PRINTER'S NO. 2399
No. 1716 Session of 1990
INTRODUCED BY RHOADES, JUNE 29, 1990
REFERRED TO STATE GOVERNMENT, JUNE 29, 1990
AN ACT 1 Providing for the registration and regulation of solicitations 2 by charitable organizations, professional fundraisers and 3 other solicitors; imposing additional powers on the 4 Department of State and the Office of Attorney General; 5 prescribing civil and criminal penalties; and making a 6 repeal. 7 TABLE OF CONTENTS 8 Section 1. Short title. 9 Section 2. Legislative intent. 10 Section 3. Definitions. 11 Section 4. Powers and duties of secretary. 12 Section 5. Registration of charitable organizations; financial 13 reports; fees; failure to file. 14 Section 6. Exemptions from registration. 15 Section 7. Short form registration. 16 Section 8. Registration of professional fundraising counsel, 17 and contracts. 18 Section 9. Registration of professional solicitors; contract 19 and disclosure requirements; bonds; records;
1 books. 2 Section 10. Contracts voidable by charitable organizations. 3 Section 11. Information filed to become public records. 4 Section 12. Records to be kept by charitable organizations, 5 professional fundraising counsels and 6 professional solicitors; inspection; retention. 7 Section 13. Limitation on activities of charitable 8 organizations; disclosure requirements. 9 Section 14. Reciprocal agreements. 10 Section 15. Prohibited acts. 11 Section 16. Investigation; subpoenas; injunctions; court 12 orders. 13 Section 17. Administrative enforcement and penalties. 14 Section 18. Criminal penalties. 15 Section 19. Civil penalties. 16 Section 20. Additional regulations by counties, municipalities 17 or consolidated government. 18 Section 21. Charitable organizations deemed fiduciary. 19 Section 22. Prior registration unaffected. 20 Section 23. Repeals. 21 Section 24. Appropriation. 22 Section 25. Effective date. 23 The General Assembly of the Commonwealth of Pennsylvania 24 hereby enacts as follows: 25 Section 1. Short title. 26 This act shall be known and may be cited as the Solicitation 27 of Funds for Charitable Purposes Act. 28 Section 2. Legislative intent. 29 It is the intention of the General Assembly that this act 30 shall not merely require proper registration of charitable 19900S1716B2399 - 2 -
1 organizations, professional fundraisers and professional 2 solicitors, but shall protect the citizens of this Commonwealth 3 by requiring full public disclosure of the identity of persons 4 who solicit contributions from the public, the purposes for 5 which such contributions are solicited and the manner in which 6 they are actually used, by promoting consumer education about 7 charitable concerns, and by providing civil and criminal 8 penalties for deception and dishonest statements and conduct in 9 the solicitation and reporting of contributions for or in the 10 name of charitable purposes, and by publicizing matters relating 11 to fraud, deception and misrepresentation perpetrated in the 12 name of charity. This act shall not be construed to be exclusive 13 in its purview and its application shall not operate as a bar or 14 otherwise prevent the contemporaneous or subsequent application 15 of any other relevant act or acts. 16 Section 3. Definitions. 17 The following words and phrases when used in this act shall 18 have the meanings given to them in this section unless the 19 context clearly indicates otherwise: 20 "Administrative costs." All management and general costs of 21 a charitable organization, not identifiable with a single 22 program or fundraising activity, but indispensable to the 23 conduct of such programs and activities and to an organization's 24 existence, including expenses for the overall direction of the 25 organization, business management, general record keeping, 26 budgeting, financial reporting and related activities, salaries, 27 rent, supplies, equipment and general overhead expenses. 28 "Affiliate." Any chapter, branch, auxiliary or other 29 subordinate unit of any charitable organization, howsoever 30 designated, whose policies, fundraising activities and 19900S1716B2399 - 3 -
1 expenditures are supervised or controlled by such parent 2 organization. 3 "Bureau." The Bureau of Charitable Organizations of the 4 Department of State. 5 "Charitable organization." Any person granted tax exempt 6 status under section 501(c)(3) of the Internal Revenue Code of 7 1986 (Public Law 99-514, 26 U.S.C. § 501(c)(3)) or any person 8 who is or holds himself out to be established for any charitable 9 purpose or any person who in any manner employs a charitable 10 appeal as the basis of any solicitation or an appeal which has a 11 tendency to suggest there is a charitable purpose to any 12 solicitation. An affiliate of a charitable organization which 13 has its principal place of business outside this Commonwealth 14 shall be a charitable organization for the purposes of this act. 15 The term shall not be deemed to include: 16 (1) any bona fide duly constituted organization of law 17 enforcement personnel, firefighters or other persons who 18 protect the public safety whose stated purpose in the 19 solicitation does not include any benefit to any person 20 outside the actual active membership of the organization; and 21 (2) any bona fide duty constituted religious 22 institutions and such separate groups or corporations which 23 form an integral part of religious institutions, provided 24 that: 25 (i) such religious institutions, groups or 26 corporations are tax exempt pursuant to the Internal 27 Revenue Code of 1986; 28 (ii) no part of their net income inures to the 29 direct benefit of any individual; and 30 (iii) their conduct is primarily supported by 19900S1716B2399 - 4 -
1 government grants or contracts or funds solicited within 2 their own memberships or congregations, or fees charged 3 for services rendered. 4 "Charitable promotion." Any advertising or sales campaign, 5 event or performance, conducted, produced, promoted, 6 underwritten, arranged or sponsored by a commercial co-venturer, 7 which represents that the purchase or use of goods or services 8 or attendance at events or performances offered or sponsored by 9 the commercial co-venturer will benefit, in whole or in part, a 10 charitable organization or purpose. 11 "Charitable purpose." Any benevolent, educational, 12 philanthropic, humane, scientific, patriotic, social welfare or 13 advocacy, public health, environmental conservation, civic or 14 other eleemosynary objective, including an objective of any bona 15 fide duly constituted organization of law enforcement personnel, 16 firefighters or other persons who protect the public safety if a 17 stated purpose of the solicitation includes any benefit to any 18 person outside the actual active membership of the organization. 19 "Commercial co-venturer." Any person who for profit is 20 regularly and primarily engaged in trade or commerce other than 21 in connection with the raising of funds or any other thing of 22 value for a charitable organization and who advertises that the 23 purchase or use of goods, services, entertainment or any other 24 thing of value will benefit a charitable organization. 25 "Contribution." The promise, grant or pledge of money, 26 credit, property, financial assistance or other thing of any 27 kind or value in response to a solicitation, including the 28 payment or promise to pay in consideration of a performance, 29 event or sale of a good or service. Payment by members of an 30 organization for membership fees, dues, fines or assessments or 19900S1716B2399 - 5 -
1 for services rendered to individual members, if such fees, dues, 2 fines or assessments confer a bona fide right, privilege, 3 professional standing, honor or other direct benefit, shall not 4 be deemed contributions, provided that membership is not 5 conferred solely as consideration for making a contribution in 6 response to a solicitation. Government grants or contracts shall 7 not be deemed a contribution. 8 "Department." The Department of State of the Commonwealth. 9 "Federated fundraising organization." A federation of 10 independent charitable organizations which have voluntarily 11 joined together including, but not limited to, a United Way or 12 Community Chest, for purposes of raising and distributing money 13 for and among themselves and where membership does not confer 14 upon the federated group organization operating authority and 15 control of the individual agencies. 16 "Firefighters." Any person who is or represents or holds 17 itself out to represent, aid, train or otherwise benefit any 18 paid or volunteer firefighter, active or retired, or their 19 families. 20 "Fundraising costs." Those costs incurred in inducing others 21 to make contributions to a charitable organization for which the 22 contributors will receive no direct economic benefit. 23 Fundraising costs normally include, but are not limited to, 24 salaries, rent, acquiring and maintaining mailing lists, 25 printing, mailing and all direct and indirect costs of 26 soliciting, as well as the cost of unsolicited merchandise sent 27 to encourage contributions. Fundraising costs do not include the 28 direct cost of merchandise or goods sold or the direct cost of 29 fundraising dinners, bazaars, shows, circuses, banquets, 30 dinners, theater parties or any other form of benefit 19900S1716B2399 - 6 -
1 performances. 2 "Law enforcement personnel." Any person who is or represents 3 or holds itself out to represent, aid, train or otherwise 4 benefit any police officer, sheriff or deputy sheriff, constable 5 or deputy constable, county detectives, fire police, or any 6 other person who is empowered to make arrests, serve warrants, 7 issue summons or otherwise enforce the laws of this Commonwealth 8 to include retired law enforcement personnel and the families of 9 law enforcement personnel. 10 "Net proceeds." The total proceeds received from the 11 solicitation of contributions reduced by the direct cost of 12 merchandise or other goods sold or fundraising events of any 13 kind. 14 "Owner." Any person who has a direct or indirect interest in 15 any professional fundraising counsel or professional solicitor. 16 "Parent organization." That part of a charitable 17 organization which coordinates, supervises or exercises control 18 of policy, fundraising and expenditures, or assists or receives 19 funds from or advises one or more affiliates. 20 "Person." Any individual, organization, corporation, 21 association, partnership, trust, foundation or any other entity 22 however styled. 23 "Professional fundraising counsel." Any person who is 24 retained by a charitable organization for a fixed fee or rate 25 under a written agreement to plan, conduct, manage, carry on, 26 advise, consult or prepare material for or with respect to the 27 solicitation in this Commonwealth of contributions for a 28 charitable organization, but who does not solicit contributions 29 or employ, procure or engage any compensated person to solicit 30 contributions and who does not have custody or control of 19900S1716B2399 - 7 -
