ENROLLED
COMMITTEE SUBSTITUTE
for
H. B. 4248
(By Delegates Wells, Reynolds,
Manypenny and Lawrence)
[Passed March 13, 2010; in effect ninety days from passage.]
AN ACT to amend and reenact §29-19-2, §29-19-5 and §29-19-6 of the
Code of West Virginia, 1931, as amended, all relating to the
solicitation of charitable funds; defining the terms "audit"
and "financial review"; including other methods of
communications in the definition of the term "solicitation";
raising the threshold for exemption from filing audits and
registering; and requiring financial reviews for charitable
organization raising between $100,000 and $200,000 in
contributions.
Be it enacted by the Legislature of West Virginia:
That §29-19-2, §29-19-5 and §29-19-6 of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read
as follows:
ARTICLE 19. SOLICITATION OF CHARITABLE FUNDS ACT.
§29-19-2. Definitions.
As used in this article:
(1) "Audit" means the systematic examination of records and
documents and the securing of other evidence by confirmation,
physical inspection, or otherwise, that includes a written
assurance that financial statements and reports are fairly
presented in conformity with generally accepted accounting
principles issued by the American Institute of Certified Public
Accountants.
(2) "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 those 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.
(3) "Contribution" means the promise or grant of any money or
property of any kind or value.
(4) "Financial review" means an examination of financial
statements in accordance with generally accepted accounting
principles issued by the American Institute of Certified Public
Accountants, in which a certified public accountant has a reasonable basis for expressing limited assurance that the reviewed
statements are free of material misstatements or false or missing
information and are found to be accurate, complete and fairly
presented to meet the requirements of the generally accepted
accounting principles.
(5) "Solicit" and "solicitation" means the request or appeal,
directly or indirectly, for any contribution on the plea or
representation that the contribution will be used for a charitable
purpose, including, without limitation, the following methods of
requesting a contribution:
(A) Any oral or written request;
(B) Any announcement to the press, over the radio or
television, or by telephone, electronic mail or messaging,
electronic bulletin board, or Internet technology, 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 an appeal as an inducement or reason for
making the sale, or when or where in connection with the sale, any statement is made that the whole or any part of the proceeds from
the sale will be donated to any charitable purpose.
"Solicitation", as defined herein, occurs when the request is
made, at the place the request is received, whether or not the
person making the request actually receives any contribution.
(6) "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.
(7) "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.
(8) "Person" means any individual, organization, trust,
foundation, group, association, partnership, corporation, society
or any combination of them.
(9) "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 the services. A bona fide
salaried officer or employee of a charitable organization
maintaining a permanent establishment within the state is not a
professional fund-raising counsel.
(10) "Professional solicitor" means any person who, for a
financial or other consideration, solicits contributions for, or on
behalf of a charitable organization, whether the solicitation is
performed personally or through that 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 that 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, is
considered, as the result of the 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, donations or grants within this state or to have funds solicited or received 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 the charitable organization is engaged in
solicitation activities. If an organization discontinues
solicitation at any time after its last registration filing, then
it shall file a registration statement reflecting its activities
during its last fiscal year in which solicitation in West Virginia
took place. It is the duty of the president, chairman or principal
officer of the charitable organization to file the statements
required under this article. The 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 and 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 to the fundraising and
showing how the funds were disbursed or allocated for the same
fiscal year: Provided, That in addition to the financial documents
required by this subdivision:
(A) Charitable organizations raising more than $200,000 per
year in contributions, excluding grants from governmental agencies
or private foundations, shall submit a report of an audit by an
independent certified public accountant, and
(B) Charitable organizations raising more than $100,000 per
year but less than $200,001 per year in contributions, excluding
grants from governmental agencies or private foundations, shall
submit a statement of financial review by an independent certified
public accountant. Organizations are required to report the amount
of money received 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, donations or grants from the public directly or have other
solicitation done on its behalf by others;
(9) Whether the organization is authorized by any other
governmental authority to solicit contributions, donations or
grants 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 in
subsection (d), section seven of this article.
