H. B. 4641

(By Delegates Staton, Rowe, Smirl, L. White and Hutchins)

[Introduced February 27, 1998; referred to the Committee on the Judiciary then Finance.]

A BILL to amend and reenact sections two and five, article nineteen, chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, updating and clarifying provisions of the "Solicitations of Charitable Funds Act"; expanding the definition of "solicit" and "solicitation" to cover requests made by electronic means; raising the dollar threshhold for audits of organazations by an independent public accountant; identifying organizations required to provide information regarding tax-exempt status; requiring the filing of copies of written solicitation materials and scripts; and clarifying who must file a registration statement or report.

Be it enacted by the Legislature of West Virginia:
That sections two and five, article nineteen, chapter twenty- nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended,be amended and reenacted, to read as follows:
§29-19-2. Definitions.
As used in this article:
(1) "Charitable organization" means a person who is or holds itself out to be a benevolent, educational, philanthropic, humane, patriotic, religious or eleemosynary organization, or any person who solicits or obtains contributions solicited from the public for charitable purposes, or any person who in any manner employs any appeal for contributions which may be reasonably interpreted to suggest that any part of such contributions will be used for charitable purposes. A chapter, branch, area, office or similar affiliate or any person soliciting contributions within the state for a charitable organization which has its principal place of business outside the state is a charitable organization for the purposes of this article.
(2) "Contribution" means the promise or grant of any money or property of any kind or value.
(3) "Solicit" and "solicitation" means the request or appeal, directly or indirectly, for any contribution on the plea or representation that such contribution will be used for a charitable purpose, including, without limitation, the following methods of requesting such contribution:
(a) (A) Any oral or written request;
(b) (B) Any announcement to the press, over the radio or television, or by telephone, or telegraph or other electronic means, concerning an appeal or campaign to which the public is requested to make a contribution for any charitable purpose connected therewith;
(C) The distribution, circulation, posting or publishing of any handbill, written advertisement or other publication which directly or by implication seeks to obtain public support; or
(D) The sale of, offer or attempt to sell, any advertisement, advertising space, subscription, ticket or any service or tangible item in connection with which any appeal is made for any charitable purpose or where the name of any charitable or civic organization is used or referred to in any such appeal as an inducement or reason for making any such sale, or when or where in connection with any such sale, any statement is made that the whole or any part of the proceeds from any such sale will be donated to any charitable purpose.
"Solicitation", as defined herein, shall be deemed to occur when the request is made, at the place the request is received, whether or not the person making the same actually receives any contribution.
(4) "Federated fund-raising organization" means a federation of independent charitable organizations which have voluntarily joined together, including, but not limited to, a united fund or community chest, for purposes of raising and distributing money for and among themselves and where membership does not confer operating authority and control of the individual agencies upon the federated group organization.
(5) "Parent organization" is that part of a charitable organization which coordinates, supervises or exercises control over policy, fund raising and expenditures, or assists, receives funds from or advises one or more chapters, branches or affiliates in the state.
(6) "Person" means any individual, organization, trust, foundation, group, association, partnership, corporation, society or any combination of them.
(7) "Professional fund-raising counsel" means any person who for a flat fixed fee under a written agreement plans, conducts, manages, carries on, advises or acts as a consultant, whether directly or indirectly, in connection with soliciting contributions for, or on behalf of any charitable organization but who actually solicits no contributions as a part of such services. A bona fide salaried officer or employee of a charitable organization maintaining a permanent establishment within the state shall not be deemed to be a professional fund-raising counsel.
(8) "Professional solicitor" means any person who, for a financial or other consideration, solicits contributions for, or on behalf of a charitable organization, whether such solicitation is performed personally or through said person's agents, servants or employees specially employed by, or for a charitable organization, who are engaged in the solicitation of contributions under the direction of such person, or a person who plans, conducts, manages, carries on, advises or acts as a consultant to a charitable organization in connection with the solicitation of contributions but does not qualify as "professional fund-raising counsel" within the meaning of this article. A bona fide salaried officer or employee of a charitable organization maintaining a permanent establishment within the state is not a professional solicitor.
No attorney, investment counselor or banker, who advises any person to make a contribution to a charitable organization, shall be considered, as the result of such advice, a professional fund-raising counsel or a professional solicitor.
§29-19-5. Registration of charitable organizations; fee.
(a) Every charitable organization, except as provided in section six of this article, which intends to solicit contributions within this state or to have funds solicited on its behalf shall, prior to any solicitation, file a registration statement with the secretary of state upon forms prescribed by him or her, which shall be good for one full year and which shall be refiled in the next and each following year in which such charitable organization is engaged in solicitation activities. If an organization discontinues solicitation at any time after its last registration filing, then it must file a registration statement reflecting its activities during its last fiscal year in which solicitation in West Virginia took place. It shall be the duty of the president, chairman or principal officer of such charitable organization to file the statements required under this article. Such statements shall be sworn to and shall contain the following information:
(1) The name of the organization and the purpose for which it was organized;
(2) The principal address of the organization and the address of any offices in this state. If the organization does not maintain an office, the name and address of the person having custody of its financial records;
(3) The names and addresses of any chapters, branches or affiliates in this state;
(4) The place where and the date when the organization was legally established, the form of its organization;
(5) The names and addresses of the officers, directors, trustees and the principal salaried executive staff officer;
(6) A copy of a balance sheet and a statement or report of income and expenses for the organization's immediately preceding fiscal year, or a financial statement reporting information showing the kind and amount of funds raised during the preceding fiscal year, the costs and expenses incidental thereto and showing how the funds were disbursed or allocated for the same fiscal year: Provided, That for organizations raising more than fifty one hundred thousand dollars per year in contributions, the balance sheet and income and expense statement, or financial statement provided, shall be audited by an independent public accountant. Organizations are required to report the amount of money raised in the state and the amount spent in the state for charitable purposes;
(7) A copy of any determination of the organization's tax exempt status under the provisions of 26 U.S.C. §501(c)(3) and a copy of the last filed Internal Revenue Service form 990 and Schedule A for every charitable organization and any parent organization;
(8) Whether the organization intends to solicit contributions from the public directly or have such done on its behalf by others;
(9) Whether the organization is authorized by any other governmental authority to solicit contributions and whether it is or has ever been enjoined by any court from soliciting contributions;
(10) The general purpose or purposes for which the contributions to be solicited shall be used;
(11) The name or names under which it intends to solicit contributions;
(12) The names of the individuals or officers of the organization who will have final responsibility for the custody of the contributions;
(13) The names of the individuals or officers of the organization responsible for the final distribution of the contributions; and
(14) Copies of all contract documentation from professional fund-raising counsels and professional solicitors as provided for in subsection (d), section seven of this article.
(15) Copies of all written solicitation materials and copies of all scripts to be used in fund-raising.
(b) Each chapter, branch or affiliate, except an independent member agency of a federated fund-raising organization, may separately report the information required by this section, or report the information to its parent organization which shall then furnish such information as to its West Virginia affiliates, chapters and branches in a consolidated form to the secretary of state. An independent member agency of a federated fund-raising organization, as hereinbefore defined, shall comply with the provisions of this article independently. Each organization shall file a separate registration form for each name under which funds will be solicited.
(c) The registration forms and any other documents prescribed by the secretary of state shall be signed by an authorized officer or by an independent public accountant and by the chief fiscal officer of the charitable organization and shall be verified under oath.
(d) Every charitable organization collecting less than one million dollars during any year which submits an independent registration to the secretary of state shall pay an annual registration fee of fifteen dollars; every charitable organization collecting more than one million dollars during one year which submits an independent registration to the secretary of state shall pay an annual registration fee of fifty dollars; a parent organization filing on behalf of one or more chapters, branches or affiliates or a single organization filing under different names shall pay a single annual registration fee of fifty dollars for itself and such chapters, branches or affiliates included in the registration statement.
(e) For good cause shown, the secretary of state may extend the due date for the annual filing of a registration statement or report for a period not to exceed ninety days. During such period, the previously filed registration statement or report of the charitable organization which has been granted the extension shall remain in effect.
(f) In addition to the registration fee required by this section, a charitable organization, professional fund raiser or professional fund-raising counsel which fails to file a registration statement or report by the original or extended due date therefor as required by this section shall, for each month or part of the month thereafter in which the same is not filed, pay an additional fee of twenty-five dollars: Provided, That the total amount of such additional fees for a registration statement or report required to be filed in any one year shall not exceed five hundred dollars. Any such additional fees received shall be paid into the charitable organization fund established pursuant to the provisions of section fifteen-b of this article.

NOTE: The purpose of this bill is to update and clarify provisions of the "Solicitation of Charitable Funds Act."

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.