AN ACT
1-1 relating to registration of and reporting by certain charitable
1-2 organizations; providing penalties.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. SCOPE OF ACT. The solicitation of contributions
1-5 from persons in this state shall be considered to be engaging in
1-6 telephone solicitation in Texas, regardless of where the
1-7 solicitation originates.
1-8 SECTION 2. DEFINITIONS. In this Act:
1-9 (1) "Charitable organization" means a person, other
1-10 than a governmental law enforcement agency or organization, who
1-11 solicits contributions or funds and is or holds himself, herself,
1-12 or itself out to be established or operating for a charitable
1-13 purpose relating to law enforcement, including nongovernmental law
1-14 enforcement organizations, nongovernmental law enforcement
1-15 publications, and survivors of law enforcement officers who are
1-16 killed in the line of duty.
1-17 (2) "Commercial telephone solicitor" means a person
1-18 who is retained by a charitable organization to solicit
1-19 contributions or funds by telephone, whether done individually or
1-20 through another person under the direction of the commercial
1-21 telephone solicitor. The term does not include a bona fide
1-22 employee, officer, director, or volunteer of a charitable
1-23 organization.
2-1 (3) "Contribution" means the promise to give or the
2-2 gift of money, credit, property, financial assistance, or other
2-3 thing of any kind or value, except volunteer services. The term
2-4 does not include bona fide fees, dues, or assessments paid by
2-5 members if membership is not conferred solely as consideration for
2-6 making a contribution in response to a telephone solicitation.
2-7 (4) "Knowingly" means with actual awareness, but
2-8 actual awareness may be inferred if objective manifestations
2-9 indicate that a person acted with actual awareness.
2-10 (5) "Person" means an individual, partnership,
2-11 corporation, association, or other legal entity.
2-12 (6) "Telephone solicitation" means the use of a
2-13 telephone to solicit another person to make a charitable
2-14 contribution to an organization.
2-15 SECTION 3. REGISTER TO BE MAINTAINED. (a) The attorney
2-16 general shall establish and maintain a register of charitable
2-17 organizations subject to this Act.
2-18 (b) All documents required to be filed with the attorney
2-19 general under this Act are public information and shall be
2-20 available to the public under the open records law, Chapter 552,
2-21 Government Code, except those documents that identify the donors of
2-22 a charitable organization, which information is confidential and is
2-23 not subject to disclosure.
2-24 SECTION 4. REGISTRATION. (a) The attorney general shall
2-25 maintain a registry of charitable organizations that submit to the
3-1 attorney general completed registration statements that contain:
3-2 (1) the legal name and each assumed name, the mailing
3-3 address and street address, and each telephone number and facsimile
3-4 number of each office, chapter, local unit, branch, and affiliate
3-5 of the charitable organization;
3-6 (2) the employer identification number of the
3-7 charitable organization;
3-8 (3) the name, title, address, and telephone number of
3-9 each officer, director, and executive director or other chief
3-10 operating officer of the charitable organization;
3-11 (4) the name of each officer, director, or employee
3-12 who is compensated by the charitable organization or who has
3-13 custody and control of funds of the charitable organization and who
3-14 has been convicted of or pleaded nolo contendere to a misdemeanor
3-15 involving fraud or the theft, misappropriation, misapplication, or
3-16 misuse of property of another, or any felony, including the offense
3-17 and the state, court, and date of each conviction or plea of nolo
3-18 contendere;
3-19 (5) the date the charitable organization was
3-20 incorporated and the state of incorporation or, if not
3-21 incorporated, the type of organization and the date established;
3-22 the day and month on which the organization's fiscal year ends; and
3-23 whether the organization is eligible to receive tax-deductible
3-24 contributions under Section 170, Internal Revenue Code of 1986 (26
3-25 U.S.C. Section 170);
4-1 (6) a statement as to whether the organization has
4-2 applied for or been granted tax exempt status by the Internal
4-3 Revenue Service and, if so, the date of the application, the date
4-4 the exemption was granted or denied, the Internal Revenue Code
4-5 section on which the application was based, and a statement as to
4-6 whether or when the tax exemption has ever been denied, revoked, or
4-7 modified;
4-8 (7) the date the organization began doing business in
4-9 this state and the name and address of the organization's
4-10 registered agent in this state;
4-11 (8) a statement of the charitable organization's
4-12 charitable purposes and a list of the programs for which funds are
4-13 solicited;
4-14 (9) a statement that includes:
4-15 (A) the names, addresses, and telephone numbers
4-16 of the organization's accountants and auditors and the method of
4-17 accounting used;
4-18 (B) a statement that the charitable organization