1 contributions. A bona fide salaried officer or regular, 2 nontemporary employee of a charitable organization maintaining a 3 permanent establishment within this Commonwealth shall not be 4 deemed to be a professional fundraising counsel provided that 5 the individual is not employed or engaged as professional 6 fundraising counsel or as a professional solicitor by any other 7 person. 8 "Professional solicitor." Any person who is retained for 9 financial or other consideration by a charitable organization to 10 solicit in this Commonwealth contributions for charitable 11 purposes directly or in the form of payment for goods, services 12 or admission to fundraising events, whether such solicitation is 13 performed personally or through his agents, servants or 14 employees or through agents, servants or employees especially 15 employed by or for a charitable organization who are engaged in 16 the solicitation of contributions, the sale of goods or services 17 or the production of fundraising events under the direction of 18 such person, or a person who plans, conducts, manages, carries 19 on, advises, consults, whether directly or indirectly, in 20 connection with the solicitation of contributions, sale of goods 21 or services or the production of fundraising events for or on 22 behalf of any charitable organization, but does not qualify as a 23 "professional fundraising counsel" within the meaning of this 24 act. A person who is otherwise a professional fundraising 25 counsel shall be deemed a professional solicitor if his 26 compensation is related to the amount of contributions received. 27 A bona fide salaried officer or regular, nontemporary employee 28 of a charitable organization maintaining a permanent 29 establishment within this Commonwealth shall not be deemed to be 30 a professional solicitor provided that the individual is not 19900S1716B2399 - 8 -
1 employed or engaged as professional fundraising counsel or as a 2 professional solicitor by any other person. 3 "Secretary." The Secretary of the Commonwealth. 4 "Solicitation." Any direct or indirect request for a 5 contribution on the representation that such contribution will 6 be used in whole or in part for a charitable purpose including, 7 but not limited to, any of the following: 8 (1) Any oral request that is made in person, by 9 telephone, radio or television or other advertising or 10 communication media. 11 (2) Any written or otherwise recorded or published 12 request that is mailed, sent, delivered, circulated, 13 distributed, posted in a public place or advertised or 14 communicated by press, telegraph, television or any other 15 media. 16 (3) Any sale of, offer or attempt to sell any 17 advertisement, advertising space, sponsorship, book, card, 18 chance, coupon, device, food, magazine, merchandise, 19 newspaper, subscription, ticket or other service or tangible 20 good, thing or item of value. 21 (4) Any announcement requesting the public to attend an 22 appeal, assemblage, athletic or competitive event, carnival, 23 circus, concert, contest, dance, entertainment, exhibition, 24 exposition, game, lecture, meal, party, show, social 25 gathering or other performance or event of any kind. 26 Section 4. Powers and duties of secretary. 27 The secretary shall have the following powers and duties to: 28 (1) Provide for and regulate the registration of 29 charitable organizations, professional fundraising counselors 30 and professional solicitors. 19900S1716B2399 - 9 -
1 (2) Decide matters relating to the issuance, renewal, 2 suspension or revocation of registration. 3 (3) Promulgate, adopt and enforce the rules and 4 regulations necessary to carry out this act. 5 (4) Promulgate regulations altering fees and fines 6 established in this act sufficient to meet expenditures of 7 the bureau. 8 (5) Take appropriate action to initiate any civil or 9 criminal proceedings necessary to enforce this act, in 10 accordance with the act of October 15, 1980 (P.L.950, 11 No.164), known as the Commonwealth Attorneys Act. 12 (6) Conduct hearings and make adjudications. 13 (7) Keep a record showing the names and addresses of all 14 registered charitable organizations, professional fundraising 15 counsel and professional solicitors. 16 (8) Submit annually, on or before September 30, to the 17 Governor, to the State Government Committees of the House of 18 Representatives and Senate, as well as to interested parties, 19 a report on the number of registered charities, the number of 20 charities ordered to cease and desist solicitation, the 21 number of charities contracting with professional solicitors 22 and the compensation of professional solicitors for each 23 solicitation campaign in relation to the funds raised and 24 administrative costs. 25 (9) Delegate to a division director of his office such 26 powers and duties under this act as he may deem appropriate. 27 (10) Exercise all other authority accorded to him by 28 this act. 29 Section 5. Registration of charitable organizations; financial 30 reports; fees; failure to file. 19900S1716B2399 - 10 -
1 (a) Registration and approval required.--A charitable 2 organization, unless exempted from registration requirements 3 pursuant to section 6, shall file a registration statement with 4 the department. This statement must be refiled annually within 5 135 days after the close of its fiscal year in which the 6 charitable organization was engaged in solicitation activities. 7 The department shall review the statement pursuant to section 8 5(r). No charitable organization shall solicit contributions or 9 have contributions solicited in its behalf before approval of 10 its registration statement by the department. 11 (b) Filing of statement.--It shall be the duty of the 12 president, chairman or principal officer of each charitable 13 organization to file the registration statement, financial 14 report and fee required under this section. The registration 15 statement shall be sworn to by two authorized officers, 16 including the chief fiscal officer of the organization, and 17 shall contain all of the following information: 18 (1) The name of the organization and any other name or 19 names under which it intends to solicit contributions. 20 (2) The principal address and telephone number of the 21 organization and the addresses and telephone numbers of any 22 offices in this Commonwealth. If the organization does not 23 maintain an office, the name and address of the individual 24 having custody of its financial records. 25 (3) The names and addresses of any affiliates which 26 share in the contributions or other revenue raised in this 27 Commonwealth. 28 (4) The names and addresses of the officers, directors 29 and trustees and the principal salaried executive staff 30 officers. 19900S1716B2399 - 11 -
1 (5) A copy of the financial report required under 2 subsection (e). 3 (6) A copy of any determination of the organization's 4 tax exempt status under the Internal Revenue Code of 1986 5 (Public Law 99-514) and, for organizations granted tax exempt 6 status under section 501(c)(3), a copy of the last filed 7 Internal Revenue Service Form 990 and Schedule A for every 8 charitable organization and parent organization. 9 (7) The date when the organization's fiscal year begins. 10 (8) Whether: 11 (i) the organization is authorized by any other 12 governmental authority to solicit contributions; 13 (ii) the organization or any of its present 14 officers, directors, executive personnel or trustees are 15 or have ever been enjoined in any jurisdiction from 16 soliciting contributions or have been found to have 17 engaged in unlawful practices in the solicitation of 18 contributions or administration of charitable assets; 19 (iii) the organization's registration or license has 20 been denied, suspended or revoked by any governmental 21 agency together with the reasons for such denial, 22 suspension or revocation; and 23 (iv) the organization has voluntarily entered into 24 an assurance of voluntary discontinuance or agreement 25 similar to that set forth in section 19(b) together with 26 a copy of that agreement. 27 (9) A clear description of the specific programs for 28 which contributions will be used and a statement whether such 29 programs are planned or in existence. 30 (10) The names and addresses of any professional 19900S1716B2399 - 12 -
1 solicitors, professional fundraising counsels and commercial 2 co-venturers who are acting or have agreed to act on behalf 3 of the organization. 4 (11) The names of the individuals or officers of the 5 organization who are in charge of any solicitation 6 activities, who will have final responsibility for the 7 custody of the contributions and who will be responsible for 8 the final distribution of the contributions. 9 (12) Whether any of the organization's officers, 10 directors, trustees or employees are related by blood, 11 marriage or adoption to each other or to any officers, agents 12 or employees of any professional fundraising counsel or 13 professional solicitor under contract to the organization or 14 to any supplier or vendor providing goods or services to the 15 organization, and the names and business and residence 16 addresses of any such related parties. 17 (13) Any other information required by the regulations 18 of the department. 19 (c) Additional filings.--With the initial registration only, 20 each charitable organization required to be registered shall 21 also file with the department the following documents: 22 (1) A copy of the organization's charter, articles of 23 organization, agreement of association, instrument of trust, 24 constitution or other organizational instrument and bylaws. 25 (2) A statement setting forth where and the date when 26 the organization was legally established, the form of its 27 organization and its tax-exempt status together with a copy 28 of the letter of exemption, if any, issued by the Internal 29 Revenue Service. 30 (d) Federal tax exemption determination.--Each charitable 19900S1716B2399 - 13 -
