California Regulation of Online Charitable Fundraising Platforms

SPECIAL NOTE: Kelsey is posting this blog on behalf of its author: Lisa Ryssel.

California has approved final regulations to implement The Supervision of Trustees and Fundraisers for Charitable Purposes Act (Assembly Bill 488). This bill regulates online fundraising platforms.

Who is considered a fundraising platform?

A “charitable fundraising platform” is any entity using the internet to provide a website, service, or other platform to persons in California and performs, permits, or otherwise enables acts of solicitation to occur.

The reporting requirements depend on the types of fundraising activities. Assembly Bill 488 details five types of activities that are considered acts of solicitation and can indicate fundraising platform status.

• Solicitation Type A includes soliciting donations or recommended donations, such as micro donations, round-up donations, or donations of any amount, from donors who are platform users by listing or referencing by name one or more recipient charitable organizations to be sent donated funds.
• Solicitation Type B includes permitting or enabling crowdfunding campaigns created by platform users engaging in peer-to-peer charitable fundraising, or otherwise permitting or enabling platform users to solicit donations or recommended donations made by other platform users for one or more recipient charitable organizations.
• Solicitation Type C includes performing solicitations through charitable sales promotions, co-venturing or cause marketing campaigns, or free action programs. In these solicitations, platform users have the option to select one or more recipient charitable organizations to be sent donated funds. The charitable fundraising platform or a third party would make the donations or recommended donations based on the purchases made or other activity performed by platform users.
• Solicitation Type D includes performing solicitations through charitable sales promotions, co-venturing or cause marketing campaigns, or free action programs. In these solicitations, the charitable fundraising platform selects one or more recipient charitable organizations to be sent donated funds and makes the donations or recommended donations based on the purchases made or other activity performed by platform users.
• Solicitation Type E includes providing a charitable fundraising platform to charitable organizations that can be private-labeled or otherwise customized, that is subject to a software-as-a-service license agreement between the charitable fundraising platform and charitable organizations and allows charitable organizations to solicit donations made to them from donors.

Filing requirements for fundraising platforms

• Initial registration — A charitable fundraising platform shall register with the Attorney General before soliciting, permitting, or otherwise enabling acts of solicitation, including Form PL-1: Initial Registration for Charitable Fundraising Platforms and a $625 registration fee.
• Annual renewal — A charitable fundraising platform shall renew its registration annually on or before January 15 for each calendar year, including Form PL-2: Registration Renewal for Charitable Fundraising Platforms and a $625 registration renewal fee.
• Platform charity must register as a trustee — A platform charity shall file a completed Form PL-3: Notification from Platform Charities. The form is required to be filed no later than 30 days after the partnership was entered.
• Platform charity annual report — A platform charity shall file a Form PL-4: Annual Fundraising Report for Charitable Fundraising Platforms or Platform Charities.

Good standing requirement

A charitable fundraising platform or platform charity shall only solicit, permit, or otherwise enable solicitations, or receive, control, or distribute funds from donations or recommended donations for charitable organizations in good standing with the IRS, the Franchise Tax Board (FTB), and the Attorney General.

Search tools to verify standing:

• IRS Tax Exempt Organization Search
• California FTB Entity Status Letter
• California Attorney General Registry Search

Assembly Bill 488 establishes complex compliance obligations and new requirements. If your nonprofit is not in “good standing” with even one of the agencies, you may be prohibited from soliciting donations in California on an online platform.

Repairing these statuses can take weeks or longer. Check your statuses regularly, and maintain a list of all deadlines, fees, and forms, and confirm they are timely filed.

If your organization is struggling with maintaining good standing, please contact us to see how CLA can help you meet these filing requirements.