Understanding the Charitable Trust Doctrine

Fundraising is the lifeblood of any nonprofit organization. To maintain transparency and build trust with donors, California law mandates specific disclosure requirements for nonprofits soliciting contributions. Understanding and adhering to these regulations is crucial for ethical fundraising practices and legal compliance. This post outlines the key disclosure requirements you need to know.

What Constitutes a Solicitation?

In California, a “solicitation” encompasses any request for money or property for a charitable purpose. This includes not only direct appeals for donations but also extends to sales of products or services where the proceeds benefit a nonprofit. Think selling tickets to a fundraising gala or offering branded merchandise – these activities also fall under solicitation rules.

Essential Disclosures for Nonprofits

California law requires specific disclosures to be made before a solicitation is made in person. While the timing for non-personal solicitations (e.g., mail, radio, or online) is less explicitly defined, it’s best practice to provide these disclosures reasonably in advance of the donation request. These disclosures must include:

• The name and address of the organization.
• The organization’s tax-exempt status (both federal and California state exemptions).
• A clear explanation of how the funds will be used.
• The tax-deductible portion of the contribution, if any.

Special Considerations for Volunteers

Recognizing the valuable role of volunteers, California law provides some flexibility in disclosure requirements for those who are not compensated for their fundraising efforts.

• General Volunteers: Volunteers who receive no compensation, including sales commissions, can provide a simplified disclosure. They only need to share the organization’s name, address, charitable purpose, and information on how to obtain the organization’s financial information.
• Minor Volunteers: Minors (individuals under 18) volunteering for tax-exempt organizations are exempt from these disclosure requirements.

Important Reminders

Beyond the specific disclosures, it’s vital to remember:

• Accuracy is Paramount: Solicitors must never misrepresent the purpose of the charity or the intended beneficiary of the solicited funds. Maintaining honesty and transparency is essential for building and preserving donor trust.
• Local Ordinances: Be aware that there may also be local ordinances governing solicitations within your city or county. It’s your organization’s responsibility to check and comply with these local regulations in addition to state law.

Commercial Fundraisers: A Separate Topic

This post focused on disclosures for nonprofits themselves. California law also has specific regulations for commercial fundraisers, which are individuals or entities hired to conduct fundraising on behalf of a nonprofit. We will cover these distinct regulations in a future post.

Staying Informed and Compliant

Navigating the legal landscape of nonprofit fundraising can be complex. It’s recommended that nonprofit organizations regularly review California’s disclosure requirements and consult with legal counsel to ensure full compliance. By prioritizing transparency and adhering to these guidelines, your organization can build stronger relationships with donors and advance its mission with confidence.