1 organization registered with the department shall file with the 2 department a copy of any Federal tax exemption determination 3 letter received after the initial registration within 30 days 4 after receipt, and any amendments to its organizational 5 instrument within 30 days after adoption. 6 (e) Financial report.--With each registration statement, a 7 charitable organization must file a financial report for the 8 immediately preceding fiscal year, which shall contain a balance 9 sheet and statements of revenue, expenses and changes in fund 10 balances indicating the organization's gross revenue, the amount 11 of funds received from solicitations or other fundraising 12 activities and all expenditures for supplies, equipment, goods, 13 services, programs, activities or other expenses, a detailed 14 list of all salaries and wages paid and expenses allowed to any 15 officer, or employee if the organization is not required to file 16 an Internal Revenue Service Form 990 and the disposition of the 17 net proceeds received from solicited contributions or other 18 fundraising activities. 19 (f) Audit of certain financial reports.--The financial 20 report of every charitable organization which received 21 contributions in excess of $100,000 shall be audited by an 22 independent public accountant. The financial report of every 23 charitable organization which receives contributions in excess 24 of $25,000, but less than $100,000 shall be reviewed or audited 25 by an independent public accountant. An audit or review is 26 optional for any charitable organization which receives 27 contributions less than $25,000. Audits shall be performed in 28 accordance with the Statement on Auditing Standards of the 29 American Institute of Certified Public Accountants and reviews 30 shall be performed in accordance with the Statement on Standards 19900S1716B2399 - 14 -
1 for Accounting and Review Services of the American Institute of 2 Certified Public Accountants. 3 (g) Governmental audits.--Government audits of government 4 grants shall be accepted and shall be included as part of the 5 financial statements. 6 (h) Other acceptable reports.--The Department may accept a 7 copy of a current financial report previously prepared by a 8 charitable organization for a governmental agency in another 9 jurisdiction in compliance with the laws of that jurisdiction, 10 provided that the report filed with such other governmental 11 agency shall be substantially similar in content to the report 12 required by this section. 13 (i) Reports to accompany audit.--Audited and reviewed 14 financial statements must be accompanied by the report prepared 15 and signed by the independent public accountant. 16 (j) Optional departmental action.--The department shall have 17 the discretion to require that an audit or review be submitted 18 by any charitable organization which files a registration 19 statement. The department shall also have the discretion to 20 accept the financial statement submitted by the organization in 21 lieu of an audit or review where special facts and circumstances 22 are presented. 23 (k) Time extension for filings.--For good cause shown, the 24 department may extend the time for the annual filing of a 25 registration statement or financial report for a period not to 26 exceed 180 days during which time the previous registration 27 remains in effect. 28 (l) Cancellation of registration.--In no event shall the 29 registration of a charitable organization continue in effect 30 after the date the organization should have filed, but failed to 19900S1716B2399 - 15 -
1 file, its financial report in accordance with this section. Such 2 organization shall not be eligible to file a new registration 3 statement until it shall have filed the required financial 4 report with the department. 5 (m) Reports by affiliates.-- 6 (1) Each affiliate whose parent organization has its 7 principal place of business in this Commonwealth may 8 separately file the registration statement or financial 9 information required by this section, or report the required 10 information to its parent organization which shall then file 11 a combined registration statement and financial report for 12 its Pennsylvania affiliates. There shall be appended to each 13 combined report a schedule, containing such information as 14 may be prescribed in the regulations of the department, 15 reflecting the activities of each affiliate, which shall 16 contain a certification, under oath, by an official of the 17 organization, that the information contained therein is true. 18 The failure of a parent organization to file a combined 19 registration statement and financial report shall not excuse 20 either the parent organization or its affiliates from 21 complying with the requirements of this section. 22 (2) If an affiliate is soliciting in this Commonwealth 23 but its parent organization has its principal place of 24 business outside this Commonwealth, both the affiliate and 25 the parent organization shall independently comply with all 26 of the registration requirements of this section. 27 (n) Federated organizations.--An independent member agency 28 of a federated fundraising organization shall independently 29 comply with the provisions of this section unless specifically 30 exempted. 19900S1716B2399 - 16 -
1 (o) Retention of records, etc.--Each charitable organization 2 required to register shall maintain records, books and reports 3 for at least three years after the end of the period of 4 registration to which they relate, which shall be available for 5 inspection upon demand by the department and the Office of 6 Attorney General. 7 (p) Annual registration fees.--A charitable organization 8 which submits a short form registration statement pursuant to 9 section 7 or receives contributions of less than $25,000 during 10 the immediately preceding fiscal year shall pay an annual 11 registration fee of $15. A charitable organization which 12 receives contributions in excess of $25,000, but less than 13 $100,000 during the immediately preceding fiscal year shall pay 14 an annual registration fee of $50. A charitable organization 15 which receives contributions in excess of $100,000 during the 16 immediately preceding fiscal year shall pay an annual 17 registration fee of $100. A parent organization filing on behalf 18 of one or more affiliates and a federated fundraising 19 organization filing on behalf of it member agencies shall pay a 20 single annual registration fee for itself and such other 21 affiliates or member agencies included in the registration 22 statement. 23 (q) Late filing fees.--In addition to the registration fee, 24 an organization failing to file a registration application by 25 the due date shall pay an additional fee of $25 for each month 26 or part of the month after the date on which the registration 27 statement and financial report were due to be filed or after the 28 period of extension granted for such filing. 29 (r) Department review.--The department shall examine each 30 registration statement and supporting documents filed by a 19900S1716B2399 - 17 -
1 charitable organization and shall determine whether the 2 registration requirements are satisfied. If the department 3 determines that the registration requirements are not satisfied, 4 the department must notify the charitable organization within 5 ten working days of its receipt of the registration statement; 6 otherwise the registration statement is deemed to be approved. 7 Within seven days after receipt of a notification that the 8 registration requirements are not satisfied, the charitable 9 organization may request a hearing. The hearing must be held 10 within seven days of receipt of the request and a determination 11 must be rendered within three working days of the hearing. 12 Section 6. Exemptions from registration. 13 (a) General rule.--The following charitable organizations 14 shall be exempt from the registration requirements of this act: 15 (1) Educational institutions, the curricula of which in 16 whole or in part are registered with or approved by the 17 Department of Education, either directly or by acceptance of 18 accreditation by an accrediting body recognized by the 19 Department of Education; and any auxiliary associations, 20 foundations and support groups which are directly responsible 21 to educational institutions. 22 (2) Hospitals which are subject to regulation by the 23 Department of Health. 24 (3) A local post, camp, chapter or similarly designated 25 element or a county unit of such elements of: 26 (i) a bona fide veteran's organization which issues 27 charters to such local elements throughout this 28 Commonwealth; 29 (ii) a bona fide organization of volunteer firemen; 30 (iii) a bona fide ambulance association; 19900S1716B2399 - 18 -
1 (iv) a bona fide rescue squad association; or 2 (v) a bona fide auxiliary or affiliate of any 3 organization or association under subparagraph (i), (ii), 4 (iii) or (iv); 5 provided that all fundraising activities of an organization 6 or association under subparagraph (i), (ii), (iii), (iv) or 7 (v) are carried on by volunteers, members or an auxiliary or 8 affiliate thereof, and those volunteers, members or 9 affiliates receive no compensation directly or indirectly for 10 the fundraising activities. 11 (4) Public nonprofit library organizations which receive 12 financial aid from State and municipal governments and file 13 an annual fiscal report with the State Library System. 14 (5) Senior citizen centers which are nonprofit and 15 charitable and which have been granted tax-exempt status 16 under the Internal Revenue Code of 1986 (Public Law 99-514, 17 26 U.S.C. § 1 et. seq.), provided that all fundraising 18 activities are carried on by volunteers, members or officers 19 of the Senior Citizen Center and those volunteers, members or 20 officers receive no compensation directly or indirectly for 21 the fundraising activities. 22 (6) Bona fide parent/teacher associations or 23 parent/teacher organizations as recognized in a notarized 24 letter from the school district in which they are located. 25 (7) Any corporation established by an act of Congress of 26 the United States, that is required by Federal law to submit 27 annual reports of its activities to Congress containing 28 itemized accounts of all receipts and expenditures after 29 being fully audited by the Department of Defense. 30 (b) Effect of exemption.--Exemption from the registration 19900S1716B2399 - 19 -
