HOUSE BILL NO. 280
INTRODUCED BY J. TROPILA
A BILL FOR AN ACT ENTITLED: "AN ACT CREATING A CHARITABLE SOLICITATIONS ACT; REQUIRING THE SECRETARY OF STATE TO ADMINISTER AND ENFORCE THE CHARITABLE SOLICITATIONS ACT; AND PROVIDING THE SECRETARY OF STATE WITH RULEMAKING AUTHORITY TO CARRY OUT THE PROVISIONS OF THE CHARITABLE SOLICITATIONS ACT."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Short title. [Sections 1 through 19] may be known and cited as the Montana Charitable Solicitations Act.
NEW SECTION. Section 2. Definitions. For the purposes of [sections 1 through 19], the following definitions apply:
(1) (a) "Charitable organization" means any of the following:
(i) a person determined by the internal revenue service to be a tax exempt organization pursuant to section 501(c)(3) of the Internal Revenue Code;
(ii) a person actually or purporting to be established for a voluntary health and welfare, benevolent, philanthropic, patriotic, educational, humane, scientific, public health, environmental conservation, civic, or other charitable purpose, or for the benefit of law enforcement personnel, firefighters, or other public safety organizations; or
(iii) a person employing in any manner a charitable appeal as the basis of a solicitation or an appeal that suggests that there is a charitable purpose to a solicitation.
(b) The term is not limited to only those organizations to which contributions are tax deductible under section 170 of the Internal Revenue Code.
(c) The term does not include a bona fide duly constituted religious institution or a separate group or corporation that forms an integral part of the religious institution, provided that:
(i) the religious institution, separate group, or corporation is tax exempt, pursuant to the Internal Revenue Code;
(ii) none of the net income of the religious institution, separate group, or corporation inures to the direct benefit of an individual; and
(iii) the conduct of the religious institution, separate group, or corporation is primarily supported by government grants or contracts, funds solicited from membership, congregations, or previous donors, and fees charged for services rendered.
(2) (a) "Charitable purpose" means either of the following:
(i) a purpose described in section 501(c)(3) of the Internal Revenue Code; or
(ii) a voluntary health and welfare, benevolent, philanthropic, patriotic, educational, humane, scientific, public health, environmental conservation, civic, or other charitable purpose or purpose for the benefit of law enforcement personnel, firefighters, or other public safety organizations.
(b) The term is not limited to only those purposes for which contributions are tax deductible under section 170 of the Internal Revenue Code.
(3) "Container" means a box, carton, package, receptacle, canister, jar, dispenser, or machine that offers a product for sale or distribution that is or purports to be a solicitation of contributions for a charitable purpose.
(4) (a) "Contribution" means the promise or grant of money or property of any kind or value, including the promise to pay, except payments by members of an organization for membership fees, dues, fines, assessments, or for services rendered to individual members if membership in the organization confers a bona fide right, privilege, professional standing, honor, or other direct benefit, other than the right to vote, elect officers, or hold office.
(b) The term does not include money or property received from any governmental authority.
(5) (a) "Fundraising counsel" means a person who:
(i) for a fixed fee or rate under a written agreement plans, manages, advises, or consults with respect to the solicitation in this state of contributions by a charitable organization;
(ii) does not solicit contributions and does not directly or indirectly employ, procure, or engage a person compensated to solicit contributions; and
(iii) does not at any time, directly or indirectly, receive or have custody or control of contributions.
(b) A bona fide nontemporary salaried officer or employee of a charitable organization may not be considered a fundraising counsel.
(c) An attorney, an accountant, or a banker who renders professional services to a charitable organization or advises a person to make a contribution during the course of rendering professional services to that person may not be considered, as a result of the professional service or advice rendered, to be a fundraising counsel.
(6) "Person" means any individual, organization, group, association, partnership, corporation, trust, or other entity, however established, within or outside of this state.
(7) "Professional fundraiser" means a person:
(a) (i) who for compensation or other consideration is retained by a charitable organization to solicit in or from this state contributions for charitable purposes directly or in the form of payment for goods, services, or admission to fundraising events, regardless of whether the solicitation is performed personally or through agents, servants, or employees or through agents, servants, or employees under the direction of the person, who are especially employed by or for a charitable organization and who are engaged in the solicitation of contributions, the sale of goods or services, or the production of fundraising events;
(ii) who plans, conducts, manages, carries on, advises, or consults, whether directly or indirectly, in connection with the solicitation of contributions, sale of goods or services, or the production of fundraising events for or on behalf of any charitable organization but does not qualify as a fundraising counsel; or
(iii) independently engaged in or who represents to the public that the person is independently engaged in the business of soliciting contributions.
