assistance should explore the need to register pursuant to one or more charitable solicitation acts before submitting the grant proposal.
It is clear, although few solicitation acts expressly address the point, that the definition of solicitation entails seeking a charitable gift. There is no requirement that the solicitation be successful; that is, that the request actually results in the making of a gift.
One court created its own definition of the term solicit in this setting, writing that the “theme running through all the cases is that to solicit means ‘to appeal for something,’ ‘to ask earnestly,’ ‘to make petition to,’ ‘to plead for,’ ‘to endeavor to obtain by asking,’ and other similar expressions.”14 This court held that a state's charitable solicitation act did not apply to gambling activities held to generate funds destined for charitable purposes.15
(d) Sale
A few charitable solicitation acts include a definition of the term sale (or sell or sold). A statute may provide that a sale means the transfer of any property or the rendition of any service to any person in exchange for consideration. This may be said to include any purported contribution without which the property would not have been transferred or the services would not have been rendered.
The term consideration is the critical element of this definition, inasmuch as it represents the principal dividing line between a sale and a contribution.16 Consideration is the core component of a bona fide contract: both parties to the bargain must receive approximately equal value in exchange for the participation of the other. Consideration is the reason one person enters into a contract with another; the contracting party is motivated or impelled by the benefit to be derived from the contract (for goods or services), while the compensation to be received by the other contracting person is that person's inducement to the contract. A transaction that is not supported by adequate consideration cannot be a sale.
Likewise, a transaction that is completely supported by consideration cannot be a gift. Some transactions partake of both elements, where the consideration is less than the amount transferred, in which case only the portion in excess of the consideration is a gift. The two most common types of these dual character transactions are the quid pro quo contribution17 and the bargain sale.18
In those states that define a commercial coventure as a charitable sales promotion,19 the term sale usually is defined in that setting.
(e) Contribution
A contribution basically is a transfer of money or property in the absence of consideration—it is to be contrasted with a sale.20 The term may be defined in a charitable solicitation act as a gift, contribution, bequest, devise, or other grant of any money, credit, financial assistance, or property of any kind or value. The statutory definition may embrace promises to contribute (pledges).
The law on this point is the most developed in, not surprisingly, the federal income tax charitable giving setting. Years ago, the U.S. Supreme Court observed that a contribution is a transfer motivated by “detached or disinterested generosity.”21 Another observation from the Court was that a “payment of money [or transfer of other property] generally cannot constitute a charitable contribution if the contributor expects a substantial benefit in return.”22 Earlier, the Court referred to a contribution as a transfer made “out of affection, respect, admiration, charity or like impulses.”23
The Court has adopted use of the reference to consideration in determining what is a contribution. Thus, it wrote: “The sine qua non of a charitable contribution is a transfer of money or property without adequate consideration. The taxpayer, therefore, must at a minimum demonstrate that he [or she] purposefully contributed money or property in excess of the value of any benefit he [or she] received in return.”24 Essentially the same rule was subsequently articulated by the Court, when it ruled that an exchange having an “inherently reciprocal nature” is not a contribution and thus cannot be a charitable contribution where the recipient is a charitable organization.25
Dues, being payments for services, are not contributions. The term dues embraces payments by members of an organization in the form of membership dues, fees, assessments, or fines, as well as fees for services rendered to individual members.
A loan is not a contribution, including a loan to a charitable organization. If a person makes a loan to a charity, with the intent to subsequently forgive it, and the amount of the loan, or a portion of it, is subsequently forgiven, the amount forgiven becomes a contribution as of the date of forgiveness. As noted, a single transaction can embrace both the elements of a contribution and a sale.26
Essentially, the concept in this context is that a contribution is a payment to a charitable organization where the donor receives nothing of material value in return.27 Thus, a court ruled that a state's charitable solicitation act did not apply to the solicitation of corporate sponsors for a marathon, stating that the transaction was a “commercial” one, “[i]t is not a gift,” “[i]t is a corporate opportunity,” and “[i]t has nothing to do with philanthropy.”28
The amount or value of a charitable contribution may be pertinent in the application of a state's charitable solicitation act. Certain small solicitations are often exempted from these acts. These determinations are made on the basis of the monetary value of the gifts in the aggregate.29 In most instances, these calculations are made on the basis of (i.e., are confined to) the payments, or portions of payments, that are in fact contributions.
(f) Membership
The states' charitable solicitation acts often define the word membership or member. The principal purpose, when this definition is given, is to define the term in relation to the exclusion for solicitations that are confined to the membership of the soliciting organization.30
The statute may define the term membership to mean those persons to whom, for payment of dues, fees, assessments, and the like, an organization provides services and confers a bona fide right, privilege, professional standing, honor, or other direct benefit, in addition to the right to vote, elect officers, or hold offices.
This type of statute is likely to add the point that the concept of membership does not extend to those persons who are granted a membership upon making a contribution as the result of a solicitation.
(g)
