and received contributions exceeding $25,000 for a charitable purpose related to a disaster in this state between May 1, 2010, and May 20, 2011, must file a financial report with the secretary of state on June 30, 2011. The report must detail all funds received and expended by the organization as a result of the solicitation. After June 30, 2011, the organization must file quarterly financial reports with the secretary of state, on forms prescribed by the secretary of state, detailing the money raised and expended by the organization as a result of the solicitation, until the funds are expended.<br /> <br /> Finally, present law provides that any charitable organization, other than a bona fide religious institution, that solicits and receives contributions exceeding $25,000 for a charitable purpose related to a disaster in this state and that does not expend all contributions received within two years of the commencement of solicitations to file a report with both the secretary of state and the attorney general detailing both the timing and anticipated placement for the expenditures of the remaining funds. This report must be filed by the last day of the 24th month following the commencement of solicitations. A charitable organization may request an exemption from the requirements of this provision from the secretary of state and the attorney general; however, both the secretary of state and the attorney general must first approve the request.<br /> <br /> As used in the above provisions, “disaster” means any natural, technological, or civil emergency that causes damage of sufficient severity and magnitude to result in a declaration of a state of emergency by a county, the governor, or the president of the United States. This bill adds to the definition of "disaster" by dividing a disaster into three categories based on the severity of the resulting damage, which are (i) catastrophic disasters that require massive state and federal assistance, including immediate military involvement, (ii) major disasters that will likely exceed local capabilities and require a broad range of state and federal assistance, and (iii) minor disasters that are likely to be within the response capabilities of local government and to result in only a minimal need for state or federal assistance.<br /> <br /> EXEMPTIONS<br /> <br /> Present law provides that the registration requirements under the existing law regarding solicitation of charitable funds do not apply to a charitable organization that does not raise or receive gross contributions from the public in excess of $50,000 during a fiscal year. However if the contributions raised from the public by any charitable organization during any fiscal year exceed $50,000, the charitable organization, within 30 days after the date it receives total contributions exceeding $50,000, must register with, and report to, the secretary of state.<br /> <br /> This bill adds to the present law by requiring a charitable organization to file registration statements with the secretary of state if a portion of their fundraising activities are conducted by professional solicitors, professional fundraising counsel, or commercial coventurers.<br /> <br /> Present law requires each organization claiming to be exempt pursuant to the above present law to file annually the form required under existing law with the secretary of state within six months of the close of its fiscal year. This bill adds to the present law by providing that an organization that fails to file the form required by existing law may be subject to the imposition of civil penalties pursuant to the enforcement by the secretary of state for a violation of the existing law regarding solicitation of charitable funds.<br /> <br /> BONA FIDE RELIGIOUS INSTITUTION<br /> <br /> Present law provides that any charitable organization, other than a bona fide religious institution, that solicits and receives contributions exceeding $25,000 for a charitable purpose related to a disaster in this state must file quarterly financial reports with the secretary of state, on forms prescribed by the secretary of state, detailing the money raised and expended by the organization as a result of the solicitation, until the funds are expended. The first quarterly report must be filed on the last day of the third month following the commencement of solicitations.<br /> <br /> Additionally, present law provides that any charitable organization other than a bona fide religious institution, which solicited and received contributions exceeding $25,000 for a charitable purpose related to a disaster in this state between May 1, 2010, and May 20, 2011, must file a financial report with the secretary of state, on a form prescribed by the secretary of state, on June 30, 2011. The report must detail all funds received and expended by the organization as a result of the solicitation. After June 30, 2011, the organization must file quarterly financial reports with the secretary of state, on forms prescribed by the secretary of state, detailing the money raised and expended by the organization as a result of the solicitation, until the funds are expended.<br /> <br /> Finally, present law provides that any charitable organization, other than a bona fide religious institution, that solicits and receives contributions exceeding $25,000 for a charitable purpose related to a disaster in this state and that does not expend all contributions received within two years of the commencement of solicitations to file a report with both the secretary of state and the attorney general detailing both the timing and anticipated placement for the expenditures of the remaining funds. This report must be filed by the last day of the 24th month following the commencement of solicitations. A charitable organization may request an exemption from the requirements of this provision from the secretary of state and the attorney general; however, both the secretary of state and the attorney general must first approve the request.