Current Status Bill Number:1157 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19980331 Primary Sponsor:Leventis All Sponsors:Leventis, Drummond, Ford, Waldrep, Giese and Ravenel Drafted Document Number:pt\1837dw.98 Residing Body:House Current Committee:Judiciary Committee 25 HJ Date of Last Amendment:19980423 Subject:Public Charities Division, powers devolved upon Secretary of State's office instead of Attorney General
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
House 19980428 Introduced, read first time, 25 HJ
referred to Committee
Senate 19980424 Read third time, sent to House
Senate 19980423 Read second time, unanimous
consent for third reading on
Friday, 19980424
Senate 19980423 Committee amendment adopted
Senate 19980422 Committee report: Favorable with 11 SJ
amendment
Senate 19980331 Introduced, read first time, 11 SJ
referred to Committee
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Indicates Matter Stricken
Indicates New Matter
COMMITTEE AMENDMENT ADOPTED
April 23, 1998
S. 1157
Introduced by Senators Leventis, Drummond, Ford, Waldrep, Giese and Ravenel
S. Printed 4/23/98--S.
Read the first time March 31, 1998.
TO PROVIDE THAT THE DUTIES, FUNCTIONS, AND RESPONSIBILITIES OF THE DIVISION OF PUBLIC CHARITIES OF THE OFFICE OF THE ATTORNEY GENERAL ARE DEVOLVED UPON THE SECRETARY OF STATE'S OFFICE ON AUGUST 1, 1998; TO TRANSFER ALL PERSONNEL, APPROPRIATIONS, AND FULL-TIME EQUIVALENT POSITIONS OF THE DIVISION OF PUBLIC CHARITIES TO THE SECRETARY OF STATE'S OFFICE ON AUGUST 1, 1998; TO PROVIDE THAT THE SECRETARY OF STATE SHALL ADMINISTER THE "SOUTH CAROLINA SOLICITATION OF CHARITABLE FUNDS ACT"; TO AMEND SECTIONS 33-56-20, 33-56-30, 33-56-40, 33-56-50, 33-56-60, 33-56-70, 33-56-80, 33-56-90, 33-56-100, 33-56-110, 33-56-120, 33-56-130, 33-56-140, 33-56-150, 33-56-160, AND 33-56-190, ALL AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, ALL RELATING TO THE SOLICITATION OF CHARITABLE FUNDS, SO AS TO DELETE REFERENCES TO THE ATTORNEY GENERAL AND REFLECT THE SECRETARY OF STATE AND HIS OFFICE AS THE OFFICIAL AGENCY TO ADMINISTER THE PROVISIONS OF THE "SOUTH CAROLINA SOLICITATION OF CHARITABLE FUNDS ACT", AND TO ALLOW THE SECRETARY OF STATE TO RETAIN A PORTION OF ADMINISTRATIVE FINES TO OFFSET THE EXPENSES OF ENFORCEMENT.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The duties, functions, and responsibilities of the Section of Public Charities of the office of the Attorney General are devolved upon the Secretary of State's office on July 1, 1998. All charities personnel originally transferred from the Secretary of State to the Attorney General's office and still employed by the Attorney General in the Charities Section, appropriations, and full-time equivalent positions of the Section of Public Charities also are transferred to the Secretary of State's office on July 1, 1998.
SECTION 2. The Secretary of State shall administer the "South Carolina Solicitation of Charitable Funds Act" as contained in Chapter 56 of Title 33. No later than thirty days after the effective date of this act, the Secretary of State must notify each charitable organization registered pursuant to Chapter 56 of Title 33 that the Secretary of State is now the administrator of the "South Carolina Solicitation of Charitable Funds Act" and that required registrations are to be filed with the Secretary of State.
SECTION 3. Section 33-56-20 of the 1976 Code, as last amended by Section 28C, Part II, Act 458 of 1996, is further amended by adding:
"(5) 'Secretary' means the Secretary of State."