1 requirements of this act shall in no way limit the applicability 2 of other provisions of the act to a charitable organization. 3 Section 7. Short form registration. 4 The following charitable organizations shall be required to 5 file short form annual registration statements with the 6 department: 7 (1) Persons or charitable organizations accepting 8 contributions for the relief of any individual specified by 9 name at the time of acceptance or solicitation when all of 10 the contributions collected without any deductions whatsoever 11 are turned over to the named beneficiary for his use; 12 provided that all contributions collected shall be held in 13 trust and shall be subject to the provisions of 20 Pa.C.S. 14 Ch. 71 (relating to trust estates). The secretary, the 15 Attorney General, any contributor or any person who provides 16 any goods or services for which funds are expressly or 17 implicitly solicited shall have the right to petition the 18 court of common pleas of the county in which the trust is 19 located for an accounting of all contributions. For purposes 20 of this paragraph, the trust shall be deemed to be located in 21 the county where the principal place of business of the 22 charitable organization is located. If a charitable 23 organization has its principal place of business outside this 24 Commonwealth, all of the following shall apply: 25 (i) If an affiliate is soliciting contributions 26 within this Commonwealth, the trust shall be deemed to be 27 located in the county where the principal place of 28 business of the affiliate is located. 29 (ii) If a person is soliciting contributions within 30 this Commonwealth, the trust shall be deemed to be 19900S1716B2399 - 20 -
1 located in the county where the principal place of 2 business or the residence of the person is located. 3 (iii) If there is no place of business or residence 4 within this Commonwealth, the trust shall be deemed to be 5 located in the county of Dauphin. 6 (2) Organizations which only solicit within the 7 membership of the organization by the members of the 8 organization; provided that the term "membership" shall not 9 include those persons who are granted a membership solely 10 upon making a contribution as the result of solicitation. For 11 the purpose of this paragraph, "member" means a person having 12 membership in a nonprofit corporation, or other organization, 13 in accordance with the provisions of its articles of 14 incorporation, bylaws or other instruments creating its form 15 and organization and having bona fide rights and privileges 16 in the organization such as the right to vote, to elect 17 officers and directors, to hold office or position as 18 ordinarily conferred on members of such organizations. 19 (3) Charitable organizations whose fundraising 20 activities are carried on by volunteers, members, officers or 21 permanent employees and which do not receive contributions in 22 excess of $25,000 during a fiscal year, if no part of their 23 assets or income inures to the benefit of or is paid to any 24 officer or member, professional fundraising counsel, 25 professional solicitor or commercial co-venturer. Charitable 26 organizations which do not intend to solicit and receive in 27 excess of $25,000, but do receive contributions in excess of 28 that amount shall file the financial report required in 29 section 5 within 30 days after contributions are received in 30 excess of that amount. 19900S1716B2399 - 21 -
1 Section 8. Registration of professional fundraising counsel, 2 and contracts. 3 (a) Registration and approval required.--No person shall act 4 as a professional fundraising counsel before obtaining 5 department approval of a registration statement pursuant to 6 subsection (c) or after the expiration, suspension or revocation 7 of such registration. A registration application shall be signed 8 and sworn to by the principal officer of the professional 9 fundraising counsel and shall contain all of the following 10 information: 11 (1) The address of the principal place of business of 12 the applicant and any Pennsylvania addresses, if the 13 principal place of business is located outside this 14 Commonwealth. 15 (2) The form of the applicant's business. 16 (3) The names and residence addresses of all principals 17 of the applicant, including all officers, directors and 18 owners. 19 (4) Whether any of the owners, directors, officers or 20 employees of the applicant are related by blood, marriage or 21 adoption to any other directors, officers, owners or 22 employees of the applicant, any officer, director, trustee or 23 employee of any charitable organization under contract to the 24 applicant or any supplier or vendor providing goods or 25 services to any charitable organization under contract to the 26 applicant. 27 (5) The name of any person who is in charge of any 28 solicitation activity. 29 (b) Registration fee.--The application for registration 30 shall be accompanied by a fee of $100. A professional 19900S1716B2399 - 22 -
1 fundraising counsel which is a partnership or corporation may 2 register for and pay a single fee on behalf of all of its 3 partners, members, officers, directors, agents and employees. 4 Each registration shall be valid for one year and may be renewed 5 for additional one-year periods upon application to the 6 department and payment of the registration fee. 7 (c) Department review.--The department shall examine each 8 registration statement and supporting documents filed by a 9 professional fundraising counsel and shall determine whether the 10 registration requirements are satisfied. If the department 11 determines that the registration requirements are not satisfied, 12 the department must notify the professional fundraising counsel 13 within ten working days of its receipt of its registration 14 statement; otherwise the registration statement is deemed to be 15 approved. Within seven days after receipt of a notification that 16 the registration requirements are not satisfied, the 17 professional fundraising counsel may request a hearing. The 18 hearing must be held within seven days of receipt of the request 19 and a determination must be rendered within three working days 20 of the hearing. 21 (d) Written contract.--There shall be a written contract 22 between a charitable organization and a professional fundraising 23 counsel which shall be filed by the professional fundraising 24 counsel with the department at least ten working days prior to 25 the performance by the professional fundraising counsel of any 26 service. No solicitation pursuant to the contract shall begin 27 before the department has approved the contract pursuant to 28 subsection (e). The contract must be signed by two authorized 29 officials of the charitable organization, one of whom must be a 30 member of the organization's governing body, and the authorized 19900S1716B2399 - 23 -
1 contracting officer for the professional fundraising counsel. 2 The contract shall contain all of the following provisions: 3 (1) A statement of the charitable purpose for which the 4 solicitation campaign is being conducted. 5 (2) A statement of the respective obligations of the 6 professional fundraising counsel and the charitable 7 organization. 8 (3) A clear statement of the fees which will be paid to 9 the professional fundraising counsel. 10 (4) The effective and termination dates. 11 (5) A statement that the professional fundraising 12 counsel will not at any time have custody of contributions. 13 (6) Any other information required by the regulations of 14 the department. 15 (e) Department review.--The department shall examine each 16 contract filed by a professional fundraising counsel and shall 17 determine whether the contract contains the required 18 information. If the department determines that the requirements 19 are not satisfied, the department must notify the professional 20 fundraising counsel within ten working days of its receipt of 21 the contract; otherwise the contract is deemed to be approved. 22 Within seven days after receipt of a notification that the 23 requirements are not satisfied, the professional fundraising 24 counsel may request a hearing. The hearing must be held within 25 seven days of receipt of the request and a determination must be 26 rendered within three working days of the hearing. 27 Section 9. Registration of professional solicitors; contract 28 and disclosure requirements; bonds; records; 29 books. 30 (a) Registration and approval required.--No person shall act 19900S1716B2399 - 24 -
1 as a professional solicitor before obtaining department approval 2 of a registration statement pursuant to subsection (d) or after 3 the expiration, suspension or revocation of such registration. A 4 registration application shall be signed and sworn to by the 5 principal officer of the professional solicitor, and shall 6 contain all of the following information: 7 (1) The address of the principal place of business of 8 the applicant and any Pennsylvania addresses, if the 9 principal place of business is located outside this 10 Commonwealth. 11 (2) The form of the applicant's business. 12 (3) The names and residence addresses of all principals 13 of the applicant, including all officers, directors and 14 owners. 15 (4) Whether any of the owners, directors, officers or 16 employees of the applicant are related by blood, marriage or 17 adoption to any other directors, officers, owners or 18 employees of the applicant, any officer, director, trustee or 19 employee of any charitable organization under contract to the 20 applicant or any supplier or vendor providing goods or 21 services to any charitable organization under contract to the 22 applicant. 23 (5) The name of all persons in charge of any 24 solicitation activity. 25 (b) Registration fee.--The application for registration 26 shall be accompanied by a fee of $100. A professional solicitor 27 which is a partnership or corporation may register for and pay a 28 single fee on behalf of all of its partners, members, officers, 29 directors, agents and employees. Each registration shall be 30 valid for one year and may be renewed for additional one-year 19900S1716B2399 - 25 -