(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 the information regarding 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 defined in section two of this article, 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 receiving less than $1
million during any year which submits an independent registration
to the Secretary of State shall pay an annual registration fee of
$15; every charitable organization collecting more than $1 million
during one year which submits an independent registration to the
Secretary of State shall pay an annual registration fee of $50; and
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 $50
for itself and the chapters, branches or affiliates included in the
registration statement. All fees and moneys collected by the
Secretary of State pursuant to the provisions of this article shall
be deposited by the Secretary of State as follows: One-half shall
be deposited in the state General Revenue Fund and one-half shall
be deposited in the services fees and collections account established by section two, article one, chapter fifty-nine of this
code for the operation of the office of the Secretary of State.
The Secretary of State shall dedicate sufficient resources from
that fund or other funds to provide the services required in this
article.
(e) For good cause shown, the Secretary of State may extend
the due date for the annual filing of a registration statement or
report by a charitable organization or a professional fundraiser
for a period not to exceed ninety days. During that period, the
previously filed registration statement or report of the charitable
organization which has been granted the extension remains in
effect.
(f) In addition to the registration fee required by this
section, a charitable organization or professional fundraiser, or
both, which fails to file a registration statement or report by the
original or extended due date for filing as required by this
section shall, for each month or part of the month thereafter in
which the registration statement or report is not filed, pay an
additional fee of $25: Provided, That the total amount of the
additional fees for a registration statement or report required to
be filed in any one year may not exceed $500. All fees and moneys
collected by the Secretary of State pursuant to the provisions of
this article shall be deposited by the Secretary of State as
follows: One-half shall be deposited in the state General Revenue
Fund and one-half shall be deposited in the service fees and collections account established by section two, article one,
chapter fifty-nine of this code for the operation of the Office of
the Secretary of State. The Secretary of State shall dedicate
sufficient resources from that fund or other funds to provide the
services required in this article.
§29-19-6. Certain persons and organizations exempt from
registration.
The following charitable organizations are not required to
file an annual registration statement with the Secretary of State:
(1) Educational institutions, the curriculums of which, in
whole or in part, are registered or approved by the State Board of
Education, either directly or by acceptance of accreditation by an
accrediting body recognized by the State Board of Education; and
any auxiliary associations, foundations and support groups which
are directly responsible to the educational institutions;
(2) Persons requesting contributions for the relief of any
individual specified by name at the time of the solicitation when
all of the contributions collected without any deductions
whatsoever are turned over to the named beneficiary for his or her
use;
(3) Hospitals and licensed nursing homes which are nonprofit
and charitable;
(4) Organizations which solicit only within the membership of
the organization by the members thereof: Provided, That the term
"membership" does not include those persons who are granted a membership upon making a contribution as the result of
solicitation. For the purpose of this section, "member" means a
person having membership in a nonprofit corporation, or other
organization, in accordance with the provisions of its articles of
incorporation, bylaws or other instruments creating its form and
organization; and having bona fide rights and privileges in the
organization, including the right to vote, to elect officers,
directors and issues, to hold office or otherwise as ordinarily
conferred on members of the organizations;
(5) Churches, synagogues, associations or conventions of
churches, religious orders or religious organizations that are an
integral part of a church which qualifies as tax exempt under the
provisions of 26 U.S.C. §501(c)(3) and which qualifies as being
exempt from filing an annual return under the provisions of 26
U.S.C. §6033;
(6) Any person, firm, corporation or organization that
sponsors a single fund-raising event for the benefit of a named
charitable organization where all or part of the funds collected
are donated to the named charitable organization: Provided, That
the named charitable organization receiving the funds is registered
pursuant to this article, reports each of these donations
individually and certifies that no funds were withheld by the
organization that solicited the funds;
(7) Any charitable organization that does not employ a
professional solicitor or fundraiser and does not intend to solicit and receive and does not actually raise or receive contributions,
donations or grants from the public in excess of $25,000 during a
calendar year.
Charitable organizations which do not intend to solicit and
receive contributions, donations or grants in excess of 25,000, but
do receive in excess of that amount from the public, shall file the
annual registration statement within thirty days after
contributions are in excess of $25,000.