(b) A bona fide officer or employee of a charitable organization may not be considered a professional fundraiser unless the officer's or employee's salary or other compensation is paid as a commission that is computed on the basis of funds to be raised or actually raised.
(8) "Professional solicitor" means a person who is employed or retained for compensation by a professional fundraiser to solicit contributions for charitable purposes from persons in this state.
(9) "Public safety organization" means a nongovernmental organization that uses in its name the term "officer", "peace officer", "police officer", "police law enforcement", "reserve officer", "deputy", "deputy sheriff", "constable", "deputy constable", "firefighter", "volunteer firefighter", "emergency medical service provider", "civil employee", or other similar term in a manner that reasonably implies that the organization or that a contribution to, purchase from, or membership in that organization will benefit public safety personnel.
(10) (a) "Solicitation" or "solicit" means the request, directly or indirectly, for money, credit, property, financial assistance, or other thing of value on the representation that the money, credit, property, financial assistance, or other thing of value or a portion of the money, credit, financial assistance, or other thing of value will be used for a charitable purpose or will benefit a charitable organization.
(b) "Solicitation" or "solicit" includes but is not limited to the following methods of requesting or securing money, credit, property, financial assistance, or other thing of value:
(i) an oral or written request;
(ii) making an announcement in the press, over the radio or television, by telephone, through the mail, or other media concerning an appeal or campaign by or for a charitable organization or purpose;
(iii) distributing, circulating, posting, or publishing a handbill, written advertisement, or other publication that directly or by implication seeks to obtain a contribution;
(iv) offering, attempting to sell, or selling an item including but not limited to advertising space, a book, a card, a tag, a coupon, a device, a magazine, a membership, merchandise, a subscription, flowers, a ticket, candy, cookies, or other tangible item in connection with which an appeal is made for a charitable organization or purpose;
(v) using or employing a container, a card, or a similar device for the collection of money or other thing of value in connection with which an appeal is made for a charitable organization or purpose; or
(vi) an announcement requesting that the public attend an appeal, an assemblage, an athletic or competitive event, a carnival, a circus, a concert, a contest, a dance, an entertainment, an exhibition, an exposition, a game, a lecture, a meal, a party, a show, a social gathering, or other performance or event in connection with which an appeal is made for a charitable organization or purpose.
(c) A solicitation occurs whether or not the person making the solicitation receives a contribution, except that a charitable organization's use of its own name in a communication is not sufficient by itself to constitute a solicitation.
NEW SECTION. Section 3. Registration. (1) Except as provided in [section 5] and prior to solicitation of contributions by any means, a charitable organization shall file a registration statement with the secretary of state. A registration statement that contains false, misleading, deceptive, or incomplete information or documentation may not be considered sufficient. The registration statement must be on forms prescribed by the secretary of state and must contain the following information:
(a) the name of the charitable organization and the name or names under which it intends to solicit contributions;
(b) the names and addresses of the officers, directors, trustees, and chief executive officer of the charitable organization;
(c) the addresses of the charitable organization and any offices in this state and, if the charitable organization does not maintain a principal office, the name and address of the person having custody of its financial records;
(d) where and when the charitable organization was legally established, the form of its organization, and its tax-exempt status;
(e) the purpose for which the charitable organization was formed and the purpose or purposes for which the contributions to be solicited will be used;
(f) the date on which the fiscal year of the charitable organization ends;
(g) whether the charitable organization is authorized by other governmental authority to solicit contributions and a statement of:
(i) whether the charitable organization or any of its present officers, directors, executive personnel, or trustees have ever had a license or registration denied, suspended, revoked, or enjoined by a court or other governmental authority in this state or another state; and
(ii) whether the charitable organization has voluntarily entered into an assurance, voluntary discontinuance, or agreement with a jurisdiction or federal agency;
(h) the names and addresses of professional fundraisers or fundraising counsel who are acting or have agreed to act on behalf of the organization;
(i) methods by which solicitation will be made;
(j) copies of contracts between charitable organizations and professional fundraisers or fundraising counsel relating to financial compensation or profit to be derived by the professional fundraisers or fundraising counsel. If a contract is executed after the filing of a registration statement, a copy of the contract must be filed within 10 days of the date of the contract's execution.