1 periods upon application to the department and payment of the 2 registration fee. 3 (c) Bond.--A professional solicitor shall, at the time of 4 making application for registration and renewal of registration, 5 file with and have approved by the department a bond, in which 6 it shall be the principal obligor in the sum of $25,000, or a 7 greater amount as prescribed by the regulations of the 8 department and which shall have one or more sureties 9 satisfactory to the department whose liability in the aggregate 10 as such sureties will at least equal that sum and maintain the 11 bond in effect as long as the registration is in effect. The 12 bond shall run to the Commonwealth for use of the secretary, 13 Attorney General and any person who may have a cause of action 14 against the obligor for any losses resulting from malfeasance, 15 nonfeasance or misfeasance in the conduct of solicitation 16 activities. A professional solicitor which is a partnership or 17 corporation may file one $25,000 bond or an amount specified by 18 regulation of the department on behalf of all its partners, 19 members, officers, directors, agents and employees. 20 (d) Department review.--The department shall examine each 21 registration statement and supporting documents filed by a 22 professional solicitor and shall determine whether the 23 registration requirements are satisfied. If the department 24 determines that registration requirements are not satisfied, the 25 department must notify the professional solicitor within ten 26 working days of its receipt of its registration statement; 27 otherwise the registration statement is deemed to be approved. 28 Within seven days after receipt of a notification that the 29 regulation requirements are not satisfied, the professional 30 solicitor may request a hearing. The hearing must be held within 19900S1716B2399 - 26 -
1 seven days of receipt of the request and a determination must be 2 rendered within three working days of the hearing. 3 (e) Contract filing.--No less than ten working days prior to 4 the commencement of each solicitation campaign, a professional 5 solicitor shall file with the department a copy of the contract 6 described in subsection (f) and a written solicitation notice. 7 No solicitation pursuant to the contract shall begin before the 8 department has approved the contract pursuant to subsection (g). 9 The solicitation notice shall be accompanied by a fee of $25, 10 shall be signed and sworn to by the authorized contracting 11 officer for the professional solicitor and shall contain all of 12 the following information: 13 (1) A description of the solicitation event or campaign. 14 (2) Each location and telephone number from which the 15 solicitation is to be conducted. 16 (3) The legal name and resident address of each person 17 responsible for directing and supervising the conduct of the 18 campaign and each person who is to solicit during such 19 campaign. 20 (4) A statement as to whether the professional solicitor 21 will at any time have custody of contributions. 22 (5) The account number and location of each bank account 23 where receipts from the campaign are to be deposited. 24 (6) Full and fair description of the charitable program 25 for which the solicitation campaign is being carried out. 26 (7) Any other information required by the regulations of 27 the department. 28 (f) Written contract.--There shall be a written contract 29 between a professional solicitor and a charitable organization 30 for each solicitation campaign which shall be signed by two 19900S1716B2399 - 27 -
1 authorized officials of the charitable organization, one of whom 2 must be a member of the organization's governing body, and the 3 authorized contracting officer for the professional solicitor 4 and which shall contain all of the following provisions: 5 (1) A statement of the charitable purpose for which the 6 solicitation campaign is being conducted. 7 (2) A statement of the respective obligations of the 8 professional solicitor and the charitable organization. 9 (3) A statement of the guaranteed minimum percentage of 10 the gross receipts from contributions which will be remitted 11 to the charitable organization, if any, or, if the 12 solicitation involves the sale of goods, services or tickets 13 to a fundraising event, the percentage of the purchase price 14 which will be remitted to the charitable organization, if 15 any. Any stated percentage shall exclude any amount which the 16 charitable organization is to pay as fundraising costs. 17 (4) A statement of the percentage of the gross revenue 18 which the professional solicitor will be compensated. If the 19 compensation of the professional solicitor is not contingent 20 upon the number of contributions or the amount of revenue 21 received, his compensation shall be expressed as a reasonable 22 estimate of the percentage of the gross revenue, and the 23 contract shall clearly disclose the assumptions upon which 24 the estimate is based. The stated assumptions shall be based 25 upon all of the relevant facts known to the professional 26 solicitor regarding the solicitation to be conducted by the 27 professional solicitor. 28 (5) The effective and termination dates of the contract. 29 (6) Any other information required by the regulations of 30 the department. 19900S1716B2399 - 28 -
1 (g) Department review.--The department shall examine each 2 contract and solicitation notice filed by a professional 3 solicitor and shall determine whether the contract and notice 4 contain the required information. If the department determines 5 that the requirements are not satisfied, the department must 6 notify the professional solicitor within ten working days of its 7 receipt of the contract and notice; otherwise the contract and 8 notice are deemed to be approved. Within seven days after 9 receipt of a notification that the requirements are not 10 satisfied, the professional solicitor may request a hearing. The 11 hearing must be held within seven days of receipt of the request 12 and a determination must be rendered within three working days 13 of the hearing. 14 (h) Required disclosures.--Prior to orally requesting a 15 contribution or contemporaneously with a written request for a 16 contribution, a professional solicitor shall be responsible for 17 clearly and conspicuously disclosing: 18 (1) The name of the professional solicitor as on file 19 with the department and that the solicitation is being 20 conducted by a professional solicitor who is being paid for 21 his services. 22 (2) If the individual acting on behalf of the 23 professional solicitor identifies himself by name, the 24 individual's legal name. 25 (3) The name of the charitable organization and a 26 description of how the contributions raised by the 27 solicitation will be utilized for a charitable purpose, or if 28 there is no charitable organization, a description as to how 29 the contributions raised by the solicitation will be utilized 30 for a charitable purpose. 19900S1716B2399 - 29 -
1 (i) Responses.--Any responses given by or on behalf of a 2 professional solicitor to an oral or written request for 3 information shall be truthful. 4 (j) Information on disclosure.--In the case of a 5 solicitation campaign conducted orally, whether by telephone or 6 otherwise, any written confirmation or receipt or reminder sent 7 to any person who has contributed or has pledged to contribute, 8 shall include a clear and conspicuous disclosure of the 9 information required by subsection (h). 10 (k) Notice.--In addition to the information required by 11 subsection (j), any written confirmation, receipt or reminder of 12 a contribution made pursuant to an oral solicitation and any 13 written solicitation shall conspicuously state: 14 "A copy of the official registration and financial 15 information may be obtained from the Pennsylvania 16 Department of State by calling toll free, within 17 Pennsylvania, 1 (800) 000-0000. Registration does not 18 imply endorsement." 19 (l) Financial reports.--Within 90 days after a solicitation 20 campaign has been completed, and on the anniversary of the 21 commencement of a solicitation campaign lasting more than one 22 year, a professional solicitor shall file with the department a 23 financial report for the campaign, including gross revenue and 24 an itemization of all expenses incurred. This report shall be 25 signed and sworn to by the authorized contracting agent for the 26 professional solicitor and two authorized officials of the 27 charitable organization. 28 (m) Retention of records, etc.--A professional solicitor 29 shall maintain during each solicitation campaign and for not 30 less than three years after the completion of such campaign the 19900S1716B2399 - 30 -