4-19 has attempted in good faith to comply with all Texas county and
4-20 municipal ordinances regarding telephone solicitation that have
4-21 been filed with the attorney general or, if none apply, a statement
4-22 to that effect;
4-23 (C) for charitable organizations that engage the
4-24 services of commercial telephone solicitors, the name and address
4-25 of each commercial telephone solicitor engaged in the preceding 12
5-1 months, as well as written confirmation from the commercial
5-2 telephone solicitor that it has complied with all state and local
5-3 registration laws;
5-4 (D) the amount paid to commercial telephone
5-5 solicitors during the preceding 12 months;
5-6 (E) the total contributions received during the
5-7 preceding 12 months; and
5-8 (F) the total fund-raising costs during the
5-9 preceding 12 months, computed pursuant to generally accepted
5-10 accounting principles;
5-11 (10) a copy of the charitable organization's most
5-12 recently filed Internal Revenue Service Form 990 and other federal
5-13 tax returns, including all supplements, amendments, and attachments
5-14 to those returns and requests for extensions to file those returns
5-15 or, if the charitable organization does not file federal tax
5-16 returns:
5-17 (A) a statement as to the reason none is filed;
5-18 and
5-19 (B) the charitable organization's most recent
5-20 financial statements, including audited financial statements, if
5-21 any have been prepared; and
5-22 (11) a sworn statement verifying that the information
5-23 contained in the registration statement and all attachments to the
5-24 statement are true, correct, and complete to the best of the
5-25 affiant's knowledge.
6-1 (b) A charitable organization shall file its initial
6-2 registration statement before the 10th working day preceding the
6-3 date on which the organization begins telephone solicitation in
6-4 this state.
6-5 (c) Registration expires on the 15th day of the fifth month
6-6 after the last day of a charitable organization's fiscal year.
6-7 Renewal registration statements shall be filed on the same forms
6-8 required for initial registration statements and must include the
6-9 name and employer identification number of the charitable
6-10 organization and any changes to the information previously
6-11 submitted to the attorney general. For items on which there is no
6-12 change from the previous year's registration statement, "no change"
6-13 may be indicated.
6-14 (d) A filing fee not to exceed $50 must accompany the
6-15 initial registration statement. A $50 filing fee must accompany
6-16 all renewal registration statements.
6-17 (e) The registration statements shall be submitted on forms
6-18 prescribed or approved by the attorney general.
6-19 (f) A volunteer that has been authorized to solicit on
6-20 behalf of a charitable organization is not required to register
6-21 under this Act.
6-22 SECTION 5. BOND. A commercial telephone solicitor shall
6-23 post a surety bond with the secretary of state in the amount of
6-24 $50,000 issued by a surety company authorized to do business in
6-25 this state.
7-1 SECTION 6. NOTIFICATION OF NONCOMPLIANCE. (a) A charitable
7-2 organization that is not in compliance with this Act shall be
7-3 notified of noncompliance by the attorney general by first class
7-4 mail at the organization's last reported address. Noncompliance
7-5 includes failure to file any documents required by this Act or the
7-6 filing of incomplete or inaccurate documents.
7-7 (b) A charitable organization violates this Act if the
7-8 organization:
7-9 (1) fails to file complete documents within 30 days
7-10 after the date the notice required by Subsection (a) of this
7-11 section has been mailed; or
7-12 (2) knowingly files materially inaccurate documents.
7-13 SECTION 7. RECORDKEEPING; AUDIT POWERS OF ATTORNEY GENERAL.
7-14 (a) Each charitable organization required to file a registration
7-15 statement shall keep true books and records as to its activities
7-16 within this state in a form to enable it to accurately provide the
7-17 information required by this Act. The books and records shall be
7-18 retained for a period of at least three years after the end of the
7-19 period to which the registration statement relates. All books and
7-20 records of a charitable organization shall be made available for
7-21 inspection and copying by authorized personnel of the attorney
7-22 general on written request by authorized personnel of the attorney
7-23 general.
7-24 (b) A charitable organization shall make available the
7-25 information requested by authorized personnel of the attorney
8-1 general at the organization's principal place of business within 10
8-2 working days of the date of the request, or at a time and place as
8-3 may be agreed.
8-4 (c) The authority established by this section is in addition
8-5 to other statutory or common law audit or investigative authority
8-6 of the attorney general.
8-7 SECTION 8. REGISTRATION DOES NOT IMPLY ENDORSEMENT.
8-8 Registration under this Act does not imply endorsement by this
8-9 state or the attorney general, and charitable organizations are
8-10 prohibited from stating or implying to the contrary.
