PRIOR PRINTER'S NO. 2399 PRINTER'S NO. 2501
No. 1716 Session of 1990
INTRODUCED BY RHOADES, JUNE 29, 1990
SENATOR RHOADES, STATE GOVERNMENT, AS AMENDED, SEPTEMBER 25, 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. Appropriation. 21 Section 24. Repeals. 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 19900S1716B2501 - 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 19900S1716B2501 - 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 19900S1716B2501 - 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 19900S1716B2501 - 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 19900S1716B2501 - 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 19900S1716B2501 - 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 19900S1716B2501 - 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. 19900S1716B2501 - 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. 19900S1716B2501 - 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. 19900S1716B2501 - 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 19900S1716B2501 - 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 19900S1716B2501 - 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 EXCEPT FOR THE CHARITABLE <--
23 ORGANIZATIONS DESCRIBED IN SECTION 6(A)(3), THE financial report
24 of every charitable organization which receives contributions in
25 excess of $25,000, but less than $100,000 shall be reviewed or
26 audited by an independent public accountant. An audit or review
27 is optional for any charitable organization which receives
28 contributions less than $25,000 OR FOR ANY CHARITABLE <--
29 ORGANIZATION DESCRIBED IN SECTION 6(A)(3) WHICH RECEIVES
30 CONTRIBUTIONS LESS THAN $100,000. Audits shall be performed in
19900S1716B2501 - 14 -
1 accordance with the Statement on Auditing Standards of the 2 American Institute of Certified Public Accountants and reviews 3 shall be performed in accordance with the Statement on Standards 4 for Accounting and Review Services of the American Institute of 5 Certified Public Accountants. 6 (g) Governmental audits.--Government audits of government 7 grants shall be accepted and shall be included as part of the 8 financial statements. 9 (h) Other acceptable reports.--The Department may accept a 10 copy of a current financial report previously prepared by a 11 charitable organization for a governmental agency in another 12 jurisdiction in compliance with the laws of that jurisdiction, 13 provided that the report filed with such other governmental 14 agency shall be substantially similar in content to the report 15 required by this section. 16 (i) Reports to accompany audit.--Audited and reviewed 17 financial statements must be accompanied by the report prepared 18 and signed by the independent public accountant. 19 (j) Optional departmental action.--The department shall have 20 the discretion to require that an audit or review be submitted 21 by any charitable organization which files a registration 22 statement. The department shall also have the discretion to 23 accept the financial statement submitted by the organization in 24 lieu of an audit or review where special facts and circumstances 25 are presented. 26 (k) Time extension for filings.--For good cause shown, the 27 department may extend the time for the annual filing of a 28 registration statement or financial report for a period not to 29 exceed 180 days during which time the previous registration 30 remains in effect. 19900S1716B2501 - 15 -
1 (l) Cancellation of registration.--In no event shall the 2 registration of a charitable organization continue in effect 3 after the date the organization should have filed, but failed to 4 file, its financial report in accordance with this section. Such 5 organization shall not be eligible to file a new registration 6 statement until it shall have filed the required financial 7 report with the department. 8 (m) Reports by affiliates.-- 9 (1) Each affiliate whose parent organization has its 10 principal place of business in this Commonwealth may 11 separately file the registration statement or financial 12 information required by this section, or report the required 13 information to its parent organization which shall then file 14 a combined registration statement and financial report for 15 its Pennsylvania affiliates. There shall be appended to each 16 combined report a schedule, containing such information as 17 may be prescribed in the regulations of the department, 18 reflecting the activities of each affiliate, which shall 19 contain a certification, under oath, by an official of the 20 organization, that the information contained therein is true. 21 The failure of a parent organization to file a combined 22 registration statement and financial report shall not excuse 23 either the parent organization or its affiliates from 24 complying with the requirements of this section. 25 (2) If an affiliate is soliciting in this Commonwealth 26 but its parent organization has its principal place of 27 business outside this Commonwealth, both the affiliate and 28 the parent organization shall independently comply with all 29 of the registration requirements of this section. 30 (n) Federated organizations.--An independent member agency 19900S1716B2501 - 16 -
1 of a federated fundraising organization shall independently 2 comply with the provisions of this section unless specifically 3 exempted. 4 (o) Retention of records, etc.--Each charitable organization 5 required to register shall maintain records, books and reports 6 for at least three years after the end of the period of 7 registration to which they relate, which shall be available for 8 inspection upon demand by the department and the Office of 9 Attorney General. 10 (p) Annual registration fees.--A charitable organization 11 which submits a short form registration statement pursuant to 12 section 7 or receives contributions of less than $25,000 during 13 the immediately preceding fiscal year shall pay an annual 14 registration fee of $15. A charitable organization which 15 receives contributions in excess of $25,000, but less than 16 $100,000 during the immediately preceding fiscal year shall pay 17 an annual registration fee of $50. A charitable organization 18 which receives contributions in excess of $100,000 during the 19 immediately preceding fiscal year shall pay an annual 20 registration fee of $100. A parent organization filing on behalf 21 of one or more affiliates and a federated fundraising 22 organization filing on behalf of it member agencies shall pay a 23 single annual registration fee for itself and such other 24 affiliates or member agencies included in the registration 25 statement. 26 (q) Late filing fees.--In addition to the registration fee, 27 an organization failing to file a registration application by 28 the due date shall pay an additional fee of $25 for each month 29 or part of the month after the date on which the registration 30 statement and financial report were due to be filed or after the 19900S1716B2501 - 17 -
