BILL NUMBER: AB 556	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 7, 2015
	AMENDED IN ASSEMBLY  MARCH 19, 2015

INTRODUCED BY   Assembly Member Irwin

                        FEBRUARY 23, 2015

   An act to amend Section 17510.85 of the Business and Professions
Code, to add Section 2224.5 to the Civil Code, and to amend 
Section 12596   Sections 12596   and 12599
 of the Government Code, relating to trusts.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 556, as amended, Irwin. Trusts: regulation and enforcement.
   Existing law requires an individual or entity who for compensation
solicits funds or property for charitable purposes to disclose that
the solicitation is being conducted by a commercial fundraiser for a
charitable purpose and the registered name of the commercial
fundraiser.
   This bill would  also require an individual or entity who
solicits funds or property for charitable purposes with the
participation of a fundraising counsel for charitable purposes to
make specified disclosures regarding the fundraising counsel. The
bill would require   require  the disclosures, if
printed or if presented electronically, to be in at least 12-point
type, and be clear and conspicuous.
   Existing law, the Supervision of Trustees and Fundraisers for
Charitable Purposes Act, generally regulates charitable corporations,
trustees, and other legal entities holding property for charitable
purposes, commercial fundraisers for charitable purposes, and
fundraising counsel for charitable purposes, among others, over which
the state or the Attorney General has enforcement or supervisory
powers. Existing law defines a commercial fundraiser for
charitable purposes to mean any individual, corporation,
unincorporated association, or other legal entity who, for
compensation, engages in specified activities, including, among other
things, soliciting funds, assets, or property in this state for
charitable purposes.  Existing law requires the Attorney General
to establish and maintain a register of charitable corporations,
unincorporated associations, and trustees subject to these provisions
and of the particular trust or other relationship under which they
hold property for charitable purposes. Existing law authorizes the
Attorney General to bring any action against trustees or against any
charitable corporation or director or officer thereof, to enforce a
charitable trust, to impress property with a trust for charitable
purposes, or to recover property or the proceeds thereof at any time
within 10 years after the cause of action accrued. 
   This bill would expand the definition of a commercial fundraiser
for charitable purposes to include any individual, corporation,
unincorporated association, or other legal entity that plans,
manages, advises, counsels, consults, or prepares material for, or
with respect to, the solicitation in this state of funds, assets, or
property for charitable purposes, as specified. 
   This bill would authorize the Attorney General to bring an action
for a violation of these provisions at any time within 10 years after
the cause of action accrued. The bill would also authorize the
Attorney General to bring an action for civil liability against a
person who aids or abets a violation of these provisions at any time
within 10 years after the cause of action accrued.
   Existing law provides that one who wrongfully detains a thing is
an involuntary trustee thereof for the benefit of the owner, and that
one who gains a thing by fraud, or other wrongful act is an
involuntary trustee of the thing gained for the benefit of the owner.

   This bill would authorize the Attorney General to bring an action
for a violation of these provisions at any time within 10 years after
the cause of action accrued.
   This bill would also authorize the Attorney General to bring an
action for civil liability against a person who aids or abets a
violation of these provisions at any time within 10 years after the
cause of action accrued.
   Existing law, the Nonprofit Corporation Law, set forth standards
of conduct for directors and officers of nonprofit public benefit
corporations and provides that it is a crime for any director or
officer of any corporation among other things, to knowingly engage in
specified acts relating to fraud, to make materially false reports,
to receive or acquire possession of the property of the corporation,
or to falsify the books or accounts of the corporation.
   This bill would authorize the Attorney General to bring an action
for a violation of these provisions at any time within 10 years after
the cause of action accrued. The bill would also authorize the
Attorney General to bring an action for civil liability against a
person who aids or abets a violation of the standards of conduct for
directors and officers of nonprofit public benefit corporations at
any time within 10 years after the cause of action accrued.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 17510.85 of the Business and Professions Code
is amended to read:
   17510.85.  (a) An individual, corporation, or other legal entity
who for compensation solicits funds or other property in this state
for charitable purposes shall disclose prior to an oral solicitation
or sales solicitation made by direct personal contact, radio,
television, telephone, or over the Internet, or at the same time as a
written solicitation or sales solicitation:
   (1) That the solicitation or sales solicitation is being conducted
by a commercial fundraiser for charitable purposes.
   (2) The name of the commercial fundraiser for charitable purposes
as registered with the Attorney General pursuant to Section 12599 of
the Government Code. 
   (b) An individual, corporation, or other legal entity who solicits
funds or other property in this state for charitable purposes with
the participation of a fundraising counsel for charitable purposes,
as defined in Section 12599.1 of the Government Code, shall disclose
prior to an oral solicitation or sales solicitation made by direct
personal contact, radio, television, telephone, or via the Internet,
or at the same time as a written solicitation or sales solicitation:
 
   (1) That the solicitation or sales solicitation is being conducted
with the participation of a fundraising counsel for charitable
purposes.  
   (2) The name of the fundraising counsel for charitable purposes as
registered with the Attorney General pursuant to Section 12599.1 of
the Government Code.  
   (c) 
    (b)  The disclosures required pursuant to this section,
if printed or if presented electronically, shall be in at least
12-point type, and shall be clear and conspicuous, as defined in
Section 17601.
  SEC. 2.  Section 2224.5 is added to the Civil Code, to read:
   2224.5.  An action brought by the Attorney General pursuant to
Section 2223 or 2224 may be brought at any time within 10 years after
the cause of action accrued.
  SEC. 3.  Section 12596 of the Government Code is amended to read:
   12596.  (a) A civil action brought by the Attorney General against
trustees or other persons holding property in trust for charitable
purposes or against any charitable corporation or any director or
officer thereof to enforce a charitable trust or to impress property
with a trust for charitable purposes or to recover property or the
proceeds thereof for and on behalf of any charitable trust or
corporation, may be brought at any time within 10 years after the
cause of action accrued.
   (b) A civil action brought by the Attorney General for a violation
of this article, pursuant to Section 2223 or 2224 of the Civil Code,
or pursuant to Division 2 (commencing with Section 5000) of Title 1
of the Corporations Code, may be brought at any time within 10 years
after the cause of action accrued.
   (c) Notwithstanding Section 12581, the Attorney General may bring
a civil action against a person who aids or abets a violation of this
article, Section 2223 or 2224 of the Civil Code, or Article 3
(commencing with Section 5230) of Chapter 2 of Division 2 of Title 1
of the Corporations Code, at any time within 10 years after the cause
of action accrued.
   SEC. 4.    Section 12599 of the   Government
Code   is amended to read: 
   12599.  (a) "Commercial fundraiser for charitable purposes" means
any individual, corporation, unincorporated association, or other
legal entity who for compensation does any of the following:
   (1) Solicits funds, assets, or property in this state for
charitable purposes.
   (2) As a result of a solicitation of funds, assets, or property in
this state for charitable purposes, receives or controls the funds,
assets, or property solicited for charitable  purposes.
  purposes, including indirectly controlling  
the funds through either of the following means:  
   (A) Maintaining an interest in an escrow account into which
solicited funds are deposited.  
   (B) Maintaining access to, or the right to access, funds, assets,
or property received by a caging company as a result of the
solicitation. 
   (3) Employs, procures, or engages any compensated person to
solicit, receive, or control funds, assets, or property for
charitable purposes. 
   (4) Plans, manages, advises, counsels, consults, or prepares
material for, or with respect to, the solicitation in this state of
funds, assets, or property for charitable purposes, and is
compensated by a percentage interest in the funds, assets, or
property received through a solicitation campaign, rather than by a
flat fee. This paragraph shall not apply to any entity described in
subdivision (b) of Section 12599.1.  
   (5) (A) Plans, manages, advises, counsels, consults, or prepares
material for, or with respect to, the solicitation in this state of
funds, assets, or property for charitable purposes, and does either
of the following:  
   (i) Has an ownership or management interest in any other entity
that receives or controls the funds, assets, or property solicited
for charitable purposes.  
   (ii) Receives any material financial benefit, directly or
indirectly, from any other individual or entity that receives or
controls the funds, assets, or property solicited for charitable
purposes, other than the nonprofit soliciting the funds, assets, or
property for charitable purposes.  
   (B) This paragraph shall not apply to any entity described in
subdivision (b) of Section 12599.1. 