(k) the board, group, or individual having final authority over the distribution, custody, and use of contributions received;
(l) a financial report, as required by [section 6];
(m) with the initial registration only, a copy of the current charter, articles of incorporation, agreement of association, instrument of trust, constitution, or other organizational instrument and a copy of the bylaws of the charitable organization;
(n) with the initial registration or, if received after registration, within 30 days after its receipt, a copy of a federal tax exemption determination letter, correspondence rescinding the charitable organization's tax exempt status, or notification from the internal revenue service of a challenge to or investigation of the charitable organization's continued entitlement to federal tax exemption; and
(o) other information required by the secretary of state by rule.
(2) The registration statement must be signed and sworn to under penalties of perjury by the president or other authorized officer and the chief fiscal officer of the charitable organization.
(3) The secretary of state shall issue a certificate of registration to a charitable organization once the secretary of state determines that the charitable organization has complied with the provisions of [sections 1 through 19]. A charitable organization required to be registered under this section may not solicit funds without a valid certificate of registration.
(4) A registration is effective upon approval by the secretary of state or 30 days after a completed application is filed if a denial order or other proceeding is not in effect or pending under [sections 1 though 19].
(5) A registration is effective for 1 year, unless renewed by filing the forms as prescribed by the secretary of state.
(6) Each registered charitable organization shall notify the secretary of state within 30 days of a change in the information required to be furnished by the charitable organization under [sections 1 through 19].
(7) A registered charitable organization may not continue to solicit contributions in or from this state after the date that the organization should have filed, but failed to file, its financial report, in accordance with the requirements of [section 6].
(8) If a local, county, or area division of a charitable organization is supervised and controlled by a superior or parent organization that is incorporated, qualified to do business, or doing business within this state, the local, county, or area division is not required to register under this section if the superior or parent organization files a registration statement on behalf of the local, county, or area division in addition to or as part of its own registration statement. If a registration statement has been filed by a superior or parent organization as provided in this section, it shall file the annual report required under this section on behalf of the local, county, or area division in addition to or as part of its own report, but the accounting information required under [section 6] must be set forth separately.
NEW SECTION. Section 4. Powers of secretary of state. The secretary of state may:
(1) adopt rules necessary for the administration of [sections 1 through 19], including but not limited to rules prescribing registration and financial reporting forms; governing applications for registration exemptions; and providing for the issuance of subpoenas, for the production of documents, for service of notice, for imposition of civil penalties, and for commencement of legal actions;
(2) respond to requests from interested persons regarding registration and exemptions from registration;
(3) publish and disseminate information to the public concerning persons subject to [sections 1 through 19]; and
(4) perform other functions and duties that may be necessary to carry out the provisions of [sections 1 through 19].
NEW SECTION. Section 5. Exempt institutions and organizations -- penalties. (1) The registration provisions of [section 3] do not apply to the following organizations:
(a) an educational institution or foundation having an established identity with an educational institution that solicits contributions solely by its student body, alumni, faculty, and trustees, and their families;
(b) a library established under the laws of this state;
(c) a fraternal, a patriotic, a social, an educational, or an alumni organization, or a historical society that solicits contributions solely by its membership. This exemption extends to a subsidiary of a parent or superior organization if the solicitation is made solely by the membership of the subsidiary, parent, or superior organization;
(d) a person requesting a contribution for the relief or benefit of an individual, specified by name at the time of the solicitation, if the contributions collected are turned over to the named beneficiary, after deducting reasonable expenses for costs of banquets or social gatherings, if any, provided that the fundraising functions are carried out by persons who are not paid, directly or indirectly, for their services;
(e) (i) a charitable organization that does not intend to solicit and receive and does not actually receive contributions in excess of $4,000 during a 12-month period ending June 30 of a year, provided that its fundraising functions are carried out by persons who are not paid for their services; and
(ii) if the gross contributions received by a charitable organization claiming an exemption under this subsection (1)(e) during a 12-month period ending June 30 of a year exceed $4,000, the charitable organization shall, within 30 days after the date it receives total contributions in excess of $4,000, register with and report to the secretary of state as required by [sections 1 through 19];
(f) a fire department, a volunteer fire department, a law enforcement agency, an emergency service provider, or a rescue unit established under the laws of this state if contributions are only solicited by members of the entity and the members are not paid for their fundraising services;
(g) a humane society organized under the laws of this state that contracts with counties or municipalities for the care and keeping of strays; and
(h) any other organization that the secretary of state by rule exempts from the registration requirements of [section 3] upon a finding that:
(i) registration is not necessary in the public interest or for the protection of contributors; or
(ii) the exemption would further the objective of uniformity among the states.