1 period of extension granted for such filing. 2 (r) Department review.--The department shall examine each 3 registration statement and supporting documents filed by a 4 charitable organization and shall determine whether the 5 registration requirements are satisfied. If the department 6 determines that the registration requirements are not satisfied, 7 the department must notify the charitable organization within 8 ten working days of its receipt of the registration statement; 9 otherwise the registration statement is deemed to be approved. 10 Within seven days after receipt of a notification that the 11 registration requirements are not satisfied, the charitable 12 organization may request a hearing. The hearing must be held 13 within seven days of receipt of the request and a determination 14 must be rendered within three working days of the hearing. 15 Section 6. Exemptions from registration. 16 (a) General rule.--The following charitable organizations 17 shall be exempt from the registration requirements of this act: 18 (1) Educational institutions, the curricula of which in 19 whole or in part are registered with or approved by the 20 Department of Education, either directly or by acceptance of 21 accreditation by an accrediting body recognized by the 22 Department of Education; and any auxiliary associations, 23 foundations and support groups which are directly responsible 24 to educational institutions. 25 (2) Hospitals which are subject to regulation by the 26 Department of Health. 27 (3) A local post, camp, chapter or similarly designated 28 element or a county unit of such elements of: 29 (i) a bona fide veteran's organization which issues 30 charters to such local elements throughout this 19900S1716B2501 - 18 -
1 Commonwealth; 2 (ii) a bona fide organization of volunteer firemen; 3 (iii) a bona fide ambulance association; 4 (iv) a bona fide rescue squad association; or 5 (v) a bona fide auxiliary or affiliate of any 6 organization or association under subparagraph (i), (ii), 7 (iii) or (iv); 8 provided that all fundraising activities of an organization 9 or association under subparagraph (i), (ii), (iii), (iv) or 10 (v) are carried on by volunteers, members or an auxiliary or 11 affiliate thereof, and those volunteers, members or 12 affiliates receive no compensation directly or indirectly for 13 the fundraising activities. 14 (4) Public nonprofit library organizations which receive 15 financial aid from State and municipal governments and file 16 an annual fiscal report with the State Library System. 17 (5) Senior citizen centers which are nonprofit and 18 charitable and which have been granted tax-exempt status 19 under the Internal Revenue Code of 1986 (Public Law 99-514, 20 26 U.S.C. § 1 et. seq.), provided that all fundraising 21 activities are carried on by volunteers, members or officers 22 of the Senior Citizen Center and those volunteers, members or 23 officers receive no compensation directly or indirectly for 24 the fundraising activities. 25 (6) Bona fide parent/teacher associations or 26 parent/teacher organizations as recognized in a notarized 27 letter from the school district in which they are located. 28 (7) Any corporation established by an act of Congress of 29 the United States, that is required by Federal law to submit 30 annual reports of its activities to Congress containing 19900S1716B2501 - 19 -
1 itemized accounts of all receipts and expenditures after 2 being fully audited by the Department of Defense. 3 (b) Effect of exemption.--Exemption from the registration 4 requirements of this act shall in no way limit the applicability 5 of other provisions of the act to a charitable organization. 6 Section 7. Short form registration. 7 (A) ORGANIZATIONS REQUIRED TO FILE.--The following <-- 8 charitable organizations shall be required to file short form 9 annual registration statements with the department: 10 (1) Persons or charitable organizations accepting 11 contributions for the relief of any individual specified by 12 name at the time of acceptance or solicitation when all of 13 the contributions collected without any deductions whatsoever 14 are turned over to the named beneficiary for his use; 15 provided that all contributions collected shall be held in 16 trust and shall be subject to the provisions of 20 Pa.C.S. 17 Ch. 71 (relating to trust estates). The secretary, the 18 Attorney General, any contributor or any person who provides 19 any goods or services for which funds are expressly or 20 implicitly solicited shall have the right to petition the 21 court of common pleas of the county in which the trust is 22 located for an accounting of all contributions. For purposes 23 of this paragraph, the trust shall be deemed to be located in 24 the county where the principal place of business of the 25 charitable organization is located. If a charitable 26 organization has its principal place of business outside this 27 Commonwealth, all of the following shall apply: 28 (i) If an affiliate is soliciting contributions 29 within this Commonwealth, the trust shall be deemed to be 30 located in the county where the principal place of 19900S1716B2501 - 20 -
1 business of the affiliate is located. 2 (ii) If a person is soliciting contributions within 3 this Commonwealth, the trust shall be deemed to be 4 located in the county where the principal place of 5 business or the residence of the person is located. 6 (iii) If there is no place of business or residence 7 within this Commonwealth, the trust shall be deemed to be 8 located in the county of Dauphin. 9 (2) Organizations which only solicit within the 10 membership of the organization by the members of the 11 organization; provided that the term "membership" shall not 12 include those persons who are granted a membership solely 13 upon making a contribution as the result of solicitation. For 14 the purpose of this paragraph, "member" means a person having 15 membership in a nonprofit corporation, or other organization, 16 in accordance with the provisions of its articles of 17 incorporation, bylaws or other instruments creating its form 18 and organization and having bona fide rights and privileges 19 in the organization such as the right to vote, to elect 20 officers and directors, to hold office or position as 21 ordinarily conferred on members of such organizations. 22 (3) Charitable organizations whose fundraising 23 activities are carried on by volunteers, members, officers or 24 permanent employees and which do not receive contributions in 25 excess of $25,000 during a fiscal year, if no part of their 26 assets or income inures to the benefit of or is paid to any 27 officer or member, professional fundraising counsel, 28 professional solicitor or commercial co-venturer. Charitable 29 organizations which do not intend to solicit and receive in 30 excess of $25,000, but do receive contributions in excess of 19900S1716B2501 - 21 -
1 that amount shall file the financial report required in 2 section 5 within 30 days after contributions are received in 3 excess of that amount. 4 (4) ORGANIZATIONS DESCRIBED IN SECTION 6(A)(3) WHICH DO <-- 5 NOT RECEIVE CONTRIBUTIONS IN EXCESS OF $100,000 DURING A 6 FISCAL YEAR IF NO PART OF THEIR ASSETS OR INCOME INURES TO 7 THE BENEFIT OF OR IS PAID TO A PROFESSIONAL SOLICITOR. 8 (B) CONTENTS OF STATEMENT.--THE SHORT FORM ANNUAL 9 REGISTRATION STATEMENTS REQUIRED TO BE FILED UNDER THIS SECTION 10 SHALL INCLUDE ANY INFORMATION REQUIRED BY THE REGULATIONS OF THE 11 DEPARTMENT. 12 Section 8. Registration of professional fundraising counsel, 13 and contracts. 14 (a) Registration and approval required.--No person shall act 15 as a professional fundraising counsel before obtaining 16 department approval of a registration statement pursuant to 17 subsection (c) or after the expiration, suspension or revocation 18 of such registration. A registration application shall be signed 19 and sworn to by the principal officer of the professional 20 fundraising counsel and shall contain all of the following 21 information: 22 (1) The address of the principal place of business of 23 the applicant and any Pennsylvania addresses, if the 24 principal place of business is located outside this 25 Commonwealth. 26 (2) The form of the applicant's business. 27 (3) The names and residence addresses of all principals 28 of the applicant, including all officers, directors and 29 owners. 30 (4) Whether any of the owners, directors, officers or 19900S1716B2501 - 22 -
1 employees of the applicant are related by blood, marriage or 2 adoption to any other directors, officers, owners or 3 employees of the applicant, any officer, director, trustee or 4 employee of any charitable organization under contract to the 5 applicant or any supplier or vendor providing goods or 6 services to any charitable organization under contract to the 7 applicant. 8 (5) The name of any person who is in charge of any 9 solicitation activity. 10 (b) Registration fee.--The application for registration 11 shall be accompanied by a fee of $100. A professional 12 fundraising counsel which is a partnership or corporation may 13 register for and pay a single fee on behalf of all of its 14 partners, members, officers, directors, agents and employees. 15 Each registration shall be valid for one year and may be renewed 16 for additional one-year periods upon application to the 17 department and payment of the registration fee. 18 (c) Department review.--The department shall examine each 19 registration statement and supporting documents filed by a 20 professional fundraising counsel and shall determine whether the 21 registration requirements are satisfied. If the department 22 determines that the registration requirements are not satisfied, 23 the department must notify the professional fundraising counsel 24 within ten working days of its receipt of its registration 25 statement; otherwise the registration statement is deemed to be 26 approved. Within seven days after receipt of a notification that 27 the registration requirements are not satisfied, the 28 professional fundraising counsel may request a hearing. The 29 hearing must be held within seven days of receipt of the request 30 and a determination must be rendered within three working days 19900S1716B2501 - 23 -
1 of the hearing. 2 (d) Written contract.--There shall be a written contract 3 between a charitable organization and a professional fundraising 4 counsel which shall be filed by the professional fundraising 5 counsel with the department at least ten working days prior to 6 the performance by the professional fundraising counsel of any 7 service. No solicitation pursuant to the contract shall begin 8 before the department has approved the contract pursuant to 9 subsection (e). The contract must be signed by two authorized 10 officials of the charitable organization, one of whom must be a 11 member of the organization's governing body, and the authorized 12 contracting officer for the professional fundraising counsel. 13 The contract shall contain all of the following provisions: 14 (1) A statement of the charitable purpose for which the 15 solicitation campaign is being conducted. 16 (2) A statement of the respective obligations of the 17 professional fundraising counsel and the charitable 18 organization. 19 (3) A clear statement of the fees which will be paid to 20 the professional fundraising counsel. 21 (4) The effective and termination dates. 22 (5) A statement that the professional fundraising 23 counsel will not at any time have custody of contributions. 24 (6) Any other information required by the regulations of 25 the department. 26 (e) Department review.--The department shall examine each 27 contract filed by a professional fundraising counsel and shall 28 determine whether the contract contains the required 29 information. If the department determines that the requirements 30 are not satisfied, the department must notify the professional 19900S1716B2501 - 24 -
1 fundraising counsel within ten working days of its receipt of 2 the contract; otherwise the contract is deemed to be approved. 3 Within seven days after receipt of a notification that the 4 requirements are not satisfied, the professional fundraising 5 counsel may request a hearing. The hearing must be held within 6 seven days of receipt of the request and a determination must be 7 rendered within three working days of the hearing. 8 Section 9. Registration of professional solicitors; contract 9 and disclosure requirements; bonds; records; 10 books. 11 (a) Registration and approval required.--No person shall act 12 as a professional solicitor before obtaining department approval 13 of a registration statement pursuant to subsection (d) or after 14 the expiration, suspension or revocation of such registration. A 15 registration application shall be signed and sworn to by the 16 principal officer of the professional solicitor, and shall 17 contain all of the following information: 18 (1) The address of the principal place of business of 19 the applicant and any Pennsylvania addresses, if the 20 principal place of business is located outside this 21 Commonwealth. 22 (2) The form of the applicant's business. 23 (3) The names and residence addresses of all principals 24 of the applicant, including all officers, directors and 25 owners. 26 (4) Whether any of the owners, directors, officers or 27 employees of the applicant are related by blood, marriage or 28 adoption to any other directors, officers, owners or 29 employees of the applicant, any officer, director, trustee or 30 employee of any charitable organization under contract to the 19900S1716B2501 - 25 -
1 applicant or any supplier or vendor providing goods or 2 services to any charitable organization under contract to the 3 applicant. 4 (5) The name of all persons in charge of any 5 solicitation activity. 6 (b) Registration fee.--The application for registration 7 shall be accompanied by a fee of $100. A professional solicitor 8 which is a partnership or corporation may register for and pay a 9 single fee on behalf of all of its partners, members, officers, 10 directors, agents and employees. Each registration shall be 11 valid for one year and may be renewed for additional one-year 12 periods upon application to the department and payment of the 13 registration fee. 14 (c) Bond.--A professional solicitor shall, at the time of 15 making application for registration and renewal of registration, 16 file with and have approved by the department a bond, in which 17 it shall be the principal obligor in the sum of $25,000, or a 18 greater amount as prescribed by the regulations of the 19 department and which shall have one or more sureties 20 satisfactory to the department whose liability in the aggregate 21 as such sureties will at least equal that sum and maintain the 22 bond in effect as long as the registration is in effect. The 23 bond shall run to the Commonwealth for use of the secretary, 24 Attorney General and any person who may have a cause of action 25 against the obligor for any losses resulting from malfeasance, 26 nonfeasance or misfeasance in the conduct of solicitation 27 activities. A professional solicitor which is a partnership or 28 corporation may file one $25,000 bond or an amount specified by 29 regulation of the department on behalf of all its partners, 30 members, officers, directors, agents and employees. 19900S1716B2501 - 26 -