   A commercial fundraiser for charitable purposes shall include any
person, association of persons, corporation, or other entity that
obtains a majority of its inventory for sale by the purchase,
receipt, or control for resale to the general public, of salvageable
personal property solicited by an organization qualified to solicit
donations pursuant to Section 148.3 of the Welfare and Institutions
Code.
   A commercial fundraiser for charitable purposes shall not include
a "trustee" as defined in Section 12582 or 12583, a "charitable
corporation" as defined in Section 12582.1, or any employee thereof.
A commercial fundraiser for charitable purposes shall not include an
individual who is employed by or under the control of a commercial
fundraiser for charitable purposes registered with the Attorney
General. A commercial fundraiser for charitable purposes shall not
include any federally insured financial institution that holds as a
depository funds received as a result of a solicitation for
charitable purposes.
   As used in this section, "charitable purposes" includes any
solicitation in which the name of any organization of law enforcement
personnel, firefighters, or other persons who protect the public
safety is used or referred to as an inducement for transferring any
funds, assets, or property, unless the only expressed or implied
purpose of the solicitation is for the sole benefit of the actual
active membership of the organization.
   (b) A commercial fundraiser for charitable purposes shall, prior
to soliciting any funds, assets, or property, including salvageable
personal property, in California for charitable purposes, or prior to
receiving and controlling any funds, assets, or property, including
salvageable personal property, as a result of a solicitation in this
state for charitable purposes, register with the Attorney General's
Registry of Charitable Trusts on a registration form provided by the
Attorney General. Renewals of registration shall be filed with the
Registry of Charitable Trusts by January 15 of each calendar year in
which the commercial fundraiser for charitable purposes does business
and shall be effective for one year. A registration or renewal fee
of two hundred dollars ($200) shall be required for registration of a
commercial fundraiser for charitable purposes, and shall be payable
by certified or cashier's check to the Attorney General's Registry of
Charitable Trusts at the time of registration or renewal. The
Attorney General may adjust the annual registration or renewal fee,
or means of payment, as needed pursuant to this section. The Attorney
General's Registry of Charitable Trusts may grant extensions of time
to file annual registration as required, pursuant to subdivision (b)
of Section 12586. No separate fee shall be charged by the Attorney
General for electronic registration, electronic renewal, or
electronic repayment of fees.
   (c) A commercial fundraiser for charitable purposes shall file
with the Attorney General's Registry of Charitable Trusts an annual
financial report on a form provided by the Attorney General,
accounting for all funds collected pursuant to any solicitation for
charitable purposes during the preceding calendar year. The annual
financial report shall be filed with the Attorney General's Registry
of Charitable Trusts no later than 30 days after the close of the
preceding calendar year.
   (d) The contents of the forms for annual registration and annual
financial reporting by commercial fundraisers for charitable purposes
shall be established by the Attorney General in a manner consistent
with the procedures set forth in subdivisions (a) and (b) of Section
12586. The annual financial report shall require a detailed, itemized
accounting of funds, assets, or property, solicited for charitable
purposes on behalf of each charitable organization exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code or for
each charitable purpose during the accounting period, and shall
include, among other data, the following information for funds,
assets, or property, solicited by the commercial fundraiser for
charitable purposes:
   (1) Total revenue.
   (2) The fee or commission charged by the commercial fundraiser for
charitable purposes.
   (3) Salaries paid by the commercial fundraiser for charitable
purposes to its officers and employees.
   (4) Fundraising expenses.
   (5) Distributions to the identified charitable organization or
purpose.
   (6) The names and addresses of any director, officer, or employee
of the commercial fundraiser for charitable purposes who is a
director, officer, or employee of any charitable organization listed
in the annual financial report.
   (e) A commercial fundraiser for charitable purposes that obtains a
majority of its inventory for sale by the purchase, receipt, or
control for resale to the general public, of salvageable personal
property solicited by an organization qualified to solicit donations
pursuant to Section 148.3 of the Welfare and Institutions Code shall
file with the Attorney General's Registry of Charitable Trusts, and
not with the sheriff of any county, an annual financial report on a
form provided by the Attorney General that is separate and distinct
from forms filed by other commercial fundraisers for charitable
purposes pursuant to subdivisions (c) and (d).
