California AG Developing Regulations For Online Fundraising

The California Attorney General’s Office has issued a last call for comments on regulations that will govern a new state law meant to curtail fraud and deceptive practices when it comes to charitable fundraising via online platforms.

California Assembly Bill 488, The Supervision of Trustees and Fundraiser for Charitable Purpose Act, governs charitable corporations, unincorporated associations, trustees, commercial fundraisers, fundraising counsel, commercial co-venturers, and other legal entities holding or soliciting property for charitable purposes over which the state or the attorney general has enforcement and supervisory powers.

The Act, for the first time, expands the attorney general’s supervision of charities and fundraisers to online charitable fundraising platforms including crowdfunding websites like GoFundMe, PayPal, and e-commerce companies that solicit donations for charities.

Fundraising platforms and platform charities are required to obtain written consent of the benefiting charitable organization before using its name in a campaign. They are also required to remove benefiting charities upon receiving a written notice from the charity.

The Act was signed into law by Gov. Gavin Newsom in October 2021. Before it takes effect on Jan. 1, 2023, staffers in the attorney general’s office must promulgate regulations, with a virtual public hearing set for 9 a.m. (PST) July 13.

A copy of the proposed regulations can be found here. A link to the public hearing and how to provide written commends can be found here.

Other elements of the proposed regulations to implement the new law require that charitable fundraising platforms and platform charities:

  • Register and report to the Attorney General’s Registry of Charitable Trusts, with filings made available for public viewing.
  • Reveal any associated fees with donating
  • Promptly distribute donations to intended charities
  • Only solicit for charities that have provided prior consent
  • Only solicit for charities that are in good standing in California and with the IRS.

Legislation was first discussed more than four years ago, intending to protect donors whose contributions to specific charitable causes on some social media sites or crowdfunding platforms were never received by the intended charity or were held for lengthy periods of time.

The law is not applicable to platforms operated by nonprofits to solicit donations only for organization. The law covers crowdfunding platforms and websites that advertise that a percentage of a purchase price will be donated to specific charities or that invite customers to make check-out donations.

“The technology with online giving is constantly changing and the law had to catch up,” said Jan Masaoka, CEO of the California Association of Nonprofits.