1 (d) Department review.--The department shall examine each 2 registration statement and supporting documents filed by a 3 professional solicitor and shall determine whether the 4 registration requirements are satisfied. If the department 5 determines that registration requirements are not satisfied, the 6 department must notify the professional solicitor within ten 7 working days of its receipt of its registration statement; 8 otherwise the registration statement is deemed to be approved. 9 Within seven days after receipt of a notification that the 10 regulation requirements are not satisfied, the professional 11 solicitor may request a hearing. The hearing must be held within 12 seven days of receipt of the request and a determination must be 13 rendered within three working days of the hearing. 14 (e) Contract filing.--No less than ten working days prior to 15 the commencement of each solicitation campaign, a professional 16 solicitor shall file with the department a copy of the contract 17 described in subsection (f) and a written solicitation notice. 18 No solicitation pursuant to the contract shall begin before the 19 department has approved the contract pursuant to subsection (g). 20 The solicitation notice shall be accompanied by a fee of $25, 21 shall be signed and sworn to by the authorized contracting 22 officer for the professional solicitor and shall contain all of 23 the following information: 24 (1) A description of the solicitation event or campaign. 25 (2) Each location and telephone number from which the 26 solicitation is to be conducted. 27 (3) The legal name and resident address of each person 28 responsible for directing and supervising the conduct of the 29 campaign and each person who is to solicit during such 30 campaign. 19900S1716B2501 - 27 -
1 (4) A statement as to whether the professional solicitor 2 will at any time have custody of contributions. 3 (5) The account number and location of each bank account 4 where receipts from the campaign are to be deposited. 5 (6) Full and fair description of the charitable program 6 for which the solicitation campaign is being carried out. 7 (7) Any other information required by the regulations of 8 the department. 9 (f) Written contract.--There shall be a written contract 10 between a professional solicitor and a charitable organization 11 for each solicitation campaign which shall be signed by two 12 authorized officials of the charitable organization, one of whom 13 must be a member of the organization's governing body, and the 14 authorized contracting officer for the professional solicitor 15 and which shall contain all of the following provisions: 16 (1) A statement of the charitable purpose for which the 17 solicitation campaign is being conducted. 18 (2) A statement of the respective obligations of the 19 professional solicitor and the charitable organization. 20 (3) A statement of the guaranteed minimum percentage of 21 the gross receipts from contributions which will be remitted 22 to the charitable organization, if any, or, if the 23 solicitation involves the sale of goods, services or tickets 24 to a fundraising event, the percentage of the purchase price 25 which will be remitted to the charitable organization, if 26 any. Any stated percentage shall exclude any amount which the 27 charitable organization is to pay as fundraising costs. 28 (4) A statement of the percentage of the gross revenue 29 which the professional solicitor will be compensated. If the 30 compensation of the professional solicitor is not contingent 19900S1716B2501 - 28 -
1 upon the number of contributions or the amount of revenue 2 received, his compensation shall be expressed as a reasonable 3 estimate of the percentage of the gross revenue, and the 4 contract shall clearly disclose the assumptions upon which 5 the estimate is based. The stated assumptions shall be based 6 upon all of the relevant facts known to the professional 7 solicitor regarding the solicitation to be conducted by the 8 professional solicitor. 9 (5) The effective and termination dates of the contract. 10 (6) Any other information required by the regulations of 11 the department. 12 (g) Department review.--The department shall examine each 13 contract and solicitation notice filed by a professional 14 solicitor and shall determine whether the contract and notice 15 contain the required information. If the department determines 16 that the requirements are not satisfied, the department must 17 notify the professional solicitor within ten working days of its 18 receipt of the contract and notice; otherwise the contract and 19 notice are deemed to be approved. Within seven days after 20 receipt of a notification that the requirements are not 21 satisfied, the professional solicitor may request a hearing. The 22 hearing must be held within seven days of receipt of the request 23 and a determination must be rendered within three working days 24 of the hearing. 25 (h) Required disclosures.--Prior to orally requesting a 26 contribution or contemporaneously with a written request for a 27 contribution, a professional solicitor shall be responsible for 28 clearly and conspicuously disclosing: 29 (1) The name of the professional solicitor as on file 30 with the department and that the solicitation is being 19900S1716B2501 - 29 -
1 conducted by a professional solicitor who is being paid for 2 his services. 3 (2) If the individual acting on behalf of the 4 professional solicitor identifies himself by name, the 5 individual's legal name. 6 (3) The name of the charitable organization and a 7 description of how the contributions raised by the 8 solicitation will be utilized for a charitable purpose, or if 9 there is no charitable organization, a description as to how 10 the contributions raised by the solicitation will be utilized 11 for a charitable purpose. 12 (i) Responses.--Any responses given by or on behalf of a 13 professional solicitor to an oral or written request for 14 information shall be truthful. 15 (j) Information on disclosure.--In the case of a 16 solicitation campaign conducted orally, whether by telephone or 17 otherwise, any written confirmation or receipt or reminder sent 18 to any person who has contributed or has pledged to contribute, 19 shall include a clear and conspicuous disclosure of the 20 information required by subsection (h). 21 (k) Notice.--In addition to the information required by 22 subsection (j), any written confirmation, receipt or reminder of 23 a contribution made pursuant to an oral solicitation and any 24 written solicitation shall conspicuously state: 25 "A copy of the official registration and financial 26 information may be obtained from the Pennsylvania 27 Department of State by calling toll free, within 28 Pennsylvania, 1 (800) 000-0000. Registration does not 29 imply endorsement." 30 (l) Financial reports.--Within 90 days after a solicitation 19900S1716B2501 - 30 -
1 campaign has been completed, and on the anniversary of the 2 commencement of a solicitation campaign lasting more than one 3 year, a professional solicitor shall file with the department a 4 financial report for the campaign, including gross revenue and 5 an itemization of all expenses incurred. This report shall be 6 signed and sworn to by the authorized contracting agent for the 7 professional solicitor and two authorized officials of the 8 charitable organization. 9 (m) Retention of records, etc.--A professional solicitor 10 shall maintain during each solicitation campaign and for not 11 less than three years after the completion of such campaign the 12 following records, which shall be available for inspection upon 13 demand by the department or the Office of Attorney General: 14 (1) The date and amount of each contribution received 15 and the name and address of each contributor. 16 (2) The name and residence of each employee, agent or 17 other person involved in the solicitation. 18 (3) Records of all revenue received and expenses 19 incurred in the course of the solicitation campaign. 20 (4) The location and account number of each bank or 21 other financial institution account in which the professional 22 solicitor has deposited revenue from the solicitation 23 campaign. 24 (n) Records from ticket sales.--If the professional 25 solicitor sells tickets to an event and represents that tickets 26 will be donated for use by another, the professional solicitor 27 shall maintain, for not less than three years after the 28 completion of such event, the following records, which shall be 29 available for inspection upon demand by the department or the 30 Office of Attorney General: 19900S1716B2501 - 31 -