<br /> <br /> SECRETARY OF STATE'S RULEMAKING<br /> <br /> Present law requires the secretary of state to prescribe a uniform system of accounting to determine "fund-raising costs" and "gross contributions" and may adopt rules to carry out the provisions regarding solicitation of charitable funds. The secretary of state is authorized to promulgate rules as the secretary of state may deem necessary. This bill deletes these provisions.<br /> <br /> FILING OF REGISTRATION STATEMENT<br /> <br /> Present law requires every charitable organization that intends to solicit contributions from or within this state, or have funds solicited on its behalf, to, prior to any solicitation, file a registration statement with the secretary of state, upon forms prescribed by the secretary of state. The secretary of state may prescribe and furnish forms and filing methods for all filings required by existing law. Any registration statement that contains false, misleading, deceptive, or incomplete information or documentation is not considered sufficient, except as specifically otherwise provided by existing law.<br /> <br /> Present law further requires the initial registration statement to contain the place where, and the date when, the organization was legally established, the form of its organization, and a reference to any determination of its tax exempt status under the Internal Revenue Code. This bill adds to the present law by requiring the initial registration statement to contain a copy of the completed application that has been submitted to the internal revenue service and any letters from the internal revenue service acknowledging receipt of the application if the organization has applied for, but not received, a determination of tax-exempt status.<br /> <br /> Present law also requires the initial registration statement to contain a statement as to whether the organization is authorized by any other governmental authority to solicit contributions and whether it is or has ever been enjoined by any court from soliciting contributions. This bill adds to the present law by requiring the initial registration statement to contain a statement as to whether the organization has ever been subject to an administrative order.<br /> <br /> Present law requires the registration forms and any other documents prescribed by the secretary of state to be signed by two authorized officers of the charitable organization, and such forms and documents must be accompanied by an initial registration fee of $50. However, bona fide Indian organizations whose principal purpose is to assist and promote the welfare of Indians must be exempt from the registration fee. Present law requires a bona fide Indian organization to be one that has been in existence for more than 20 years and that carries out programs and provides services to federally recognized Indians; this bill deletes this last sentence.<br /> <br /> Present law requires, during its first year of operation, a newly registered charitable organization to provide quarterly financial reports, due within 30 days after the end of each quarter of its current fiscal year, containing the amounts spent for overhead, expenses, commissions and similar purposes. The bill changes this provision by not requiring the amount spent on overhead to be included in the quarterly financial report.<br /> <br /> Finally, present law requires any organization that has applied for but not received a determination of tax exempt status to file a copy of the completed application that has been submitted to the internal revenue service, and any letters received from the internal revenue service acknowledging receipt of the application. This bill deletes this provision entirely.<br /> <br /> RENEWAL OF REGISTRATION STATEMENT<br /> <br /> Present law requires the renewal registration to be accompanied by a copy of a financial statement on forms approved by the secretary of state. Such report must also specifically identify the amount of funds raised and all costs and expenses incidental thereto, all publicity costs, and costs of allocation or disbursement of funds raised. This report must be signed by at least two authorized officers of the organization, one of whom must be the chief fiscal officer. Such officers must certify that such report is true and correct to the best of their knowledge.<br /> <br /> This bill changes the present law and requires, instead, that the renewal registration be accompanied by a copy of any and all forms required to be filed by the organization with the U.S. internal revenue service, and any other information the secretary deems appropriate to substantiate how funds were raised and spent by the organization. Such other information must be provided on forms approved by the secretary. At least two authorized officers of the organization, one of whom must be the chief fiscal officer, must certify that the information provided under this bill is true and correct to the best of their knowledge <br /> <br /> Present law requires each charitable organization to file all required information with the secretary of state within six months of the close of its fiscal year. The last day of the sixth month following the month in which the fiscal year of the organization ends must be the anniversary date of the organization. All registrations must expire each year on the anniversary date of the organization. Each annual registration application must be received by the secretary of state on or before the anniversary date. Each charitable organization must be required to supplement its registration application during the registration period as changes occur which affect the required documentation.