1 following records, which shall be available for inspection upon 2 demand by the department or the Office of Attorney General: 3 (1) The date and amount of each contribution received 4 and the name and address of each contributor. 5 (2) The name and residence of each employee, agent or 6 other person involved in the solicitation. 7 (3) Records of all revenue received and expenses 8 incurred in the course of the solicitation campaign. 9 (4) The location and account number of each bank or 10 other financial institution account in which the professional 11 solicitor has deposited revenue from the solicitation 12 campaign. 13 (n) Records from ticket sales.--If the professional 14 solicitor sells tickets to an event and represents that tickets 15 will be donated for use by another, the professional solicitor 16 shall maintain, for not less than three years after the 17 completion of such event, the following records, which shall be 18 available for inspection upon demand by the department or the 19 Office of Attorney General: 20 (1) The number of tickets purchased and donated by each 21 contributor. 22 (2) The name and address of all organizations receiving 23 donated tickets for use by others, including the number of 24 tickets received by each organization. 25 (o) Deposit of contributions.--Each contribution in the 26 control or custody of the professional solicitor shall, in its 27 entirety and within five days of its receipt, be deposited in an 28 account at a bank or other federally insured financial 29 institution. The account shall be in the name of the charitable 30 organization with whom the professional solicitor has contracted 19900S1716B2399 - 31 -
1 and the charitable organization shall have sole control over all 2 withdrawals from the account. 3 (p) Updating of information.--Any material change in any 4 information filed with the department pursuant to this section 5 shall be reported in writing by the professional solicitor to 6 the department not more than seven days after such change 7 occurs. 8 (q) Restrictions.--No person may act as a professional 9 solicitor if such person, any officer or director thereof, any 10 person with a controlling interest therein, or any person the 11 professional solicitor employs, engages or procures to solicit 12 for compensation, has been convicted by a court of any state or 13 the United States of any felony, or of any misdemeanor involving 14 dishonesty or arising from the conduct of a solicitation for a 15 charitable organization or purpose. 16 Section 10. Contracts voidable by charitable organizations. 17 (a) Contracts with registered groups.--No professional 18 fundraising counsel or professional solicitor shall contract 19 with a charitable organization unless such professional 20 fundraising counsel or professional solicitor is registered with 21 the department. A contract with an unregistered professional 22 fundraising counsel or professional solicitor shall be voidable 23 at the option of the charitable organization. 24 (b) Cancellation of contract.--Whenever a charitable 25 organization contracts with a professional fundraising counsel 26 or professional solicitor, the charitable organization shall 27 have the right to cancel the contract without cost, penalty or 28 liability for a period of ten days following the date on which 29 that contract is executed. Any provision in the contract that is 30 intended to waive this right of cancellation shall be void and 19900S1716B2399 - 32 -
1 unenforceable. 2 (c) Manner of cancellation.--A charitable organization may 3 cancel a contract pursuant to subsection (b) by a written notice 4 of cancellation. If mailed, cancellation shall be deemed 5 effective when deposited with the United States Postal Service, 6 properly addressed and postage prepaid. The notice shall be 7 sufficient if it indicates that the charitable organization does 8 not intend to be bound by the contract. 9 (d) Cancellation notice to department.--Whenever a 10 charitable organization cancels a contract pursuant to the 11 provisions of this section, it shall mail a duplicate copy of 12 the notice of cancellation to the department. 13 (e) Status of funds after cancellation.--Any funds collected 14 after a contract has been canceled shall be deemed to be held in 15 trust for the benefit of the charitable organization without 16 deduction for cost or expenses of any nature. A charitable 17 organization shall be entitled to recover all funds collected 18 after the date of cancellation. 19 Section 11. Information filed to become public records. 20 Except as otherwise provided in section 12, registration 21 statements and applications, reports, notices, contracts or 22 agreements between charitable organizations and professional 23 fundraising counsel, professional solicitors and commercial co- 24 venturers, and all other documents and information required to 25 be filed under this act with the department shall become public 26 records in the office of the bureau and shall be open to the 27 general public at such time and under such conditions as the 28 department may prescribe. 29 Section 12. Records to be kept by charitable organizations, 30 professional fundraising counsels and 19900S1716B2399 - 33 -
1 professional solicitors; inspection; retention. 2 Every charitable organization, professional fundraising 3 counsel, and professional solicitor subject to the provisions of 4 this act shall, in accordance with the rules and regulations 5 prescribed by the department, keep true fiscal records as to its 6 activities in this Commonwealth as may be covered under this 7 act, in such form as will enable them accurately to provide the 8 information required under this act. Such records shall be made 9 available for inspection upon demand by the department or the 10 Office of Attorney General. However, names, addresses and 11 identities of contributors and amounts contributed by them shall 12 not be considered a matter of public record and, therefore, 13 shall not generally be made available for public inspection, 14 shall not be used for a purpose inconsistent with this act, and 15 shall be removed from the records in the custody of the 16 department at such time that such information is no longer 17 necessary for the enforcement of this act. Such records shall be 18 maintained for a period of at least three years after the end of 19 the period of registration to which they relate. 20 Section 13. Limitation on activities of charitable 21 organizations; disclosure requirements. 22 (a) Solicitation limitation.--A charitable organization may 23 only solicit contributions for the charitable purpose expressed 24 in solicitation for contributions or the registration statement 25 of the charitable organization and may only apply contributions 26 in a manner substantially consistent with that purpose. 27 (b) Solicitation disclosures.--A charitable organization 28 soliciting in this Commonwealth shall include all of the 29 following disclosures at the point of solicitation: 30 (1) Its identity and location and, if different, the 19900S1716B2399 - 34 -
1 name and address of the charitable organization on whose 2 behalf the solicitation is being conducted. 3 (2) If requested, the name, and address or telephone 4 number of a representative to whom inquiries could be 5 addressed. 6 (3) A full and fair description of the charitable 7 purpose or purposes for which the solicitation is being made, 8 and a source from which written information is available. 9 (4) If requested, the source from which a financial 10 statement may be obtained. Such financial statement shall be 11 consistent with the annual financial report requested under 12 section 5 and shall disclose assets, liabilities, fund 13 balances, revenue and expenses for the preceding fiscal year. 14 Expenses shall be separated into program services, 15 administrative costs and fundraising costs. 16 (c) Notice on printed solicitation.--On every printed 17 solicitation or written confirmation, receipt, or reminder of a 18 contribution, the following statement must be conspicuously 19 printed: 20 "A copy of the official registration and financial 21 information may be obtained from the Pennsylvania 22 Department of State by calling toll free, within 23 Pennsylvania, 1 (800) 000-0000. Registration does not 24 imply endorsement." 25 (d) Misrepresentation.--A charitable organization may not 26 misrepresent its purpose or nature, or the purpose or 27 beneficiary of a solicitation. A misrepresentation may be 28 accomplished by words or conduct or failure to disclose a 29 material fact. 30 (e) Control over fundraising activities.--A charitable 19900S1716B2399 - 35 -
1 organization must establish and exercise control over 2 fundraising activities conducted for its benefit, including 3 approval of all written contracts and agreements, and must 4 assure that fundraising activities are conducted without 5 coercion. 6 (f) Restrictions on certain contracts.--A charitable 7 organization shall not enter into any contract or agreement with 8 or employ any professional fundraising counsel or professional 9 solicitor unless that professional fundraising counsel or 10 professional solicitor is registered with the department. 11 (g) Registration with department required.--A charitable 12 organization shall not enter into any contract or agreement with 13 or raise any funds for any charitable organization required to 14 be registered pursuant to this act unless such charitable 15 organization is registered with the department. 16 Section 14. Reciprocal agreements. 17 The secretary may enter into reciprocal agreements with the 18 appropriate authority of any other state for the purpose of 19 exchanging information with respect to charitable organizations, 20 professional fundraising counsel and professional solicitors. 21 Pursuant to such agreements, the secretary may accept 22 information filed by a charitable organization, professional 23 fundraising counsel or professional solicitor with the 24 appropriate authority of another state in lieu of the 25 information required to be filed in accordance with this act, if 26 such information is substantially similar to the information 27 required under this act. The secretary may also grant exemptions 28 from the requirements for the filing of annual registration 29 statements with the department to charitable organizations 30 organized under the laws of another state having their principal 19900S1716B2399 - 36 -