1 (1) The number of tickets purchased and donated by each 2 contributor. 3 (2) The name and address of all organizations receiving 4 donated tickets for use by others, including the number of 5 tickets received by each organization. 6 (o) Deposit of contributions.--Each contribution in the 7 control or custody of the professional solicitor shall, in its 8 entirety and within five days of its receipt, be deposited in an 9 account at a bank or other federally insured financial 10 institution. The account shall be in the name of the charitable 11 organization with whom the professional solicitor has contracted 12 and the charitable organization shall have sole control over all 13 withdrawals from the account. 14 (p) Updating of information.--Any material change in any 15 information filed with the department pursuant to this section 16 shall be reported in writing by the professional solicitor to 17 the department not more than seven days after such change 18 occurs. 19 (q) Restrictions.--No person may act as a professional 20 solicitor if such person, any officer or director thereof, any 21 person with a controlling interest therein, or any person the 22 professional solicitor employs, engages or procures to solicit 23 for compensation, has been convicted by a court of any state or 24 the United States of any felony, or of any misdemeanor involving 25 dishonesty or arising from the conduct of a solicitation for a 26 charitable organization or purpose. 27 Section 10. Contracts voidable by charitable organizations. 28 (a) Contracts with registered groups.--No professional 29 fundraising counsel or professional solicitor shall contract 30 with a charitable organization unless such professional 19900S1716B2501 - 32 -
1 fundraising counsel or professional solicitor is registered with 2 the department. A contract with an unregistered professional 3 fundraising counsel or professional solicitor shall be voidable 4 at the option of the charitable organization. 5 (b) Cancellation of contract.--Whenever a charitable 6 organization contracts with a professional fundraising counsel 7 or professional solicitor, the charitable organization shall 8 have the right to cancel the contract without cost, penalty or 9 liability for a period of ten days following the date on which 10 that contract is executed. Any provision in the contract that is 11 intended to waive this right of cancellation shall be void and 12 unenforceable. 13 (c) Manner of cancellation.--A charitable organization may 14 cancel a contract pursuant to subsection (b) by a written notice 15 of cancellation. If mailed, cancellation shall be deemed 16 effective when deposited with the United States Postal Service, 17 properly addressed and postage prepaid. The notice shall be 18 sufficient if it indicates that the charitable organization does 19 not intend to be bound by the contract. 20 (d) Cancellation notice to department.--Whenever a 21 charitable organization cancels a contract pursuant to the 22 provisions of this section, it shall mail a duplicate copy of 23 the notice of cancellation to the department. 24 (e) Status of funds after cancellation.--Any funds collected 25 after a contract has been canceled shall be deemed to be held in 26 trust for the benefit of the charitable organization without 27 deduction for cost or expenses of any nature. A charitable 28 organization shall be entitled to recover all funds collected 29 after the date of cancellation. 30 Section 11. Information filed to become public records. 19900S1716B2501 - 33 -
1 Except as otherwise provided in section 12, registration 2 statements and applications, reports, notices, contracts or 3 agreements between charitable organizations and professional 4 fundraising counsel, professional solicitors and commercial co- 5 venturers, and all other documents and information required to 6 be filed under this act with the department shall become public 7 records in the office of the bureau and shall be open to the 8 general public at such time and under such conditions as the 9 department may prescribe. 10 Section 12. Records to be kept by charitable organizations, 11 professional fundraising counsels and 12 professional solicitors; inspection; retention. 13 Every charitable organization, professional fundraising 14 counsel, and professional solicitor subject to the provisions of 15 this act shall, in accordance with the rules and regulations 16 prescribed by the department, keep true fiscal records as to its 17 activities in this Commonwealth as may be covered under this 18 act, in such form as will enable them accurately to provide the 19 information required under this act. Such records shall be made 20 available for inspection upon demand by the department or the 21 Office of Attorney General. However, names, addresses and 22 identities of contributors and amounts contributed by them shall 23 not be considered a matter of public record and, therefore, 24 shall not generally be made available for public inspection, 25 shall not be used for a purpose inconsistent with this act, and 26 shall be removed from the records in the custody of the 27 department at such time that such information is no longer 28 necessary for the enforcement of this act. Such records shall be 29 maintained for a period of at least three years after the end of 30 the period of registration to which they relate. 19900S1716B2501 - 34 -
1 Section 13. Limitation on activities of charitable 2 organizations; disclosure requirements. 3 (a) Solicitation limitation.--A charitable organization may 4 only solicit contributions for the charitable purpose expressed 5 in solicitation for contributions or the registration statement 6 of the charitable organization and may only apply contributions 7 in a manner substantially consistent with that purpose. 8 (b) Solicitation disclosures.--A charitable organization 9 soliciting in this Commonwealth shall include all of the 10 following disclosures at the point of solicitation: 11 (1) Its identity and location and, if different, the 12 name and address of the charitable organization on whose 13 behalf the solicitation is being conducted. 14 (2) If requested, the name, and address or telephone 15 number of a representative to whom inquiries could be 16 addressed. 17 (3) A full and fair description of the charitable 18 purpose or purposes for which the solicitation is being made, 19 and a source from which written information is available. 20 (4) If requested, the source from which a financial 21 statement may be obtained. Such financial statement shall be 22 consistent with the annual financial report requested under 23 section 5 and shall disclose assets, liabilities, fund 24 balances, revenue and expenses for the preceding fiscal year. 25 Expenses shall be separated into program services, 26 administrative costs and fundraising costs. 27 (c) Notice on printed solicitation.--On every printed 28 solicitation or written confirmation, receipt, or reminder of a 29 contribution, the following statement must be conspicuously 30 printed: 19900S1716B2501 - 35 -