<br /> <br /> However, present law authorizes the secretary of state to extend the time for filing a renewal application for a period not to exceed 90 days, during which time the previous registration remains in effect. This bill changes the present law by only authorizing the secretary of state to extend the time for filing a renewal application for good cause shown for a period not to exceed 90 days, during which time the previous registration remains in effect. <br /> <br /> Present law requires applications received after the expiration of the current registration period to be assessed a late fee of $25 for each month, or portion thereof, that the report is late filed. The late filing fee must accompany every late-filed application. In addition to the late fee, any organization which files a late application is also subject to the imposition of civil penalties. This bill changes the existing law and provides, instead, that any organization which files a late application may also be subject to the imposition of civil penalties.<br /> <br /> PROFESSIONAL SOLICITOR REGISTRATION<br /> <br /> Present law prohibits a person from acting as a professional solicitor for any charitable organization, whether exempt or not, unless such person has first registered with the secretary of state. Registration must include the filing of a complete application, bond and filing fee. All registrations for professional solicitors expire on December 31 of the year for which they are issued.<br /> <br /> Present law requires applications received after December 31 to be assessed a late fee of $25 for each month, or portion thereof, that the report is late filed. The late filing fee must accompany every late-filed application. In addition to the late fee provided for herein, any organization which files a late application is also subject to the imposition of civil penalties. This bill changes the existing law and provides, instead, that any organization which files a late application may also subject to the imposition of civil penalties.<br /> <br /> Present law requires a professional solicitor to file a financial report for a solicitation campaign with the secretary of state within 90 days after a solicitation campaign has been completed or within 90 days after the end of the fiscal year end of any campaign which lasts for more than one year. The financial report must include gross revenue and an itemization of all expenditures from those funds. The report must be completed on a form prescribed by the secretary of state and signed by an authorized official of the professional solicitor and two authorized officials of the charitable organization, who must certify that such report is true and complete to the best of their knowledge. The financial report must be audited by an independent certified public accountant in accordance with generally accepted auditing standards or regulations which may be issued by the secretary of state. If the solicitation campaign which is conducted by a professional solicitor is one conducted nationally or regionally and is not confined only to this state, then the financial information required to be filed must be inclusive of the national or regional campaign. Each charitable organization must make available to its professional solicitor any necessary fiscal or other records needed to enable the professional solicitor to comply with existing law.<br /> <br /> Present law further requires financial reports for solicitation campaigns to be assessed a late fee of $25 for each month, or portion thereof, that the report is late filed. The late filing fee must accompany every late-filed campaign report. In addition to the late fee provided for herein, any person who files a late financial report is also subject to the imposition of civil penalties. This bill changes the existing law and provides, instead, that any person who files a late application may also be subject to the imposition of civil penalties.<br /> <br /> DENIAL OF EXEMPTION OR REGISTRATION<br /> <br /> Present law requires the department of state's division of business and charitable organizations ("division") to examine each registration statement and supporting documents filed by all applicants and to determine whether the registration requirements are satisfied. If the division determines that the registration requirements are not satisfied, the department must notify the applicant within 10 working days of its receipt of its registration statement or the registration statement is deemed to be approved. Within seven days after receipt of notification that the regulation requirements are not satisfied, the applicant 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 business days of the hearing.<br /> <br /> This bill changes the existing law and requires, instead the division must examine each filing and supporting documents submitted by all applicants and to determine whether the registration requirements are satisfied. If the registration requirements are not satisfied, then the division must deny the registration or take other action provided under this bill. The division must notify the applicant within 10 business days if a registration application or renewal application has been denied or if an action is taken in response to an exemption statement filed under existing law. Within seven business days after receipt of the notification that the registration requirements are not satisfied or that an action is taken in response to an exemption statement filed under existing law, the applicant may request administrative review. The administrative review must be held within seven business days of the request. A final decision regarding the denial of the applicant's registration must be rendered within three business days of the administrative review. <br /> <br /> FISCAL RECORDS<br /> <br /> In accordance with rules promulgated by the secretary of state, present law requires every charitable organization and professional solicitor to keep (i) true and accurate fiscal records and (ii) true records regarding the conduct of any solicitation campaigns. This bill still requires every charitable organization and professional solicitor to keep records but it does not require such organizations and solicitors to keep the records in accordance with rules prescribed by the secretary of state.