8-11 SECTION 9. REMEDIES. (a) The attorney general may
8-12 institute an action for failure to fully and accurately comply with
8-13 this Act and may obtain injunctive relief to restrain a person from
8-14 continuing a violation, cancellation or suspension of the
8-15 registration, an order restraining the person from doing business
8-16 in this state while violating this Act, a civil penalty of not more
8-17 than $25,000 per violation, or injunctive relief and a civil
8-18 penalty. A person who violates an injunction issued under this
8-19 section is liable to the state for a civil penalty of not less than
8-20 $100,000.
8-21 (b) The remedies authorized by this Act are not exclusive
8-22 but are in addition to any other procedure or remedy provided for
8-23 by other statutory or common law.
8-24 (c) In any proceeding successfully prosecuted by the
8-25 attorney general under this Act, the court may allow the attorney
9-1 general to recover civil penalties and the reasonable costs,
9-2 expenses, and attorney's fees incurred in bringing the suit.
9-3 SECTION 10. DEDICATION OF FEES AND CIVIL PENALTIES. In
9-4 addition to other money, all fees assessed under this Act and all
9-5 recovered expenses incurred in obtaining injunctive relief and
9-6 administrative and civil penalties authorized by this Act are
9-7 dedicated for use by the attorney general in enforcing and
9-8 administering this Act. Recovered expenses include investigative
9-9 costs, witness fees, attorney's fees, and deposition expenses.
9-10 SECTION 11. VENUE. An action under this Act shall be
9-11 brought in a court of competent jurisdiction in Travis County, in
9-12 the county in which the charitable organization has its principal
9-13 place of business or has a fixed and established place of business
9-14 at the time the suit is brought, or in the county in which
9-15 solicitation occurred.
9-16 SECTION 12. NOTICE TO CONTRIBUTORS; PROHIBITION. (a) If
9-17 less than 90 percent of the contributions or funds collected by a
9-18 charitable organization or commercial telephone solicitor are paid
9-19 by the charitable organization or commercial telephone solicitor to
9-20 a charitable organization, the commercial telephone solicitor shall
9-21 notify each person solicited by telephone, before accepting a
9-22 contribution or funds from the person, of the percentage of the
9-23 contributions or funds that will be paid to the organization for
9-24 which the contributions or funds are being solicited and the
9-25 percentage that will be retained by the solicitor. This
10-1 information shall also be included on any written statement mailed
10-2 to the contributor.
10-3 (b) A charitable organization or commercial telephone
10-4 solicitor may not make a telephone call to solicit contributions or
10-5 funds unless the call is made after 9 a.m. and before 7 p.m.,
10-6 Monday through Friday.
10-7 SECTION 13. PROHIBITED PRACTICES. (a) A person may not
10-8 commit an unfair or deceptive act or practice in the conduct of
10-9 solicitations for a charitable organization.
10-10 (b) A person may not represent to a person solicited that a
10-11 contribution is to be used to benefit the survivors of a law
10-12 enforcement officer killed in the line of duty unless:
10-13 (1) 100 percent of the contributions collected are
10-14 used to benefit those survivors; or
10-15 (2) the person solicited is informed in writing of the
10-16 exact percentage of the contribution that will directly benefit
10-17 those survivors.
10-18 SECTION 14. RULES. The attorney general may adopt rules,
10-19 procedures, and forms that are consistent with and necessary for
10-20 the proper administration and enforcement of this Act.
10-21 SECTION 15. TRANSITION. (a) The changes in law made by
10-22 this Act apply only to a solicitation that takes place on or after
10-23 the effective date of this Act. A solicitation that takes place
10-24 before the effective date of this Act is governed by the law in
10-25 effect on the date of the solicitation, and the former law is
11-1 continued in effect for that purpose.
11-2 (b) A charitable organization engaging in telephone
11-3 solicitation in this state on the effective date of this Act that
11-4 is required to register under this Act shall file the
11-5 organization's initial registration statement required under this
11-6 Act before January 1, 1998.
11-7 SECTION 16. EFFECTIVE DATE. This Act takes effect September
11-8 1, 1997.
11-9 SECTION 17. EMERGENCY. The importance of this legislation
11-10 and the crowded condition of the calendars in both houses create an
11-11 emergency and an imperative public necessity that the
11-12 constitutional rule requiring bills to be read on three several
11-13 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1581 passed the Senate on
April 17, 1997, by a viva-voce vote; and that the Senate concurred
in House amendments on May 28, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1581 passed the House, with
amendments, on May 26, 1997, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor