BILL ANALYSIS
S.B. 1214
By: Ellis (Coleman/Hill)
5-16-95
Committee Report (Unamended)
BACKGROUND
Texas is one of only seven states which has no reporting or
registration requirements for charities or charity fund raisers.
As a result, the public has no single entity which it can contact
to obtain information about organizations that claim to be
charities and their fundraising practices. The attorney general,
who is charged with representing the interest of the general public
in cases involving charitable organizations must rely solely on
complaints to learn about fraudulent and misleading practices
occurring in the guise of charity.
PURPOSE
S.B. 1214 sets forth the requirements for the registration and
reporting by charitable organizations and provides a civil penalty.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the attorney general under SECTION 1 (Section 15(a), Article
9023d, Vernon's Texas Civil Statutes) and the attorney general's
advisory committee under SECTION 1 (Section 15(b), Article 9023d,
Vernon's Texas Civil States) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 20, Title 132, Vernon's Texas Civil
Statutes, by adding Article 9023d, as follows:
Art. 9023d. REGISTRATION AND REPORTING BY CHARITABLE ORGANIZATIONS
Sec. 1. SCOPE OF ACT; SHORT TITLE. (a) Applies this Act to all
charitable orgainzations doing business in this state. Requires
the solicitation of contributions from persons in this state to be
considered to be doing business in Texas.
(b) States that this article may be cited as the Charities
Registrations and Reporting Act.
(c) Provides that this Act does not apply to organizations
subject to Articles 9023b or 9023c, Vernon's Texas Civil Statutes.
Sec. 2. CONSTRUCTION AND APPLICATION. (a) Requires this Act
to be applied to encourage contributions to legitimate charitable
organizations through public awareness and donor education, and to
prevent persons from posing as charitable orgainzations and from
using misleading fundraising practices.
(b) Prohibits this Act from being construed to unreasonably
burden legitimate charitable organizations.
Sec. 3. DEFINITIONS. (a) Defines "charitable organization",
"charitable purpose", "charitable sales promotion", "commercial
coventurer", "commercial solicitor", "contribution", "fund-raising
counsel", knowingly", and "person".
(b) Sets forth circumstances under which a person is or is not
considered to have custody and control of funds of a charitable
organizations.
(c) Sets forth circumstances considered to be a solicitation.
(d) Provides that a request for a contribution by a charitable
organization made solely to its current and former trustees,
officers, directors, members, employees, students, advisory board,
or volunteers is not a solicitation for the purpose of this Act.
(e) Explains that a request for a contribution to a named
charitable organization be made in lieu of flowers in an obituary
is not a solicitation for the purposes of this Act.
Sec. 4. EXEMPTION FROM REGISTRATION. (a) Sets forth persons
that are not required to register under Section 6, except as
provided by Subsection (b).
(b) Requires a person described by Subsection (a) to register
is any year in which the personnel engages the services of a
commercial solicitor by filing a registration statement and filing
fee before the 10th working day preceding the effective date of the
contract with the commercial solicitor.
Sec. 5. REGISTER TO BE MAINTAINED. (a) Requires the attorney
general to establish and maintain a register of charitable
organizations subject to this Act.
(b) Requires all filed documents to be public information and
to be available to the public, except those documents that identify
donors of charitable organizations.
Sec. 6. REGISTRATION. (a) Requires the attorney general to
maintain a registry of charitable organizations that submit to the
attorney general completed registration statements that contain
certain information.
(b) Requires a charitable organization doing business in Texas
on the effective date of this Act to file initial registration
statement at least 10 working days before doing business in this
state.
(c) Provides that registration expires on the 15th day of the
fifth month following the close of a charitable organization's
fiscal year. Requires registration statements to be filed on the
same forms for initial registration statements and to include the
name and employer identification number of the charitable
organization and any changes to the information previously
submitted.
(d) Requires a filing fee of up to $75 to accompany the
initial registration statement and all renewal statements.
(e) Requires the registration statements to be submitted on
forms prescribed or approved by the attorney general.
Sec. 7. NOTIFICATION OF NONCOMPLIANCE. (a) Requires a
charitable organization that is not in compliance with this Act to
be notified of noncompliance by the attorney general. Provides
that noncompliance shall include failure to file any documents
required by this Act or the filing of incomplete or inaccurate
documents.
(b) Provides that a charitable organization violates this Act
if it fails to file complete documents within 30 days of the date
the notice required by Subsection (a) has been mailed or if it
knowingly files inaccurate documents.
Sec. 8. RECORD KEEPING; AUDIT POWERS OF THE ATTORNEY GENERAL.
(a) Requires each charitable organization required to file a
registration statement to keep true books and records as to it
activities. Requires the books and records to be retained for a
period of at least three years after the end of the period to which
the statement relates. Requires all books and records to be made
available for inspection by authorized personnel of the attorney
general upon request.
(b) Requires a charitable organization to make available the
information requested by authorized personnel of the attorney
general at the organization's principal place.
(c) Provides that the authority established by this section
is in addition to other statutory or common law audit or
investigative authority of the attorney general.
Sec. 9. USE OF FEES. (a) Dedicates all fees collected by the
attorney general to the attorney general during the biennium of
receipt to administer and enforce this Act and to educate the
public about this Act and charitable organizations and
solicitations generally.
(b) Requires the attorney general to file with the
Legislative Budget Board at the end of each biennium a report that
shows the amounts of fees collected by the attorney general and the
uses for which the collected fees were expended.
Sec. 10. TOLL-FREE TELEPHONE LINE. Requires the attorney
general to establish and operate a toll-free telephone line.
Authorizes the public to telephone the number to obtain information
about a registered organization or to report an alleged violation.
Sec. 11. REGISTRATION DOES NOT IMPLY ENDORSEMENT. Provides
that registration does not imply endorsement by the state or the
attorney general.
Sec. 12. REMEDIES. (a) Authorizes the attorney general to
institute an action for failure to comply with this statute and to
obtain injunctive relief to restrain the person from continuing the
violation, cancellation or suspension of the registration, an order
restraining the person from doing business in this state while
violating this Act, civil penalties of not less than $25,000 per
violation, or injunctive relief and a civil penalty. Provides that
a person who violates an injunction issued under this Act is liable
to the state for a civil penalty of not less than $100,000.
(b) Provides that the remedies authorized by this Act are not
exclusive, but are in addition to other remedies provided for by
statutory or common law.
(c) Authorizes the court to allow the attorney general to
recover civil penalties and costs incurred in bringing the suit in
any proceeding successfully prosecuted by the attorney general.
Sec. 13. SERVICE ON SECRETARY OF STATE. (a) Provides that
the secretary of state is an agent for service of process or
complaint on a charitable organization which meets certain
criteria.
(b) Authorizes service on the secretary of state to be made by
certified mail, return receipt requested, the clerk of the court in
which the case is pending, by the party or representative of the
party, or by any other authorized method.
(c) Requires the secretary of state, if served with process
for a charitable organization, to require a statement of the name
and address of the charitable organization and to mail a copy of
the process of the charitable organization.
Sec. 14. VENUE. Requires an action under this Act to be
brought in a court of competent jurisdiction in Travis County, in
the county in which the charitable organization has its principal
place of business, or in the county in which the solicitation
occurred.
Sec. 15. RULES; ADVISORY COMMITTEES. (a) Authorizes the
attorney general to prescribe any rules, procedures, and forms
which are consistent with and necessary of the administration and
enforcement of the Act.
(b) Requires the attorney general to annually appoint an
advisory Committee, consisting of certain members, authorized to
assist the attorney general in preparing rules, procedures,a nd
forms authorized by this Act. Authorizes the advisory committee to
assist the attorney general in developing a public education
program.
SECTION 2. Makes application of this Act prospective.
SECTION 3. Requires a charitable organization doing business
in this state on the effective date that is required to register
under Section 6, Article 9023d, Vernon's Texas Annotated Civil
Statutes to file the organization's initial registration statement
required under that section before January 1, 1996.
SECTION 4. Establishes the effective date of this Act as
September 1, 1995.
SECTION 5. Emergency clause.
SUMMARY OF COMMITTEE ACTION
S.B. 1214 was considered by the Committee on Business and Industry
in a public hearing on May 16, 1995. Testifying on S.B. 1214 was
Jan Soifer, representing the Office of the Attorney General. No
one testfied in support or against the bill. S.B. 1214 was
reported favorably, without amendment to the full house with the
recommendation that it do pass and be printed, by a record vote of
8 (eight) ayes, 0 (zero) nays, 1 (one) present-not-voting, 0 (zero)
absent.