<br /> <br /> IDENTIFICATION OF SOLICITOR<br /> <br /> Present law provides that it is the duty of every charitable organization to furnish identification to persons who solicit contributions from the public on behalf of the charitable organization. The solicitor is required to have and produce or display, on demand, identification indicating that the solicitor has been duly authorized by the organization for which the solicitor is soliciting. This bill provides that if a person solicits by telephone, then the identifications required by this provision must be made orally.<br /> <br /> PROHIBITIONS<br /> <br /> This bill prohibits a person from making any representation that such person is soliciting contributions for or on behalf of a charitable organization or from using or displaying any emblem, device or printed matter belonging to or associated with a charitable organization for the purpose of soliciting or inducing contributions from the public without first being authorized to do so by the charitable organization. This bill requires the authorization from the charitable organization to be in a writing signed by the charitable organization.<br /> <br /> Present law prohibits a person from, in connection with the solicitation of contributions or the sale of goods, magazines, newspaper advertising, or any other service, using the name “POLICE,” “FIREFIGHTER,” or “FIREMEN,” unless properly authorized by a bona fide police or firefighter organization or police or fire department. Such authorization must bear the signatures of two bona fide members of the organization or department.<br /> <br /> This bill adds to the present law by also prohibiting a person from using the name veteran, unless properly authorized. This bill also allows veteran organizations, police departments, and fire departments to authorize the use of the name police, firefighter, firemen, or veteran. Finally, this bill requires any authorization to be in writing. <br /> <br /> This bill requires a charitable organization or person that is not a charitable organization that places or maintains a collection receptacle for the purpose of collecting donated clothing, household items, or similar goods to maintain a comprehensive list of the location of every such collection receptacle placed or managed by the organization or person within this state. Such list, along with any written permissions required by existing law, must be filed by the charitable organization or person who is not a charitable organization that places or maintains a collection receptacle for the purpose of collecting donated clothing, household items, or similar goods with the secretary of state on forms prescribed by the secretary of state. Such list must be filed on an annual basis, and an updated list must also be filed within 14 days of the placement of a new bin or the change of a bin's location. <br /> <br /> ENFORCEMENT BY SECRETARY OF STATE <br /> <br /> Present law provides that the secretary of state, upon the secretary of state's own motion or upon complaint of any person, if the secretary of state has reasonable ground to suspect any violation of existing law regarding solicitation of charitable funds or to aid in enforcement of the existing law regarding solicitation of charitable funds, may publicly or privately investigate as the secretary of state deems necessary any charitable organization, professional solicitor or other person to determine whether such person or organization has filed any registration application or other information required that contains false or misleading statements, has conducted any solicitation of contributions by any unfair, false, misleading or deceptive means or manner, or has otherwise violated any provision of the existing law. If the secretary of state finds that any application or other information contains false or misleading statements or that a registrant has violated the provisions of the existing law regarding the solicitation of charitable funds, then the secretary of state may find that such registrant's registration is improper or unlawful. Further, the secretary of state, or the secretary of state's authorized representative, may impose a civil penalty of not more than $5,000 for each and any violation. Upon notice to the affected parties of an order by the secretary of state that registration is improper or unlawful and/or that sanctions should be imposed, including civil penalties, the affected party may seek review of that decision by requesting a contested case hearing.<br /> <br /> This bill changes the present law by authorizing the secretary of state to assess a civil penalty for each and any violation instead of impose a civil penalty. Finally, this bill changes the present law by providing that upon notice to the affected parties of an order by the secretary of state that registration is improper or unlawful or that sanctions should be assessed, including civil penalties, the affected party may seek review of that decision by requesting a contested case hearing. <br /> <br /> Present law provides that whenever any assessment has become final, because of a person's failure to appeal the secretary of state's assessment or otherwise, the secretary of state, in the name of the state, may apply to the appropriate court for a judgment and seek execution on such judgment. The court, in such proceedings, must treat the failure to appeal such assessment as a confession of judgment in the amount of the assessment.