1 "A copy of the official registration and financial 2 information may be obtained from the Pennsylvania 3 Department of State by calling toll free, within 4 Pennsylvania, 1 (800) 000-0000. Registration does not 5 imply endorsement." 6 (d) Misrepresentation.--A charitable organization may not 7 misrepresent its purpose or nature, or the purpose or 8 beneficiary of a solicitation. A misrepresentation may be 9 accomplished by words or conduct or failure to disclose a 10 material fact. 11 (e) Control over fundraising activities.--A charitable 12 organization must establish and exercise control over 13 fundraising activities conducted for its benefit, including 14 approval of all written contracts and agreements, and must 15 assure that fundraising activities are conducted without 16 coercion. 17 (f) Restrictions on certain contracts.--A charitable 18 organization shall not enter into any contract or agreement with 19 or employ any professional fundraising counsel or professional 20 solicitor unless that professional fundraising counsel or 21 professional solicitor is registered with the department. 22 (g) Registration with department required.--A charitable 23 organization shall not enter into any contract or agreement with 24 or raise any funds for any charitable organization required to 25 be registered pursuant to this act unless such charitable 26 organization is registered with the department. 27 Section 14. Reciprocal agreements. 28 The secretary may enter into reciprocal agreements with the 29 appropriate authority of any other state for the purpose of 30 exchanging information with respect to charitable organizations, 19900S1716B2501 - 36 -
1 professional fundraising counsel and professional solicitors. 2 Pursuant to such agreements, the secretary may accept 3 information filed by a charitable organization, professional 4 fundraising counsel or professional solicitor with the 5 appropriate authority of another state in lieu of the 6 information required to be filed in accordance with this act, if 7 such information is substantially similar to the information 8 required under this act. The secretary may also grant exemptions 9 from the requirements for the filing of annual registration 10 statements with the department to charitable organizations 11 organized under the laws of another state having their principal 12 place of business outside this Commonwealth whose funds are 13 derived principally from sources outside this Commonwealth and 14 which have been exempted from the filing of registration 15 statements by the statute under whose laws they are organized if 16 such state has a statute similar in substance to the provisions 17 of this act. 18 Section 15. Prohibited acts. 19 (a) General rule.--Regardless of a person's intent or the 20 lack of injury, the following acts and practices are prohibited 21 in the planning, conduct or execution of any solicitation or 22 charitable sales promotion: 23 (1) Operating in violation of, or failing to comply 24 with, any of the requirements of this act, regulations of the 25 department or an order of the secretary, or soliciting 26 contributions after registration with the department has 27 expired or has been suspended or revoked or soliciting 28 contributions prior to the solicitation notice and contract 29 having been approved by the department. 30 (2) Utilizing any unfair or deceptive acts or practices 19900S1716B2501 - 37 -
1 or engaging in any fraudulent conduct which creates a 2 likelihood of confusion or of misunderstanding. 3 (3) Utilizing any representation that implies the 4 contribution is for or on behalf of a charitable 5 organization, or utilizing any emblem, device or printed 6 matter belonging to or associated with a charitable 7 organization without first being authorized in writing to do 8 so by the charitable organization. 9 (4) Utilizing a name, symbol or statement so closely 10 related or similar to that used by another charitable 11 organization or other person that the use thereof would tend 12 to confuse or mislead a solicited person. 13 (5) Misrepresenting or misleading anyone in any manner 14 to believe that the person on whose behalf a solicitation or 15 charitable sales promotion is being conducted is a charitable 16 organization or that the proceeds of such solicitation or 17 charitable sales promotion will be used for charitable 18 purposes when such is not the fact. 19 (6) Misrepresenting or misleading anyone in any manner 20 to believe that any other person sponsors, endorses or 21 approves such solicitation or charitable sales promotion when 22 such other person has not given consent in writing to the use 23 of his name for these purposes. 24 (7) Misrepresenting or misleading anyone in any manner 25 to believe that goods or services have sponsorship, approval, 26 characteristics, ingredients, uses, benefits or qualities 27 that they do not have or that a person has a sponsorship, 28 approval, status, affiliation or connection that he does not 29 have. 30 (8) Utilizing or exploiting the fact of registration so 19900S1716B2501 - 38 -
1 as to lead any person to believe that such registration in 2 any manner constitutes an endorsement or approval by the 3 Commonwealth. The use of the following statement shall not be 4 deemed a prohibited exploitation: 5 "A copy of the official registration and financial 6 information may be obtained from the Pennsylvania 7 Department of State by calling toll free, within 8 Pennsylvania, 1 (800) 000-0000. Registration does not 9 imply endorsement." 10 (9) Representing directly or by implication that a 11 charitable organization will receive an amount greater than 12 the actual net proceeds reasonably estimated to be retained 13 by the charity for its use. 14 (10) With respect to solicitations by or on behalf of 15 law enforcement personnel, firefighters, or other persons who 16 protect the public safety, issuing, offering, giving, 17 delivering or distributing any honorary membership cards, 18 courtesy cards or similar cards, or any stickers, emblems, 19 plates or other such items which could be used for display on 20 a motor vehicle. 21 (11) (i) Soliciting for advertising to appear in a for- 22 profit publication which relates to, purports to relate 23 to, or which could reasonably be construed to relate to 24 any charitable purpose without making the following 25 disclosures at the time of solicitation: 26 (A) The publication is a for-profit, commercial 27 enterprise. 28 (B) True name of the solicitor and the fact that 29 the solicitor is a professional solicitor. 30 (C) The publication is not directly affiliated 19900S1716B2501 - 39 -
1 or sponsored by any charitable organization. 2 (ii) Where a sale of advertising has been made, the 3 solicitor, prior to accepting any money for the sale, 4 shall present the purchaser with the same disclosures, in 5 written form and in conspicuous type. 6 (12) Representing that any part of the contributions 7 received will be given or donated to any other charitable 8 organization unless such organization has consented to the 9 use of its name prior to the solicitation. The written 10 consent shall be signed by any two authorized officers, 11 directors or trustees of the charitable organization. 12 (13) Representing that tickets to events will be donated 13 for use by another, unless all of the following requirements 14 have been met: 15 (i) The charitable organization or professional 16 solicitor shall have commitments, in writing, from 17 charitable organizations stating that they will accept 18 donated tickets and specifying the number of tickets they 19 are willing to accept. 20 (ii) The charitable organization or professional 21 solicitor shall not solicit or accept more contributions 22 of donated tickets than the lesser of: 23 (A) the number of ticket commitments it has 24 received from charitable associations; or 25 (B) the total attendance capacity of the site of 26 the event. 27 (iii) A ticket commitment alone, as described in 28 this subsection, shall not constitute written consent to 29 use the organization's name in the solicitation campaign. 30 (b) Criteria to determine unfairness.--In determining 19900S1716B2501 - 40 -
