New To-Dos for Do-Good Programs
by: Heather Nolan
Charitable donation activities are subject to some recently-changed requirements in three states. We are updating our clients’ internal checklists and other guidance based on the newly-passed measures in Tennessee, Utah, and California - including California’s new charitable fundraising registration requirements starting June 12th. Here are some key things to know:
Companies offering various online or in-app charitable donation options should consider their new obligations in California: California issued final regulations for the charitable fundraising law it passed in 2021(previously addressed on our blog here and here). The regulations contain specific requirements for for-profit companies offering traditional commercial coventurer (“CCV”) donation options (like checkout round-ups or donation per purchase offers), as well as for organizations offering a broader range of online, in-app, or platform based donation activities, known as charitable fundraising platforms and platform charities.
For-profit companies publicly representing that the purchase or use of any goods, services, entertainment, or any other thing of value will benefit a charity or will be used for a charitable purpose are known as CCVs and are still required to register unless there is a written contract with the charity meeting the statutory requirements and donations are transferred at least every 90 days (or within 90 days for shorter campaigns).
Activities that trigger CCV compliance include allowing people to donate to a charity at checkout or offering to make a donation with a purchase, subscription, order, or other transaction, whether or not it occurs in person, online, or in an app.
If these activities are for 6 or fewer charities in a calendar year, the entity may register and comply as a CCV only.
On the other hand, if the entity offers online or in-app charitable donation options for more than 6 charities in a calendar year, as of June 12, 2024, it will need to register and comply in California as a charitable fundraising platform.
California also requires those who offer other online, in-app, or platform-based activities to register as a charitable fundraising platform or platform charity starting June 12th. Triggering activities include listing or referencing one or more charities that can receive donations or grants from users; offering peer-to-peer charitable fundraising; permitting users to select charities to receive donations from others or the platform itself based on the user’s activity; and providing charities with certain electronic means to solicit or receive donations through it (which may be integrated with the charity’s own platform).
California’s updated registration portal is now open, so advanced filings can be made.
Charitable fundraising platforms and platform charities are also required to provide conspicuous disclosures in their solicitations starting June 12th, but have until January 1, 2025 for the requirements to have the proper contracts with charities in place, promptly issue tax donation receipts, promptly distribute donations to charities, only solicit for charities that are in good standing with California and the IRS and that have provided prior consent, unless certain criteria are met.
If your organization will solicit donations in person, California still requires to display a written notice with certain information or “Solicitation or Sale for Charitable Purposes Card” under its Business & Professions Code 17510.3.
For charities who partner with for-profit companies: Starting July 1st, Tennessee will require charities to have certain details in their charitable sales promotion contracts and make filings of those agreements before the program begins. These agreements are where a for-profit company agrees to advertise or offer that the purchase or use of its goods or services will benefit, in whole or in part, a charity or charitable purpose. In some states, the for-profit company is required to make related filings. With this new law, Tennessee joins Arkansas, Connecticut, New Hampshire, and New Jersey in putting this obligation on the charity itself.
Utah also currently requires charities to file their charitable sales promotion contracts with the state, but has recently changed its requirements. Starting January 1, 2025, charities will no longer be required to do so. At that point, the main compliance requirements for charitable sales promotions are that the for-profit company must disclose in each advertisement the dollar amount or percent per unit of goods or services purchased or used that will benefit the charity or purpose.
Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.