   (f) It shall be unlawful for any commercial fundraiser for
charitable purposes to solicit funds in this state for charitable
purposes unless the commercial fundraiser for charitable purposes has
complied with the registration or annual renewal and financial
reporting requirements of this article. Failure to comply with these
registration or annual renewal and financial reporting requirements
shall be grounds for injunction against solicitation in this state
for charitable purposes and other civil remedies provided by law.
   (g) A commercial fundraiser for charitable purposes is a
constructive trustee for charitable purposes as to all funds
collected pursuant to solicitation for charitable purposes and shall
account to the Attorney General for all funds. A commercial
fundraiser for charitable purposes is subject to the Attorney General'
s supervision and enforcement over charitable funds and assets to the
same extent as a trustee for charitable purposes under this article.

   (h) Not less than 10 working days prior to the commencement of
each solicitation campaign, event, or service, or not later than
commencement of solicitation for solicitations to aid victims of
emergency hardship or disasters, a commercial fundraiser for
charitable purposes shall file with the Attorney General's Registry
of Charitable Trusts a notice on a form prescribed by the Attorney
General that sets forth all of the following:
   (1) The name, address, and telephone number of the commercial
fundraiser for charitable purposes.
   (2) The name, address, and telephone number of the charitable
organization with whom the commercial fundraiser has contracted.
   (3) The fundraising methods to be used.
   (4) The projected dates when performance under the contract will
commence and terminate.
   (5) The name, address, and telephone number of the person
responsible for directing and supervising the work of the commercial
fundraiser under the contract.
   (i) There shall be a written contract between a commercial
fundraiser for charitable purposes and a charitable organization for
each solicitation campaign, event, or service, that shall be signed
by the authorized contracting officer for the commercial fundraiser
and by an official of the charitable organization who is authorized
to sign by the organization's governing body. The contract shall be
available for inspection by the Attorney General and shall contain
all of the following provisions:
   (1) The legal name and address of the charitable organization as
registered with the Registry of Charitable Trusts, unless the
charitable organization is exempt from registration.
   (2) A statement of the charitable purpose for which the
solicitation campaign, event, or service is being conducted.
   (3) A statement of the respective obligations of the commercial
fundraiser and the charitable organization.
   (4) If the commercial fundraiser is to be paid a fixed fee, a
statement of the fee to be paid to the commercial fundraiser and a
good faith estimate of what percentage the fee will constitute of the
total contributions received. The contract shall clearly disclose
the assumptions upon which the estimate is based, and the stated
assumptions shall be based upon all of the relevant facts known to
the commercial fundraiser regarding the solicitation to be conducted
by the commercial fundraiser.
   (5) If a percentage fee is to be paid to the commercial
fundraiser, a statement of the percentage of the total contributions
received that will be remitted to or retained by the charitable
organization, or, if the solicitation involves the sale of goods or
services or the sale of admissions to a fundraising event, the
percentage of the purchase price that will be remitted to the
charitable organization. The stated percentage shall be calculated by
subtracting from contributions received and sales receipts not only
the commercial fundraiser's fee, but also any additional amounts that
the charitable organization is obligated to pay as fundraising
costs.
   (6) The effective and termination dates of the contract and the
date solicitation activity is to commence within the state.
   (7) A provision that requires that each contribution in the
control or custody of the commercial fundraiser shall in its entirety
and within five working days of its receipt comply with either of
the following:
   (A) Be deposited in an account at a bank or other federally
insured financial institution that is solely in the name of the
charitable organization and over which the charitable organization
has sole control of withdrawals.
   (B) Be delivered to the charitable organization in person, by
United States express mail, or by another method of delivery
providing for overnight delivery.
   (8) A statement that the charitable organization exercises control
and approval over the content and frequency of any solicitation.
   (9) If the commercial fundraiser proposes to make any payment in
cash or in kind to any person or legal entity to secure any person's
attendance at, or sponsorship, approval, or endorsement of, a charity
fundraising event, the maximum dollar amount of those payments shall
be set forth in the contract. "Charity fundraising event" means any
gathering of persons, including, but not limited to, a party,
banquet, concert, or show, that is held for the purpose or claimed
purpose of raising funds for any charitable purpose or organization.