1 whether or not a practice is unfair, deceptive, fraudulent or 2 misleading under this section, definitions, standards or 3 interpretations relating thereto under the act of December 17, 4 1968 (P.L.1224, No.387), known as the Unfair Trade Practices and 5 Consumer Protection Law, shall apply. 6 Section 16. Investigation; subpoenas; injunctions; court 7 orders. 8 (a) Permissible investigations.--The Attorney General, the 9 secretary or the district attorney may make or cause to be made 10 an investigation of any person as deemed necessary. In 11 conducting such investigation, he may: 12 (1) Require or permit any person to file a statement in 13 writing, under oath or otherwise, as to all the facts and 14 circumstances concerning the matter to be investigated. 15 (2) Administer oaths or affirmations. 16 (3) Take testimony under oath. 17 (4) Require the attendance and testimony of witnesses 18 and the production of any books, accounts, papers, records, 19 documents, audits and files relating to any solicitation or 20 any practice subject to this act or the regulations of the 21 department. 22 (5) Issue subpoenas. 23 (6) Conduct private or public hearings. 24 (7) Examine witnesses and receive evidence during any 25 investigation or public or private hearings. 26 (b) Notice.--Notice of the time and place for the 27 examination of documentary material shall be given by the 28 Attorney General, the secretary or the district attorney at 29 least ten days prior to the date of such examination or taking 30 of testimony. 19900S1716B2501 - 41 -
1 (c) Contents of notice.--Each notice shall: 2 (1) State the time and place for the taking of testimony 3 or the examination and the name and address of the person to 4 be examined, if known, and if the name is not known, a 5 general description sufficient to identify him or the 6 particular class or group to which he belongs. 7 (2) State the statute thereof, if any, of the alleged 8 violation which is under investigation and state the general 9 subject matter of the investigation. 10 (3) Describe the class or classes of documentary 11 material to be produced thereunder with reasonable 12 specificity, so as fairly to indicate the material demanded. 13 (4) Prescribe a return date within which the documentary 14 material is to be produced. 15 (5) Identify the members of the Office of Attorney 16 General's staff, the secretary's staff or the district 17 attorney's staff to whom such documentary material is to be 18 made available for inspection and copying. 19 (d) Restrictions on notices.--No such notice shall contain 20 any requirement which would be unreasonable or improper if 21 contained in a subpoena duces tecum issued by a court of the 22 Commonwealth. 23 (e) Restriction on materials.-- 24 (1) Except as provided in paragraph (2), any documentary 25 material or other information produced by any person pursuant 26 to this section shall not, unless otherwise ordered by any 27 court of competent jurisdiction for good cause shown, be 28 produced for inspection or copying by or be disclosed to any 29 person other than the authorized representative of the 30 Attorney General, the secretary or the district attorney 19900S1716B2501 - 42 -
1 without the consent of the person who produced such material. 2 (2) Under such reasonable terms and conditions that the 3 Attorney General, secretary or the district attorney shall 4 prescribe, documentary material in paragraph (1) shall be 5 available for inspection and copying by the person who 6 produced such material or any duly authorized representative 7 of such person. The Attorney General, the secretary or the 8 district attorney or his duly authorized representative may 9 use such documentary material or copies thereof as he 10 determines necessary in the enforcement of this act, 11 including presentation in any subsequent administrative or 12 judicial proceeding. 13 (f) Compliance.--Any person upon whom a notice is served 14 pursuant to this section shall comply with the terms thereof 15 unless otherwise provided by an order of court. Any person who 16 fails to appear, or with intent to avoid, evade, or prevent 17 compliance, in whole or in part, with any civil investigation 18 under this act, removes from any place, conceals, withholds, or 19 destroys, mutilates, alters, or by any other means falsifies any 20 documentary material in the possession, custody or control of 21 any person subject to any notice, or knowingly conceals any 22 relevant information, shall be assessed a civil penalty of not 23 more than $5,000. The Attorney General or the district attorney 24 may petition for an order of court for enforcement of this 25 section. Additionally, the secretary may take appropriate action 26 to petition for an order of court for the enforcement of this 27 section in accordance with the act of October 15, 1980 (P.L.950, 28 No.164), known as the Commonwealth Attorneys Act. Any 29 disobedience of any final order entered under this section by 30 any court shall be punished as contempt thereof. 19900S1716B2501 - 43 -
1 (g) Service.--Service of a subpoena may be made in any one 2 of the following ways: 3 (1) Delivering a duly executed copy thereof to the 4 person to be served or to a partner or to any officer or 5 agent authorized by appointment or by law to receive service 6 of process on behalf of such person. 7 (2) Delivering a duly executed copy thereof to the 8 principal place of business in this Commonwealth of the 9 person to be served. 10 (3) Mailing by registered or certified mail a duly 11 executed copy thereof addressed to the person to be served at 12 his principal place of business in this Commonwealth or if 13 said person has no place of business in this Commonwealth, to 14 the last address of such person known to the secretary. 15 (4) Any charitable organization, fundraising counsel, or 16 professional solicitor having its principal place of business 17 other than within this Commonwealth, or organized under and 18 by virtue of the laws of a foreign state, which is subject to 19 the provisions of this act, shall be deemed to have 20 irrevocably appointed the Secretary of State as its agent 21 upon whom may be served any summons, subpoena duces tecum or 22 other process directed to such charitable organization, 23 fundraising counsel, professional solicitor, or any partner, 24 principal officer or director of any of them, in any action 25 or proceeding brought under the provisions of this act. 26 Service of such process upon the Secretary of State shall be 27 made by personally delivering to and leaving with him a copy 28 thereof at his office in the city of Harrisburg, Pennsylvania 29 and such service shall be sufficient service; provided notice 30 of such service and a copy of such process shall be forthwith 19900S1716B2501 - 44 -