SECTION 4. Section 33-56-30 of the 1976 Code, as last amended by Section 28D, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-30. Except as otherwise provided in this chapter, every charitable organization which intends to solicit contributions within this State or have contributions solicited on its behalf shall file a registration statement with the Attorney General Secretary of State on forms prescribed by the Attorney General Secretary of State by July first of each year but in all cases prior to solicitation. It is the duty of the chief executive officer or chief financial officer of each charitable organization to file the statements required under this chapter. The statements must be sworn to and contain:
(1) the name of the organization;
(2) the purpose for which it was organized;
(3) the principal address of the organization and the address of any offices in this State. If the organization does not maintain an office, the name and address of the person having custody of its financial records;
(4) the names and addresses of the chief executive officer and chief financial officer;
(5) the names and addresses of any chapters, branches, or affiliates in this State;
(6) the place and date the organization was legally established, the form of its organization, and a reference to any determination of its tax exempt status under the Internal Revenue Code;
(7) whether the organization intends to use professional solicitors or hire individuals to solicit;
(8) whether it is certified as a tax exempt organization and is authorized by any other governmental authority in this State to solicit contributions;
(9) whether it is or has ever been enjoined by any court from soliciting contributions; and
(10) the general purpose for which the contributions to be solicited shall must be used.
The registration forms and other documents prescribed by the Attorney General Secretary of State must be signed by the chief executive officer and chief financial officer of the charitable organization and certified as true. Every charitable organization which submits a registration to the Attorney General Secretary of State must pay an annual registration fee of fifty dollars."
SECTION 5. Section 33-56-40 of the 1976 Code, as last amended by Section 28E, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-40. The Children's Trust Fund of South Carolina as established by Section 20-7-5010 is required to register with the Attorney General Secretary of State but is not required to pay the annual registration fee provided for in Section 33-56-30."
SECTION 6. Section 33-56-50 of the 1976 Code, as last amended by Section 28F, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-50. The following are not required to file registration statements with the Attorney General Secretary of State, provided none of its fund-raising activities are carried on by professional solicitors:
(1) an educational institution which solicits contributions only from its students and their families, alumni, faculty, friends and other constituencies, trustees, corporations, foundations, and individuals who are interested in and supportive of the programs of the institution;
(2) persons requesting contributions for the relief of an individual specified by name at the time of the solicitation when all of the contributions collected without any deductions of any kind are turned over to the named beneficiary for his use, provided that a person soliciting the contributions is not a named beneficiary;
(3) charitable organizations which (a) do not intend to solicit nor receive contributions from the public in excess of twenty thousand dollars during a calendar year or do not receive contributions from more than ten persons during a calendar year and (b) have received letters of tax exemption from the Internal Revenue Service, if all of their functions, including fund-raising activities, are carried on by persons who are unpaid for their services and if no part of their assets or income inures to the benefit of or is paid to any officer or member. If the contributions raised from the public, whether all of the contributions are or are not received by a charitable organization during any calendar year, are in excess of twenty thousand dollars or are received from more than ten people, within thirty days after the date the contributions exceed twenty thousand dollars or the number of contributors exceeds ten, it must register with and report to the department as required by this chapter;
(4) organizations which solicit exclusively to their members, including utility cooperatives; and
(5) any veteran's organization which has a congressional charter; and
(6) the State, its political subdivisions, and any agencies or departments thereof of it which are subject to the disclosure provisions of the Freedom of Information Act.
Any charitable organization claiming to be exempt from the registration provisions of this chapter and which will or does solicit charitable contributions shall submit annually to the Attorney General Secretary of State on forms to be prescribed by the Attorney General Secretary of State, the name, address, and purpose of the organization and a statement setting forth the reason for the claim for exemption. If exempted, the Attorney General Secretary of State or his appropriate division shall issue a letter of exemption which may be exhibited to the public. No filing fee is required of an exempt organization."
SECTION 7. Section 33-56-60 of the 1976 Code, as last amended by Section 28G, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-60. (A) Each charitable organization soliciting funds in this State and not exempt under Section 33-56-50, whether individually or collectively with other organizations, shall file a report of its financial activities, on forms prescribed by the Attorney General Secretary of State, certified to be true by the chief executive officer and the chief financial officer of it, in the office of the Attorney General Secretary of State. The report must cover the preceding fiscal year and must be filed within four and one-half months of the close of the organization's fiscal year unless a written extension has been granted by the Attorney General Secretary of State.
The report must include:
(1) specific and itemized support and revenue statements disclosing direct public support from solicitation, indirect public support, government grants, program service revenue, and any other revenue. The report must disclose the amount of direct public support received from direct mail solicitation, telephone solicitation, commercial co-venturers, door-to-door solicitations, telethons, and all other itemized sources;
(2) specific and itemized expense statements disclosing program services, public information expenditures, fund-raising costs, payments to affiliates, management costs, and salaries paid; and
(3) balance sheet disclosures containing total assets and liabilities.
