ASSEMBLY STATE GOVERNMENT COMMITTEE

STATEMENT TO

ASSEMBLY, No. 3233

with committee amendments

STATE OF NEW JERSEY

DATED: JANUARY 5, 2006

      The Assembly State Government Committee reports favorably and with committee amendments Assembly, No. 3233.

      As amended, this bill makes various changes to the "Charitable Registration and Investigation Act," P.L.1994, c.16 (C.45:17A-18 et seq.). These changes are intended to provide enhanced disclosure requirements and prohibitions against misleading prospective donors, enhance the Attorney General’s enforcement authority under the act, ease statutory compliance for smaller volunteer organizations, and raise penalties and provide for the recovery of costs and attorney fees in administrative proceedings under the act.

      Specifically, the bill:

∙    Expressly includes within the scope of the law all assignees, subcontractors and independent contractors of fund raising counsels and independent paid fund raisers;

∙    Clarifies that a bona fide salaried officer, employee or volunteer of a charitable organization is not a solicitor;

∙    Clarifies that adjudgments of civil liability include any finding of liability in an administrative or civil action related to the solicitation of contributions or the administration of charitable assets, regardless of the form or the context of the finding;

∙    Requires annual disclosure, rather than disclosure at the initial registration, of organizational information such as the organization’s street address, custodian of financial records and any limitations of fund raising activities in other jurisdictions, and adds an annual disclosure as to whether the organization's officers, directors, trustees or principal salaried executive staff employees have a financial interest in any activity engaged in by a fund raising counsel or independent paid fund raiser or any supplier or vendor;

∙    Increases the threshold amounts a charitable organization must raise before it is required to register or file financial statements. Gross revenue in excess of $250,000, or any greater amount prescribed by the Attorney General by regulation, require a financial statement prepared in accordance with generally accepted accounting principles or other comprehensive basis of accounting approved for use by the Attorney General, which statement has been audited in accordance with generally accepted auditing standards by an independent certified public accountant and which statement is accompanied by any written communication prepared by the auditor commenting on the accounting or management practices of the organization. If a charity's gross revenue is less than $250,000, but more than $25,000, a financial report shall be certified by the president or other authorized officer, but the Attorney General may require financial statements prepared as described above. Any written communication prepared by the auditor commenting on the accounting or management practices of the charitable organization shall not be considered a public record and shall not be available for public inspection;

∙    Provides that the registration requirements do not apply to any charitable organization whose fund raising does not exceed $10,000 a year if the fund raising activities are done by volunteers;

∙    Provides that all relationships between fund raising counsels and independent paid fund raisers must be set forth in written contracts, signed by the charitable organization, and are subject to review by the Attorney General;

∙    Provides for more disclosure by fund raising counsels and independent paid fund raisers, including the fixed fee or rate at which the fund raising counsel will be compensated, and disclosure of adjudgments of civil liability regardless of form or the context of the funding, and requires counsel and fund raisers to maintain a copy of each advertisement for solicitations;

∙    Shifts the responsibility for registration of the solicitors to the independent paid fund raiser, and prohibits a fund raiser from using a solicitor who has not been registered;

∙    Strengthens the State’s ability to enforce promises made by commercial co-venturers by requiring them to certify the amount of funds raised during a charitable sales promotion and to make certain disclosures regarding the advertising of their promotions;

∙    Requires a charitable organization to disclose any relationship with a government agency or emergency services personnel;

∙    Includes as a violation of the law any misrepresentation regarding the geographic location of a charitable organization or the intended beneficiaries of a solicitation, or any misrepresentation regarding the relationship between a charitable organization and a government agency or emergency services personnel;

∙    Permits an action against any entity required to be registered pursuant to the "Charitable Registration and Investigation Act" based upon proof of criminal convictions or findings of violations of charity and solicitation laws involving theft, fraud or deceptive business practices in other jurisdictions committed by the registrant, or its officers, directors or principal employees;

∙    Increases the penalties under the law from up to $7,500 to up to $10,000 for a first violation and from up to $15,000 to up to $20,000 for a second or subsequent violation and ensures that costs and attorneys’ fees are recoverable in administrative proceedings; and

∙    Requires that every printed charitable solicitation contain a statement that the percentage of contributions received by the charity and dedicated to the charitable purpose during the last reporting period is available by telephoning the Attorney General or on the Internet.

      The bill also prohibits in a solicitation or charitable sales promotion the distribution of badges or shields by a charitable organization that limits its membership to persons who are or formerly were employed as law enforcement officers, and prohibits anyone soliciting contributions from blocking the caller identification telephone system used by any person in this State.

      Assembly, No. 3233 (1R) is the same as Senate, No. 204 (3R) of 2004.

COMMITTEE AMENDMENTS

      The committee amended the bill to stipulate that certain financial statements of charitable organizations that have been audited and submitted to the Attorney General will be accompanied by any management letters prepared by the auditor in connection with the audit commenting on the internal accounting controls or management practices of the organization, and to establish custodial recordkeeping and confidentiality requirements related to those management letters pursuant to this requirement. The bill currently refers to any written communications; these amendments use more precise language to specify the nature of the particular information which must be submitted to the Attorney General in connection with the audited financial statements.