Signed by Governor Jerry Brown, Jr.

Vote Smart's Synopsis:

Vote to concur with Senate amendments and pass a bill that increases penalties for the misuse of funds by charitable organizations.

Highlights:

• Prohibits any person or charitable organization from committing certain violations, including, but not limited to, the following (Secs. 1 & 2):
• Knowingly submitting false or misleading information to the Attorney General;
• Failing to file required documents, including a complete financial report;
• Misrepresenting the nature or purpose of the charitable organization or beneficiary; and
• Misleading an individual to believe that the proceeds of a solicitation or charitable sales promotion will be used for charitable purposes when that is not the case.

• Authorizes the Attorney General to take the following actions against an organization that violates the provisions of this bill (Sec. 1):
• Issue a cease-and-desist letter;
• Impose a penalty of up to $1000 for each act that violates the law after providing at least 5 days notice;
• Suspend the registration of an organization if it is given a penalty; and
• Appeal to a superior court for an injunction to prevent further violations.

• Specifies that any individual that intentionally deceives or defrauds a charity will be subject to a civil penalty of up to $10,000 (Sec. 1).

• Requires a charitable organization to provide the following for any year the organization's balance sheet shows holdings of restricted net assets when negative unrestricted net assets were reported (Sec. 3):
• An explanation of its compliance with its charitable trust responsibilities; and
• Proof of directors’ and officers’ liability insurance coverage.

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that increases penalties for the misuse of funds by charitable organizations.

Highlights:

• Prohibits any person or charitable organization from committing certain violations, including, but not limited to, the following (Secs. 1 & 2):
• Knowingly submitting false or misleading information to the Attorney General;
• Failing to file required documents, including a complete financial report;
• Misrepresenting the nature or purpose of the charitable organization or beneficiary; and
• Misleading an individual to believe that the proceeds of a solicitation or charitable sales promotion will be used for charitable purposes when that is not the case.

• Authorizes the Attorney General to take the following actions against an organization that violates the provisions of this bill (Sec. 1):
• Issue a cease-and-desist letter;
• Impose a penalty of up to $1000 for each act that violates the law after providing at least 5 days notice;
• Suspend the registration of an organization if it is given a penalty; and
• Appeal to a superior court for an injunction to prevent further violations.

• Specifies that any individual that intentionally deceives or defrauds a charity will be subject to a civil penalty of up to $10,000 (Sec. 1).

• Requires a charitable organization to provide the following for any year the organization's balance sheet shows holdings of restricted net assets when negative unrestricted net assets were reported (Sec. 3):
• An explanation of its compliance with its charitable trust responsibilities; and
• Proof of directors’ and officers’ liability insurance coverage.

Full Bill Text