(B) However, if a charitable organization is required to file Internal Revenue Service Form 990 with the Internal Revenue Service, the organization may file such the form with the Attorney General Secretary of State in lieu of the report required under subsection (A) of this section, provided that the form may exclude such the information which the Internal Revenue Service would not release pursuant to a Freedom of Information request.
(C) An organization failing to file the report required by this section may be enjoined from further solicitation of funds in this State in an action brought by the Attorney General Secretary of State. An organization failing to file a timely report required by this section may be assessed by the Attorney General Secretary of State administrative fines not to exceed two thousand dollars."
SECTION 8. Section 33-56-70 of the 1976 Code, as last amended by Section 28H, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-70. Every contract or agreement between professional fund-raising counsel or professional solicitor and a charitable organization must be in writing and filed with the Attorney General Secretary of State within ten days after the contract is made. Every agreement or written statement of the nature of the arrangement to prevail in the absence of a contract between a professional fund-raising counsel or solicitor and a charitable organization must be filed with the Attorney General Secretary of State within ten days after the contract or written agreement is made. Every contract filed under this section must disclose the amount of compensation the professional fund-raising counsel or solicitor will receive, or if there is no flat fee, the percentage of collected revenues the professional fund-raising counsel or solicitor will receive. Every contract or agreement filed under this section must disclose the name and residence address of each person directing or supervising the conduct of services. Every contract or agreement filed under this section and involving telephone solicitation must disclose the location and telephone numbers from which the soliciting will be conducted.
Within ninety days after a solicitation campaign has been completed, and on the anniversary of the commencement of a solicitation campaign lasting more than one year, the professional solicitor or the charitable organization must file with the Attorney General Secretary of State a joint financial report for the campaign, including gross revenue and an itemization of expenses. The report must be completed on a form prescribed by the Attorney General Secretary of State and signed by an authorized official of the paid solicitor or an authorized official from the charitable organization and certified to be true.
A professional fund-raising counsel, professional solicitor, or charitable organization failing to comply with this section is liable for an administrative fine not to exceed ten dollars for each day of noncompliance, with a maximum fine under each nonregistered agreement of two thousand dollars."
SECTION 9. Section 33-56-80 of the 1976 Code, as last amended by Section 28I, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-80. Registration statements and applications, reports, professional fund-raising counsel contracts or professional solicitor contracts, and all other documents and information required to be filed under this chapter or by the Attorney General Secretary of State are public records in the office of the Attorney General Secretary of State and are open to the general public for inspection at such time and under such conditions as the Attorney General Secretary of State may prescribe. The Attorney General Secretary of State shall publish and make available to the public and to persons subject to this chapter explanatory information concerning this chapter, the duties imposed by this chapter, and the means for enforcing this chapter."
SECTION 10. Section 33-56-90(4) of the 1976 Code, as last amended by Section 28J, Part II, Act 458 of 1996, is further amended to read:
"(4) Upon request, a professional solicitor shall display or deliver to the solicited party a copy of his registration certification from the Attorney General Secretary of State."
SECTION 11. Section 33-56-100 of the 1976 Code, as last amended by Section 28K, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-100. In accordance with the regulations promulgated by the Attorney General Secretary of State, every charitable organization and professional fundraiser subject to the provisions of this chapter shall keep the true fiscal records as to its activities in this State. The records must be retained for at least three years after the end of the period of registration to which they relate."
SECTION 12. Section 33-56-110 of the 1976 Code, as last amended by Section 28L, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-110. No person shall act as a professional fund-raising counsel or professional solicitor for a charitable organization subject to the provisions of this chapter, unless he has first registered with the Attorney General Secretary of State. Applications for registration must be in writing under oath or affirmation in the form prescribed by the Attorney General Secretary of State and contain that information as the Attorney General Secretary of State may require. The application for registration by professional fund-raising counsel or professional solicitor must be accompanied by an annual fee of fifty dollars.
At the time of making application, professional solicitors shall file with and have approved by the Attorney General Secretary of State a surety bond in which the applicant or his employer shall must be the principal obligor in the sum of fifteen thousand dollars with one or more sureties satisfactory to the Attorney General Secretary of State, whose liability in the aggregate as such the sureties will at least equal that sum and maintain the bond in effect so long as a registration is in effect. However, a deposit of cash in the amount of fifteen thousand dollars may be accepted in lieu of the bond. The bond shall run to the State of South Carolina for the use of the Attorney General Secretary of State or his appropriate division and any person who may have a cause of action against the obligor of the bonds for losses resulting from malfeasance, nonfeasance, or misfeasance in the conduct of solicitation activities. A partnership or corporation which is a professional solicitor may file a consolidated bond on behalf of all its members, officers, and employees.
Each registration is valid throughout the State for one year and may be renewed for additional one-year periods upon written application under oath in the form prescribed by the Attorney General Secretary of State and the payment of the fee prescribed in this chapter.
Professional fundraisers or professional fund-raising counsel who fail to comply with the provisions of this section are liable for an administrative fine not to exceed ten dollars for each day of noncompliance, with a maximum fine under this paragraph of two thousand dollars."
SECTION 13. Section 33-56-120(2) of the 1976 Code, as last amended by Section 28M, Part II, Act 458 of 1996, is further amended to read:
"(2) No charitable organization, professional fund-raising counsel, or professional solicitor shall use or exploit the fact of registration so as to lead the public to believe that the registration in any way constitutes an endorsement or approval by the State. However, the use of the following statement is not considered a prohibited exploitation: 'Registered with the Attorney General Secretary of State as required by law. Registration does not imply endorsement of a public solicitation for contributions'."
SECTION 14. Section 33-56-130 of the 1976 Code, as last amended by Section 28N, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-130. If any charitable organization, professional fund-raising counsel, or professional solicitor soliciting contributions from people in this State and having a principal place of business outside the State, or organized under and by virtue of the laws of a foreign state, is subject to the provisions of this chapter and does not otherwise appoint a registered agent for service of process, then that charitable organization, professional fund-raising counsel, or professional solicitor is considered to have irrevocably appointed the Attorney General Secretary of State as an agent upon whom may be served summons, subpoena, subpoena duces tecum, or other process directed to the charitable organization, professional fund-raising counsel, or professional solicitor or any partner, principal officer, or director of it in any action or proceeding brought under the provisions of this chapter. Service of process upon the Attorney General Secretary of State must be made by delivering to and leaving with him personally a copy thereof of it at the office of the Attorney General Secretary of State and the service shall be is sufficient service, provided, that notice of the service and a copy of the process are sent by the Attorney General Secretary of State to the charitable organization, professional fund-raising counsel, or professional solicitor, by registered or certified mail with return receipt requested, at the address set forth in the registration form required to be filed with the Attorney General Secretary of State pursuant to this chapter or, in default of the filing of such the form, at the last address known to the Attorney General Secretary of State. Service of the process is complete ten days after the receipt by the Attorney General Secretary of State of a return receipt purporting to be signed by the addressee or a person qualified to receive the registered or certified mail, in accordance with the accepted practices of the United States Postal Service, or, if acceptance was refused by the addressee, ten days after the return to the Attorney General Secretary of State of the original envelope bearing a notation by the postal authorities that receipt thereof of it was refused."
SECTION 15. Section 33-56-140 of the 1976 Code, as last amended by Section 28O, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-140. (1) Upon his own motion or upon complaint of any person, the Attorney General Secretary of State may investigate any charitable organization, professional fund-raising counsel, or professional solicitor to determine whether the charitable organization, professional fund-raising counsel, or professional solicitor has violated the provisions of this chapter or has filed an application or other information required under this chapter which contains false or misleading statements. The Attorney General Secretary of State may subpoena persons and require the production of books, papers, and other documents to aid in the investigation of alleged violations of this chapter.
(2) If any charitable organization, professional fund-raising counsel, or professional solicitor fails to file a registration application, statement, report, or other information required to be filed with the Attorney General Secretary of State under this chapter, or violates the provisions of this chapter, the Attorney General Secretary of State shall notify the delinquent charitable organization, professional fund-raising counsel, or professional solicitor of this fact by mailing a notice by registered or certified mail, with return receipt requested, to its last known address. If the required registration application, statement, annual report, assurance of voluntary compliance, or other information is not filed or if the existing violation is not discontinued within fifteen days after the formal notification or receipt of the notice, the Attorney General Secretary of State may assess an administrative fine not to exceed two thousand dollars against the delinquent organization.
(3) In addition to all other actions authorized by law, the Attorney General Secretary of State, if he has reason to believe that one or more of the following acts or violations listed below has occurred, may bring an action to enjoin the charitable organization, professional fund-raising counsel, professional solicitor, or other person from continuing the act or violation, doing any other acts in furtherance of it, and for such other relief as to the court considers appropriate:
(a) a person is knowingly and wilfully operating in violation of the provisions of this chapter;
(b) a person has knowingly and wilfully made any false statement in any registration application, statement, report, or other information required to be filed by this chapter;
(c) a person has failed to file a registration statement or financial report required by this chapter;
(d) a person is employed or is about to be employed in any solicitation or collection of contributions any device, scheme, or artifice to defraud or to obtain money or property by means of false pretense, representation, or promise;
(e) the officers or representatives of a charitable organization, professional fund-raising counsel, or professional solicitor have refused or failed after notice to produce any records of the organization; or
(f) whenever the funds raised by solicitation activities are not devoted or will not be devoted to the charitable purposes of the charitable organization.
(4) In addition to the provisions of subsection (3), any person who knowingly and wilfully violates the provisions of this chapter or who knowingly and wilfully gives false or incorrect information to the Attorney General Secretary of State in filing statements or reports required by this chapter, is guilty of a misdemeanor and, upon conviction, for a first offense shall must be fined not more than one thousand dollars or be imprisoned for not more than thirty days, and for a second or any subsequent offense shall must be fined not more than five thousand dollars or be imprisoned for not more than one year, or both.
(5) Any registration application, statement, report, or other information required to be filed with the Attorney General Secretary of State under this chapter by a charitable organization, professional fund-raising counsel, or professional solicitor which contains false or misleading statements may be rejected by the Attorney General Secretary of State and returned to the submitting party without being filed.
(6) If a person is assessed an administrative fine under this chapter, the person has thirty days to pay the fine. After thirty days, the Attorney General Secretary of State shall give the delinquent person thirty days' notice that he will seek to enjoin the activities of the person. Before the Attorney General Secretary of State seeks an injunction, the person may pay the fines or request a hearing before the Attorney General Secretary of State. A person who fails to remit fines after the required notice is given may be enjoined from engaging in further charitable solicitation activities until the fine is paid. A person assessed a fine may request an evidentiary hearing before the Attorney General Secretary of State. A person may appeal an adverse ruling by the Attorney General Secretary of State to the circuit court. An appeal to the circuit court shall be is governed by the standard of review provided in the Administrative Procedures Act and the case law interpreting that provision.
(7) The Attorney General Secretary of State may exercise the authority granted in this section against a person who operates under the guise or pretense of being an organization exempted by the provisions of Section 33-56-40 or 33-56-50 and is not in fact an organization entitled to such an the exemption."
SECTION 16. Section 33-56-150 of the 1976 Code, as last amended by Section 28P, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-150. There shall be is created in the office of the Attorney General Secretary of State a Division of Public Charities which, under the direction and control of the Attorney General Secretary of State, shall perform the duties imposed upon it by the provisions of this chapter. The executive and administrative head of the division shall be the Director of Public Charities designated by the Attorney General Secretary of State."
SECTION 17. Section 33-56-160 of the 1976 Code, as last amended by Section 28Q, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-160. The first two hundred thousand dollars in administrative fine revenue received pursuant to this chapter in a fiscal year may be retained by the Attorney General Secretary of State to offset the expenses of enforcing this chapter. All administrative fines collected pursuant to this chapter in excess of two hundred thousand dollars in a fiscal year must be transmitted to the State Treasurer and deposited in the state general fund. All fees collected under this chapter must be transmitted to the State Treasurer and deposited in a fund separate and distinct from the state general fund and used by the Attorney General Secretary of State for the purpose of administering the provisions of this chapter."
SECTION 18. Section 33-56-190 of the 1976 Code, as last amended by Section 28R, Part II, Act 458 of 1996, is further amended to read:
"Section 33-56-190. The Attorney General Secretary of State may enter into agreements with the appropriate authority of any other state for the purpose of exchanging information with respect to charitable organizations, professional fund-raising counsel, and professional solicitors."
SECTION 19. This act takes effect August 1, 1998.