1 place of business outside this Commonwealth whose funds are 2 derived principally from sources outside this Commonwealth and 3 which have been exempted from the filing of registration 4 statements by the statute under whose laws they are organized if 5 such state has a statute similar in substance to the provisions 6 of this act. 7 Section 15. Prohibited acts. 8 (a) General rule.--Regardless of a person's intent or the 9 lack of injury, the following acts and practices are prohibited 10 in the planning, conduct or execution of any solicitation or 11 charitable sales promotion: 12 (1) Operating in violation of, or failing to comply 13 with, any of the requirements of this act, regulations of the 14 department or an order of the secretary, or soliciting 15 contributions after registration with the department has 16 expired or has been suspended or revoked or soliciting 17 contributions prior to the solicitation notice and contract 18 having been approved by the department. 19 (2) Utilizing any unfair or deceptive acts or practices 20 or engaging in any fraudulent conduct which creates a 21 likelihood of confusion or of misunderstanding. 22 (3) Utilizing any representation that implies the 23 contribution is for or on behalf of a charitable 24 organization, or utilizing any emblem, device or printed 25 matter belonging to or associated with a charitable 26 organization without first being authorized in writing to do 27 so by the charitable organization. 28 (4) Utilizing a name, symbol or statement so closely 29 related or similar to that used by another charitable 30 organization or other person that the use thereof would tend 19900S1716B2399 - 37 -
1 to confuse or mislead a solicited person. 2 (5) Misrepresenting or misleading anyone in any manner 3 to believe that the person on whose behalf a solicitation or 4 charitable sales promotion is being conducted is a charitable 5 organization or that the proceeds of such solicitation or 6 charitable sales promotion will be used for charitable 7 purposes when such is not the fact. 8 (6) Misrepresenting or misleading anyone in any manner 9 to believe that any other person sponsors, endorses or 10 approves such solicitation or charitable sales promotion when 11 such other person has not given consent in writing to the use 12 of his name for these purposes. 13 (7) Misrepresenting or misleading anyone in any manner 14 to believe that goods or services have sponsorship, approval, 15 characteristics, ingredients, uses, benefits or qualities 16 that they do not have or that a person has a sponsorship, 17 approval, status, affiliation or connection that he does not 18 have. 19 (8) Utilizing or exploiting the fact of registration so 20 as to lead any person to believe that such registration in 21 any manner constitutes an endorsement or approval by the 22 Commonwealth. The use of the following statement shall not be 23 deemed a prohibited exploitation: 24 "A copy of the official registration and financial 25 information may be obtained from the Pennsylvania 26 Department of State by calling toll free, within 27 Pennsylvania, 1 (800) 000-0000. Registration does not 28 imply endorsement." 29 (9) Representing directly or by implication that a 30 charitable organization will receive an amount greater than 19900S1716B2399 - 38 -
1 the actual net proceeds reasonably estimated to be retained 2 by the charity for its use. 3 (10) With respect to solicitations by or on behalf of 4 law enforcement personnel, firefighters, or other persons who 5 protect the public safety, issuing, offering, giving, 6 delivering or distributing any honorary membership cards, 7 courtesy cards or similar cards, or any stickers, emblems, 8 plates or other such items which could be used for display on 9 a motor vehicle. 10 (11) (i) Soliciting for advertising to appear in a for- 11 profit publication which relates to, purports to relate 12 to, or which could reasonably be construed to relate to 13 any charitable purpose without making the following 14 disclosures at the time of solicitation: 15 (A) The publication is a for-profit, commercial 16 enterprise. 17 (B) True name of the solicitor and the fact that 18 the solicitor is a professional solicitor. 19 (C) The publication is not directly affiliated 20 or sponsored by any charitable organization. 21 (ii) Where a sale of advertising has been made, the 22 solicitor, prior to accepting any money for the sale, 23 shall present the purchaser with the same disclosures, in 24 written form and in conspicuous type. 25 (12) Representing that any part of the contributions 26 received will be given or donated to any other charitable 27 organization unless such organization has consented to the 28 use of its name prior to the solicitation. The written 29 consent shall be signed by any two authorized officers, 30 directors or trustees of the charitable organization. 19900S1716B2399 - 39 -
1 (13) Representing that tickets to events will be donated 2 for use by another, unless all of the following requirements 3 have been met: 4 (i) The charitable organization or professional 5 solicitor shall have commitments, in writing, from 6 charitable organizations stating that they will accept 7 donated tickets and specifying the number of tickets they 8 are willing to accept. 9 (ii) The charitable organization or professional 10 solicitor shall not solicit or accept more contributions 11 of donated tickets than the lesser of: 12 (A) the number of ticket commitments it has 13 received from charitable associations; or 14 (B) the total attendance capacity of the site of 15 the event. 16 (iii) A ticket commitment alone, as described in 17 this subsection, shall not constitute written consent to 18 use the organization's name in the solicitation campaign. 19 (b) Criteria to determine unfairness.--In determining 20 whether or not a practice is unfair, deceptive, fraudulent or 21 misleading under this section, definitions, standards or 22 interpretations relating thereto under the act of December 17, 23 1968 (P.L.1224, No.387), known as the Unfair Trade Practices and 24 Consumer Protection Law, shall apply. 25 Section 16. Investigation; subpoenas; injunctions; court 26 orders. 27 (a) Permissible investigations.--The Attorney General, the 28 secretary or the district attorney may make or cause to be made 29 an investigation of any person as deemed necessary. In 30 conducting such investigation, he may: 19900S1716B2399 - 40 -
1 (1) Require or permit any person to file a statement in 2 writing, under oath or otherwise, as to all the facts and 3 circumstances concerning the matter to be investigated. 4 (2) Administer oaths or affirmations. 5 (3) Take testimony under oath. 6 (4) Require the attendance and testimony of witnesses 7 and the production of any books, accounts, papers, records, 8 documents, audits and files relating to any solicitation or 9 any practice subject to this act or the regulations of the 10 department. 11 (5) Issue subpoenas. 12 (6) Conduct private or public hearings. 13 (7) Examine witnesses and receive evidence during any 14 investigation or public or private hearings. 15 (b) Notice.--Notice of the time and place for the 16 examination of documentary material shall be given by the 17 Attorney General, the secretary or the district attorney at 18 least ten days prior to the date of such examination or taking 19 of testimony. 20 (c) Contents of notice.--Each notice shall: 21 (1) State the time and place for the taking of testimony 22 or the examination and the name and address of the person to 23 be examined, if known, and if the name is not known, a 24 general description sufficient to identify him or the 25 particular class or group to which he belongs. 26 (2) State the statute thereof, if any, of the alleged 27 violation which is under investigation and state the general 28 subject matter of the investigation. 29 (3) Describe the class or classes of documentary 30 material to be produced thereunder with reasonable 19900S1716B2399 - 41 -
1 specificity, so as fairly to indicate the material demanded. 2 (4) Prescribe a return date within which the documentary 3 material is to be produced. 4 (5) Identify the members of the Office of Attorney 5 General's staff, the secretary's staff or the district 6 attorney's staff to whom such documentary material is to be 7 made available for inspection and copying. 8 (d) Restrictions on notices.--No such notice shall contain 9 any requirement which would be unreasonable or improper if 10 contained in a subpoena duces tecum issued by a court of the 11 Commonwealth. 12 (e) Restriction on materials.-- 13 (1) Except as provided in paragraph (2), any documentary 14 material or other information produced by any person pursuant 15 to this section shall not, unless otherwise ordered by any 16 court of competent jurisdiction for good cause shown, be 17 produced for inspection or copying by or be disclosed to any 18 person other than the authorized representative of the 19 Attorney General, the secretary or the district attorney 20 without the consent of the person who produced such material. 21 (2) Under such reasonable terms and conditions that the 22 Attorney General, secretary or the district attorney shall 23 prescribe, documentary material in paragraph (1) shall be 24 available for inspection and copying by the person who 25 produced such material or any duly authorized representative 26 of such person. The Attorney General, the secretary or the 27 district attorney or his duly authorized representative may 28 use such documentary material or copies thereof as he 29 determines necessary in the enforcement of this act, 30 including presentation in any subsequent administrative or 19900S1716B2399 - 42 -
1 judicial proceeding. 2 (f) Compliance.--Any person upon whom a notice is served 3 pursuant to this section shall comply with the terms thereof 4 unless otherwise provided by an order of court. Any person who 5 fails to appear, or with intent to avoid, evade, or prevent 6 compliance, in whole or in part, with any civil investigation 7 under this act, removes from any place, conceals, withholds, or 8 destroys, mutilates, alters, or by any other means falsifies any 9 documentary material in the possession, custody or control of 10 any person subject to any notice, or knowingly conceals any 11 relevant information, shall be assessed a civil penalty of not 12 more than $5,000. The Attorney General or the district attorney 13 may petition for an order of court for enforcement of this 14 section. Additionally, the secretary may take appropriate action 15 to petition for an order of court for the enforcement of this 16 section in accordance with the act of October 15, 1980 (P.L.950, 17 No.164), known as the Commonwealth Attorneys Act. Any 18 disobedience of any final order entered under this section by 19 any court shall be punished as contempt thereof. 20 (g) Service.--Service of a subpoena may be made in any one 21 of the following ways: 22 (1) Delivering a duly executed copy thereof to the 23 person to be served or to a partner or to any officer or 24 agent authorized by appointment or by law to receive service 25 of process on behalf of such person. 26 (2) Delivering a duly executed copy thereof to the 27 principal place of business in this Commonwealth of the 28 person to be served. 29 (3) Mailing by registered or certified mail a duly 30 executed copy thereof addressed to the person to be served at 19900S1716B2399 - 43 -
