names of the individuals responsible for the final distribution of the contributions
A statement indicating whether the organization is or has ever been enjoined by one or more states from soliciting contributions
Copies of contracts between the charitable organization and professional fundraisers and/or professional solicitors
It is common for the statute to authorize the state's regulatory agency to require, by regulations or otherwise, the submission of information in addition to that required by the statute.
The states' laws either expressly provide or contemplate that the regulatory authorities will examine the application and, where the application is legally sufficient, issue the permit or other authorization to proceed with the fundraising effort. The review authority at this stage of the process is exceedingly broad. At a minimum, the governmental authorities have the power to determine whether the application conforms with all of the legal requirements. At the same time, the discretion these officials have is not unlimited; legally, they are not empowered to make subjective judgments about the worthiness or similar attributes of applicant organizations.39
An investigation can ensue at this stage (as well as at any time thereafter). Most states' laws vest plenary investigative capacity in the regulatory and enforcement authorities, particularly the attorney general.40
Sometimes a chapter, branch, or other affiliate (other than an independent member agency of a federated fundraising organization) has the option of separately reporting the relevant information to the state. Alternatively, it reports to the parent organization, which is then required to furnish the information in a consolidated form to the state.
Permission to engage in fundraising for charitable purposes will not be issued where the regulatory authorities conclude that the charitable organization has omitted or materially misrepresented required information or would be acting in violation of one or more provisions of the state's charitable solicitation law. The law may provide that a permit to solicit will not be issued where a person violated the law, attempted to obtain the fundraising authorization by misrepresentation, or materially misrepresented the purposes and the manner in which contributions would be used.
Usually, the state levies a registration fee, which is either a fixed amount or an amount correlated with the level of contributions received, administrative or fundraising outlays, or the like.41 Most of these statutes provide for a stated fixed fee; some states levy a fee, the amount of which depends on the level of annual receipts. A state may allow the regulatory authorities to set the fee. Other states, however, allow a charitable organization to register its fundraising program without charge.
State laws differ as to the duration of the registration or other authorization to engage in charitable fundraising. In most states, the permit or license expires by law one year after the date of its issuance, at the close of the calendar year, or at the close of the organization's fiscal year. Renewal of the registration or other authorization is made by filing an updated application within a certain period before the expiration date of the existing registration. These statutes usually also require a supplemental filing during the time a registration is in effect, where there is a material change in the information submitted with the application.
In some states, the registration or other authorization remains in effect until withdrawn by the charitable organization or suspended or revoked by the state.
The statutory law in the other jurisdictions does not address the subject of duration of the authorization to engage in charitable fundraising.
These laws usually provide that, where the charitable organization has violated a provision of the applicable charitable solicitation act, the enforcement authorities are to suspend or revoke the registration or other authorization. The statute usually provides for some form of due process, including a hearing, in this type of circumstance.42
There often are separate registration requirements for professional fundraisers and professional solicitors.43
The burdens of registration imposed on charitable organizations engaging in multistate charitable solicitations appear to be moderating, as the consequence of development of a unified registration statement. More than 30 states and the District of Columbia agreed to use the form. Some states, however, require supplemental information. This form is optional for use by participating charitable organizations.44
§ 3.4 ANNUAL REPORTING
Most state charitable solicitation acts require a soliciting charitable organization (unless exempt from the requirement)45 to annually file information with the appropriate governmental agency. This is accomplished by filing a report, usually annually, which is the requirement in most states, or an annual updating of the registration, as is the case in many states. Other states mandate the filing of an annual disclosure statement, the filing of an annual statement, a filing for an annual license, or the filing of a copy of the federal annual information return. There are states with some form of statutory law on this point that do not have any annual reporting or similar requirement for charitable entities. A few states mandate both annual registration and annual reports.
The categories of charitable organizations exempted from the annual reporting requirement usually are those also exempted from the preapproval requirement.
The charitable solicitation statute frequently mandates the contents of the annual reports. The information most often requested is the following:
The gross amount of contributions pledged to and collected by the charitable organization—not just in the particular state but in all jurisdictions in which fundraising took place
The amount from the solicitation that was or is to be devoted to charitable purposes, as well as the amounts paid or to be paid for fundraising (including the fees of professional fundraisers) and for administration
Identification of any professional fundraisers and/or professional solicitors utilized
The net receipts disbursed or dedicated for disbursement within the particular state, by category of expenditure
In addition, a reporting charitable organization usually must file a financial statement covering the preceding accounting period, prepared in conformance with appropriate accounting standards. A few states require, by statute, that the reports be based on the accounting standards and reporting procedures promulgated by the Financial Accounting Standards Board and/or the American Institute of Certified Public Accountants, while a state may mandate by statute use of the standards and procedures set forth in the standards for Uniform Financial Reporting by Voluntary Health and Welfare Organizations. Presumably, the regulatory officials in other states have the discretion to select the accounting principles with which charitable organizations must comply or to develop their own. Thus, the law may provide that each reporting charitable organization must report its expenditures in accordance with standards and classifications of accounts as prescribed by the attorney general, or a comparable official, to effect uniform reporting by organizations having similar activities and programs. These reports may have to be accompanied by an opinion of a certified public accountant.
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