<br /> <br /> This bill adds to the present law by providing that whenever any assessment has become final, because of a person's failure to appeal the secretary of state's assessment or otherwise, the secretary of state, in the name of the state through the attorney general, may apply to the appropriate court for a judgment and seek execution on such judgment. <br /> <br /> This bill authorizes, in addition to other actions authorized by law, the secretary of state, by order, letter, or other appropriate means, to enjoin the charitable organization, professional fundraiser, or other person from continuing an act or violation, or committing other acts in furtherance of it, during the course of an investigation.<br /> <br /> Present law authorizes, in case of a refusal to obey a subpoena issued to any person under the existing law regarding solicitation of charitable funds, any circuit or chancery court of this state within the jurisdiction in which the person refusing to obey the subpoena resides or is found to issue to such person, upon application by the secretary of state, an order requiring such person to appear before the court to show cause why such person should not be held in contempt for refusal to obey the subpoena. Failure to obey a subpoena may be punished by the court as a contempt of court.<br /> <br /> This bill adds to the present law by authorizing, in case of a refusal to obey a subpoena issued to any person under the existing law regarding solicitation of charitable funds, any circuit or chancery court of this state within the jurisdiction in which the person refusing to obey the subpoena resides or is found to issue to such person, upon application by the secretary of state, in the name of the state, through the attorney general, an order requiring such person to appear before the court to show cause why such person should not be held in contempt for refusal to obey the subpoena. <br /> <br /> Present law provides that at any time prior to the return date specified in the secretary of state's subpoena or request for production of documents, exhibits, or things pursuant to existing law regarding the solicitation of charitable funds, or within the 10 days following service of such subpoena or request, whichever is shorter, any person from whom information has been requested may petition the circuit or chancery court of Davidson County, stating good cause, for a protective order to extend the return date for a reasonable time, or to modify or set aside the subpoena or request for production. The secretary of state must receive at least one day's notice of such a petition and must be given an opportunity to respond. This bill changes these provisions by (i) changing the 10 days to 10 business days and (ii) requiring the secretary of state to receive at least five business days' notice of such a petition, instead of one day's notice. <br /> <br /> Present law provides that whenever it appears to the secretary of state that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of the existing law regarding solicitation of charitable funds or any rule or order hereunder, and that proceeding would be in the public interest, the secretary of state may in the secretary of state's discretion bring an action, in the name of the state, through the attorney general in the circuit or chancery court of any county of this state, to impose civil penalties. This bill changes this provision by authorizing the secretary of state to bring an action to assess civil penalties instead of impose civil penalties.<br /> <br /> Present law authorizes the action from the above provision to be brought in a court of competent jurisdiction in the county where the alleged violation took place, is taking place, or is about to take place, or in the county in which such person resides, has such person's principal place of conducting solicitations, conducts, transacts, or has transacted solicitations or, if the person cannot be found in any of the foregoing locations, in the county in which such person can be found. The bill changes this provision by deleting the portion that authorizes the action to be brought in the county which such person can be found if the person cannot be found in any of the foregoing locations.<br /> <br /> WRITTEN AGREEMENT<br /> <br /> Present law requires that, prior to any charitable sales promotion in this state, the commercial co-venturer must have a written agreement with the charitable or civic organization on whose behalf the charitable sales promotion is to be conducted. The agreement must be signed by an authorized representative of the commercial co-venturer and two officers of the charitable or civic organization.<br /> <br /> This bill adds to the present law by requiring the executed agreement to be filed by the charitable or civic organization with the secretary of state at least five business days before the initiation of the charitable sales promotion. The executed agreement must be filed on forms prescribed by the secretary of state and must state the names of the charitable or civic organization and commercial co-venturer, that the charitable organization and the commercial co-venturer will conduct a charitable sales promotion, and the date the charitable sales promotion is expected to commence.<br />