1 sent by said secretary to such charitable organization, 2 fundraising counsel, professional solicitor, or other person 3 to whom it is directed by registered mail, with return 4 receipt requested at the last address known to said 5 secretary. 6 Section 17. Administrative enforcement and penalties. 7 (a) General rule.--The secretary may refuse to register or 8 revoke or suspend the registration of any charitable 9 organization, professional fundraising counsel or professional 10 solicitor whenever he finds that a charitable organization, 11 professional fundraising counsel or professional solicitor, or 12 an agent, servant or employee thereof: 13 (1) Has violated or is operating in violation of any of 14 the provisions of this act, the regulations of the 15 department, or an order issued by the secretary. 16 (2) Has refused or failed or any of its principal 17 officers has refused or failed, after notice, to produce any 18 records of such organization or to disclose any information 19 required to be disclosed under this act or the regulations of 20 the department. 21 (3) Has made a material false statement in an 22 application, statement or report required to be filed under 23 this act. 24 (b) Additional actions.--When the secretary finds that the 25 registration of any person may be refused, suspended or revoked 26 under the terms of subsection (a), the secretary may: 27 (1) Revoke a grant of exemption to any of the provisions 28 of this act. 29 (2) Issue an order directing that the person cease and 30 desist specified fundraising activities. 19900S1716B2501 - 45 -
1 (3) Impose an administrative fine not to exceed $1,000 2 for each act or omission which constitutes a violation of 3 this act and an additional penalty, not to exceed $100 for 4 each day during which such violation continues. Registration 5 will be automatically suspended upon final affirmation of an 6 administrative fine until the fine is paid or until the 7 normal expiration date of the registration. No registration 8 shall be renewed until the fine is paid. 9 (4) Place the registrant on probation for such period of 10 time and subject to such conditions as he may decide. 11 (c) Administrative procedures.--All actions of the secretary 12 shall be taken subject to the right of notice, hearing and 13 adjudication and the right of appeal therefrom in accordance 14 with Title 2 of the Pennsylvania Consolidated Statutes (relating 15 to administrative law and procedure). 16 Section 18. Criminal penalties. 17 (a) Deceit in fraud violation.--Any person who willfully and 18 knowingly violates any provisions of this act with intent to 19 deceive or defraud any charity or individual, commits a 20 misdemeanor of the first degree and shall, upon conviction, be 21 sentenced to pay a fine not exceeding $10,000 or imprisonment 22 for not more than five years, or both. 23 (b) Other violations.--Any other violation of this act shall 24 constitute a misdemeanor of the third degree punishable, upon 25 conviction, by a fine not exceeding $2,500 or imprisonment for 26 not more than one year, or both. 27 (c) Location of offense.--Any offense committed under this 28 act involving a solicitation may be deemed to have been 29 committed at either the place at which the solicitation was 30 initiated, or at the place where the solicitation was received. 19900S1716B2501 - 46 -
1 Section 19. Civil penalties. 2 (a) General rule.--Whenever the Attorney General or any 3 district attorney shall have reason to believe, or shall be 4 advised by the secretary, that the person is operating in 5 violation of the provisions of this act, the Attorney General or 6 district attorney may bring an action in the name of the 7 Commonwealth against such person who has violated this act, to 8 enjoin such person from continuing such violation and for such 9 other relief as the court deems appropriate. In any proceeding 10 under this subsection, the court may make appropriate orders, 11 including: 12 (1) the appointment of a master or receiver; 13 (2) the sequestration of assets; 14 (3) the reimbursement of persons from whom contributions 15 have been unlawfully solicited; 16 (4) the distribution of contributions in accordance with 17 the charitable purpose expressed in the registration 18 statement or in accordance with the representations made to 19 the person solicited; 20 (5) the reimbursement of the Commonwealth for attorney 21 fees and the costs of investigation, including audit costs; 22 (6) the assessment of a civil penalty not exceeding 23 $1,000 per violation of the act, which penalty shall be in 24 addition to any other relief which may be granted; and 25 (7) the granting of other appropriate relief. 26 (b) Assurance of voluntary compliance.--In any case where 27 the Attorney General or district attorney has authority to 28 institute an action or proceeding under this act, he may accept 29 an assurance of voluntary compliance through which any person 30 alleged to be engaged in any method, act or practice in 19900S1716B2501 - 47 -
1 violation of this act agrees to discontinue such method, act or 2 practice. Such assurance may, among other terms, include a 3 stipulation of a voluntary payment by such person of the cost of 4 the investigation or of an amount to be held in escrow pending 5 the outcome of an action or as restitution to agreed persons, or 6 both. Any such assurance of compliance shall be in writing and 7 shall be filed with a court of the Commonwealth. Matters closed 8 may, at any time be reopened by the court for further 9 proceedings in the public interest. In the event of an alleged 10 violation of the assurance of voluntary compliance, the Attorney 11 General or district attorney may, at his discretion, either 12 initiate contempt proceedings or proceed as if the assurance of 13 voluntary compliance has not been accepted. Evidence of a 14 violation of such assurance shall be prima facie evidence of a 15 violation of this act in any subsequent proceeding brought by 16 the Attorney General or district attorney. 17 Section 20. Additional regulations by counties, municipalities 18 or consolidated government. 19 Nothing contained in this act shall serve to deny the right 20 to any county, municipality or consolidated government to pass 21 such ordinances, rules and regulations as may be deemed 22 appropriate to regulate further the soliciting of contributions 23 within such county, municipality or consolidated government. 24 Such ordinance may not alter any of the obligations set forth in 25 this act or the regulations of the department but may add 26 thereto other requirements and rules as appear to be proper to 27 the county, municipality or consolidated government involved. 28 Section 21. Charitable organizations deemed fiduciary. 29 Every person soliciting, collecting or expending 30 contributions for charitable purposes and every officer, 19900S1716B2501 - 48 -
1 director, trustee and employee of any such person concerned with 2 the solicitation, collection or expenditure of such contribution 3 shall be deemed to be a fiduciary and acting in a fiduciary 4 capacity. 5 Section 22. Prior registration unaffected. 6 Any person who is registered with the department under the 7 act of April 30, 1986 (P.L.107, No.36), known as the Charitable 8 Organization Reform Act, prior to the effective date of this act 9 shall, on and after the effective date hereof, be deemed to be 10 registered with the department as provided for in this act. 11 Registration shall be reissued in accordance with this act. 12 Section 23. Appropriation. 13 All fees shall be paid to the State Treasurer and are 14 appropriated to the Department of State for the administration 15 and enforcement of this act and all fines, penalties, attorney 16 fees and costs of investigation shall be paid to the 17 governmental agency that conducted the litigation. 18 Section 24. Repeals. 19 The act of April 30, 1986 (P.L.107, No.36), known as the 20 Charitable Organization Reform Act, is repealed. Existing 21 regulations promulgated pursuant to the Charitable Organization 22 Reform Act, shall remain in effect until amended in accordance 23 with the provisions of this act. 24 Section 25. Effective date. 25 This act shall take effect as follows: 26 (1) Sections 9(j) and 13(c) of this act shall take 27 effect in 120 days. 28 (2) The remainder of this act shall take effect in 60 29 days. F21L10VDL/19900S1716B2501 - 49 -