   (10) A provision that includes all of the following statements:
   (A) The charitable organization has the right to cancel the
contract without cost, penalty, or liability for a period of 10 days
following the date on which the contract is executed.
   (B) The charitable organization may cancel the contract by serving
a written notice of cancellation on the commercial fundraiser.
   (C) If mailed, service shall be by certified mail, return receipt
requested, and cancellation shall be deemed effective upon the
expiration of five calendar days from the date of mailing.
   (D) Any funds collected after effective notice that the contract
has been canceled shall be deemed to be held in trust for the benefit
of the charitable organization without deduction for costs or
expenses of any nature.
   (E) The charitable organization shall be entitled to recover all
funds collected after the date of cancellation.
   (11) A provision that includes all of the following statements:
   (A) Following the initial 10-day cancellation period, the
charitable organization may terminate the contract by giving 30 days'
written notice.
   (B) If mailed, service of the notice shall be by certified mail,
return receipt requested, and shall be deemed effective upon the
expiration of five calendar days from the date of mailing.
   (C) In the event of termination under this subdivision, the
charitable organization shall be liable for services provided by the
commercial fundraiser up to 30 days after the effective service of
the notice.
   (12) A provision that, following the initial 10-day cancellation
period, the charitable organization may terminate the contract at any
time upon written notice, without payment or compensation of any
kind to the commercial fundraiser, if the commercial fundraiser or
its agents, employees, or representatives do any of the following:
   (A) Make any material misrepresentations in the course of
solicitations or with respect to the charitable organization.
   (B) Are found by the charitable organization to have been
convicted of a crime arising from the conduct of a solicitation for a
charitable organization or purpose punishable as a misdemeanor or a
felony.
   (C) Otherwise conduct fundraising activities in a manner that
causes or could cause public disparagement of the charitable
organization's good name or good will.
   (13) Any other information required by the regulations of the
Attorney General.
   (j) It shall be unlawful for a commercial fundraiser for
charitable purposes to not disclose the percentage of total
fundraising expenses of the fundraiser upon receiving a written or
oral request from a person solicited for a contribution for a
charitable purpose. "Percentage of total fundraising expenses," as
used in this section, means the ratio of the total expenses of the
fundraiser to the total revenue received by the fundraiser for the
charitable purpose for which funds are being solicited, as reported
on the most recent financial report filed with the Attorney General's
Registry of Charitable Trusts. A commercial fundraiser shall
disclose this information in writing within five working days from
receipt of a request by mail or facsimile. A commercial fundraiser
shall orally disclose this information immediately upon a request
made in person or in a telephone conversation and shall follow this
response with a written disclosure within five working days. Failure
to comply with the requirements of this subdivision shall be grounds
for an injunction against solicitation in this state for charitable
purposes and other civil remedies provided by law.
   (k) If the Attorney General issues a report to the public
containing information obtained from registration forms or financial
report forms filed by commercial fundraisers for charitable purposes,
there shall be a separate section concerning commercial fundraisers
for charitable purposes that obtain a majority of their inventory for
sale by the purchase, receipt, or control for resale to the general
public, of salvageable personal property solicited by an organization
qualified to solicit donations pursuant to Section 148.3 of the
Welfare and Institutions Code. The report shall include an
explanation of the distinctions between these thrift store operations
and other types of commercial fundraising.
   ( l  ) No person may act as a commercial fundraiser for
charitable purposes if that person, any officer or director of that
person's business, any person with a controlling interest in the
business, or any person the commercial fundraiser employs, engages,
or procures to solicit for compensation, has been convicted by a
court of any state or the United States of a crime arising from the
conduct of a solicitation for a charitable organization or purpose
punishable as a misdemeanor or felony.
   (m) A commercial fundraiser for charitable purposes shall not
solicit in the state on behalf of a charitable organization unless
that charitable organization is registered or is exempt from
registration with the Attorney General's Registry of Charitable
Trusts.
   (n) If any provision of this section or the application thereof to
any person or circumstances is held invalid, that invalidity shall
not affect any other provision or application of this section that
can be given effect without the invalid provision or application, and
to this end the provisions of this section are severable.