1 his principal place of business in this Commonwealth or if 2 said person has no place of business in this Commonwealth, to 3 the last address of such person known to the secretary. 4 (4) Any charitable organization, fundraising counsel, or 5 professional solicitor having its principal place of business 6 other than within this Commonwealth, or organized under and 7 by virtue of the laws of a foreign state, which is subject to 8 the provisions of this act, shall be deemed to have 9 irrevocably appointed the Secretary of State as its agent 10 upon whom may be served any summons, subpoena duces tecum or 11 other process directed to such charitable organization, 12 fundraising counsel, professional solicitor, or any partner, 13 principal officer or director of any of them, in any action 14 or proceeding brought under the provisions of this act. 15 Service of such process upon the Secretary of State shall be 16 made by personally delivering to and leaving with him a copy 17 thereof at his office in the city of Harrisburg, Pennsylvania 18 and such service shall be sufficient service; provided notice 19 of such service and a copy of such process shall be forthwith 20 sent by said secretary to such charitable organization, 21 fundraising counsel, professional solicitor, or other person 22 to whom it is directed by registered mail, with return 23 receipt requested at the last address known to said 24 secretary. 25 Section 17. Administrative enforcement and penalties. 26 (a) General rule.--The secretary may refuse to register or 27 revoke or suspend the registration of any charitable 28 organization, professional fundraising counsel or professional 29 solicitor whenever he finds that a charitable organization, 30 professional fundraising counsel or professional solicitor, or 19900S1716B2399 - 44 -
1 an agent, servant or employee thereof: 2 (1) Has violated or is operating in violation of any of 3 the provisions of this act, the regulations of the 4 department, or an order issued by the secretary. 5 (2) Has refused or failed or any of its principal 6 officers has refused or failed, after notice, to produce any 7 records of such organization or to disclose any information 8 required to be disclosed under this act or the regulations of 9 the department. 10 (3) Has made a material false statement in an 11 application, statement or report required to be filed under 12 this act. 13 (b) Additional actions.--When the secretary finds that the 14 registration of any person may be refused, suspended or revoked 15 under the terms of subsection (a), the secretary may: 16 (1) Revoke a grant of exemption to any of the provisions 17 of this act. 18 (2) Issue an order directing that the person cease and 19 desist specified fundraising activities. 20 (3) Impose an administrative fine not to exceed $1,000 21 for each act or omission which constitutes a violation of 22 this act and an additional penalty, not to exceed $100 for 23 each day during which such violation continues. Registration 24 will be automatically suspended upon final affirmation of an 25 administrative fine until the fine is paid or until the 26 normal expiration date of the registration. No registration 27 shall be renewed until the fine is paid. 28 (4) Place the registrant on probation for such period of 29 time and subject to such conditions as he may decide. 30 (c) Administrative procedures.--All actions of the secretary 19900S1716B2399 - 45 -
1 shall be taken subject to the right of notice, hearing and 2 adjudication and the right of appeal therefrom in accordance 3 with Title 2 of the Pennsylvania Consolidated Statutes (relating 4 to administrative law and procedure). 5 Section 18. Criminal penalties. 6 (a) Deceit in fraud violation.--Any person who willfully and 7 knowingly violates any provisions of this act with intent to 8 deceive or defraud any charity or individual, commits a 9 misdemeanor of the first degree and shall, upon conviction, be 10 sentenced to pay a fine not exceeding $10,000 or imprisonment 11 for not more than five years, or both. 12 (b) Other violations.--Any other violation of this act shall 13 constitute a misdemeanor of the third degree punishable, upon 14 conviction, by a fine not exceeding $2,500 or imprisonment for 15 not more than one year, or both. 16 (c) Location of offense.--Any offense committed under this 17 act involving a solicitation may be deemed to have been 18 committed at either the place at which the solicitation was 19 initiated, or at the place where the solicitation was received. 20 Section 19. Civil penalties. 21 (a) General rule.--Whenever the Attorney General or any 22 district attorney shall have reason to believe, or shall be 23 advised by the secretary, that the person is operating in 24 violation of the provisions of this act, the Attorney General or 25 district attorney may bring an action in the name of the 26 Commonwealth against such person who has violated this act, to 27 enjoin such person from continuing such violation and for such 28 other relief as the court deems appropriate. In any proceeding 29 under this subsection, the court may make appropriate orders, 30 including: 19900S1716B2399 - 46 -
1 (1) the appointment of a master or receiver; 2 (2) the sequestration of assets; 3 (3) the reimbursement of persons from whom contributions 4 have been unlawfully solicited; 5 (4) the distribution of contributions in accordance with 6 the charitable purpose expressed in the registration 7 statement or in accordance with the representations made to 8 the person solicited; 9 (5) the reimbursement of the Commonwealth for attorney 10 fees and the costs of investigation, including audit costs; 11 (6) the assessment of a civil penalty not exceeding 12 $1,000 per violation of the act, which penalty shall be in 13 addition to any other relief which may be granted; and 14 (7) the granting of other appropriate relief. 15 (b) Assurance of voluntary compliance.--In any case where 16 the Attorney General or district attorney has authority to 17 institute an action or proceeding under this act, he may accept 18 an assurance of voluntary compliance through which any person 19 alleged to be engaged in any method, act or practice in 20 violation of this act agrees to discontinue such method, act or 21 practice. Such assurance may, among other terms, include a 22 stipulation of a voluntary payment by such person of the cost of 23 the investigation or of an amount to be held in escrow pending 24 the outcome of an action or as restitution to agreed persons, or 25 both. Any such assurance of compliance shall be in writing and 26 shall be filed with a court of the Commonwealth. Matters closed 27 may, at any time be reopened by the court for further 28 proceedings in the public interest. In the event of an alleged 29 violation of the assurance of voluntary compliance, the Attorney 30 General or district attorney may, at his discretion, either 19900S1716B2399 - 47 -
1 initiate contempt proceedings or proceed as if the assurance of 2 voluntary compliance has not been accepted. Evidence of a 3 violation of such assurance shall be prima facie evidence of a 4 violation of this act in any subsequent proceeding brought by 5 the Attorney General or district attorney. 6 Section 20. Additional regulations by counties, municipalities 7 or consolidated government. 8 Nothing contained in this act shall serve to deny the right 9 to any county, municipality or consolidated government to pass 10 such ordinances, rules and regulations as may be deemed 11 appropriate to regulate further the soliciting of contributions 12 within such county, municipality or consolidated government. 13 Such ordinance may not alter any of the obligations set forth in 14 this act or the regulations of the department but may add 15 thereto other requirements and rules as appear to be proper to 16 the county, municipality or consolidated government involved. 17 Section 21. Charitable organizations deemed fiduciary. 18 Every person soliciting, collecting or expending 19 contributions for charitable purposes and every officer, 20 director, trustee and employee of any such person concerned with 21 the solicitation, collection or expenditure of such contribution 22 shall be deemed to be a fiduciary and acting in a fiduciary 23 capacity. 24 Section 22. Prior registration unaffected. 25 Any person who is registered with the department under the 26 act of April 30, 1986 (P.L.107, No.36), known as the Charitable 27 Organization Reform Act, prior to the effective date of this act 28 shall, on and after the effective date hereof, be deemed to be 29 registered with the department as provided for in this act. 30 Registration shall be reissued in accordance with this act. 19900S1716B2399 - 48 -
1 Section 23. Repeals. 2 The act of April 30, 1986 (P.L.107, No.36), known as the 3 Charitable Organization Reform Act, is repealed. Existing 4 regulations promulgated pursuant to the Charitable Organization 5 Reform Act, shall remain in effect until amended in accordance 6 with the provisions of this act. 7 Section 24. Appropriation. 8 All fees shall be paid to the State Treasurer and are 9 appropriated to the Department of State for the administration 10 and enforcement of this act and all fines, penalties, attorney 11 fees and costs of investigation shall be paid to the 12 governmental agency that conducted the litigation. 13 Section 25. Effective date. 14 This act shall take effect as follows: 15 (1) Sections 9(j) and 13(c) shall be effective in 120 16 days. 17 (2) The remaining provisions of this act shall take 18 effect in 60 days. F21L10VDL/19900S1716B2399 - 49 -