California to Regulate ‘Charitable Fundraising Platforms’
Beginning 2023, state will require registration before enabling solicitation of charitable contributions
After years of uncertainty about the registration requirements for GoFundMe pages, Facebook solicitations, or other internet-based crowd-fundraising methods, California has passed amendments to its charitable solicitation registration act to cover what it calls “charitable fundraising platforms” and “platform charities” and to bring them under regulation by the state Attorney General.
Court enjoins provisions regulating professional solicitor
A federal District Court in Connecticut has enjoined the state from enforcing some of the charitable solicitation act provisions regulating professional solicitors pending trial on the constitutionality of the rules. The Court has limited the scope of a preliminary injunction solely to enforcement against the plaintiff in the case, but the ultimate decision could impact the regulation of solicitors generally under state charitable solicitation registration acts.
Director loses standing to sue when not re-elected
A director of a nonprofit corporation who brought suit against her fellow directors for breach of fiduciary duty has lost her standing to continue the litigation when not re-elected to the board in the annual elections, an appellate court in California has ruled. But her suit is not necessarily terminated because the Court remanded the case to the trial court to see if the state Attorney General would want to intervene or grant “relator status” to the director or another individual to carry the case forward.
Hawai’i AG may subpoena records for investigation
The Attorney General of Hawai’i is authorized to subpoena bank records of a nonprofit organization in connection with an investigation of the organization’s qualification for charitable status, the Supreme Court of Hawai’i has ruled. But the subpoena is subject to normal limitations and constitutional objections.
In a recent blast on the National Association of State Charity Officials’ email list, the Attorney General proclaimed the victory on the question of authority, but failed to mention the limitations imposed by the state courts.
Exemption denied to drug-based religious group
The Internal Revenue Service has denied 501(c)(3) exemption as a church to a group whose sacrament is based on use of a hallucinogenic drug. The IRS has said it is neither organized nor operated exclusively for charitable purposes and also fails the associational test for a church.