S 1157 Session 112 (1997-1998)
S 1157 General Bill, By Leventis, Drummond, Ford, Giese, Ravenel and Waldrep
A BILL TO PROVIDE THAT THE DUTIES, FUNCTIONS, AND RESPONSIBILITIES OF THE
DIVISION OF PUBLIC CHARITIES OF THE OFFICE OF THE ATTORNEY GENERAL'S OFFICE
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.
03/31/98 Senate Introduced and read first time SJ-10
03/31/98 Senate Referred to Committee on Judiciary SJ-10
04/22/98 Senate Committee report: Favorable with amendment
Judiciary SJ-8
04/23/98 Senate Amended SJ-30
04/23/98 Senate Read second time SJ-30
04/23/98 Senate Unanimous consent for third reading on next
legislative day SJ-30
04/24/98 Senate Read third time and sent to House SJ-39
04/28/98 House Introduced and read first time HJ-10
04/28/98 House Referred to Committee on Judiciary HJ-10
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.
A BILL
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.
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