(2) Prior to solicitations for contributions, each institution or organization claiming an exemption under this section shall file a notice of exemption on the forms prescribed by the secretary of state. In any proceeding under this chapter, the burden of proving an exemption, or an exception from a definition, is upon the person claiming it.
NEW SECTION. Section 6. Filing of financial reports and financial information -- penalties. (1) (a) A charitable organization registered pursuant to [section 3] that receives in a fiscal year contributions in excess of $100,000, and each charitable organization whose fundraising functions are not carried on solely by persons who are not paid for their fundraising services shall file a financial report for its most recently completed fiscal year with the secretary of state. The financial report must be filed along with the registration statement or registration renewal required by [section 3].
(b) The financial report must include a balance sheet and statement of income and expenses and must clearly set forth the following:
(i) gross receipts and gross income from all sources, broken down into total receipts and income from each separate solicitation project or source;
(ii) cost of administration;
(iii) cost of solicitation;
(iv) cost of programs designed to inform or educate the public; and
(v) total net amount disbursed or dedicated for each major purpose, charitable or otherwise.
(c) The report must be signed by the president or other authorized officer and the chief fiscal officer of the charitable organization and must be accompanied by an opinion signed by an independent certified public accountant that the financial statement fairly represents the financial operations of the charitable organization in sufficient detail to permit public evaluation of its operations. The financial report must be accompanied by any forms required to be filed by a charitable organization with the United States internal revenue service.
(2) (a) Each charitable organization registered pursuant to [section 3] that receives in a fiscal year contributions not in excess of $100,000 and whose fundraising functions are carried on by persons who are not paid for their services shall file a financial report along with the registration or renewal statement required by [section 3].
(b) The financial report must cover the most recently completed fiscal year and include information as required by the secretary of state by rule or otherwise, including but not limited to the gross receipts from contributions and the use of the proceeds of the contributions.
(c) The report must be signed by the president or other authorized officer of the charitable organization who shall certify under penalties of perjury that the statements in the report are true and correct to the best of the president's or officer's knowledge. The financial report must be accompanied by any forms required to be filed by a charitable organization with the United States internal revenue service.
(3) A charitable organization receiving more than $25,000 but less than $100,000 shall, at the request of the secretary of state, submit additional financial information that may include but is not limited to an audited financial statement prepared in accordance with generally accepted accounting principles and accompanied by an opinion signed by an independent certified public accountant that the financial statement fairly represents the financial operations of the charitable organization in sufficient detail to permit public evaluation of its operations.
(4) The secretary of state may impose a civil penalty as provided in [section 13] against a charitable organization that fails to comply with the provisions of this section within the time prescribed or fails to furnish additional information as requested by the secretary of state within the required time.
NEW SECTION. Section 7. Denial, suspension, or revocation of application or exemption -- service of process. (1) The secretary of state may deny, suspend, or revoke a registration or an exemption for any of the following:
(a) the application for registration or renewal is incomplete;
(b) a document filed with the secretary of state contains a false or misleading statement or omits a material fact;
(c) the contributions have not been or are not being applied for the purpose or purposes stated in the documents filed with the secretary of state;
(d) an applicant or registrant has violated or failed to comply with a provision of [sections 1 through 19];
(e) an applicant or a registrant or an officer, a director, a partner, an agent, or an employee of the applicant, registrant, or exempt institution or organization has been convicted of a felony or of a misdemeanor that involves misrepresentation, misapplication, or misuse of the money or property of another;
(f) an applicant, registrant, or exempt institution or organization has engaged in this state in the use or employment of dishonesty, fraud, deception, misrepresentation, false promise, or false pretense; or
(g) an applicant, registrant, or exempt institution or organization has had the authority to engage in charitable or fundraising activities denied, revoked, or suspended by another state or jurisdiction.
(2) The secretary of state shall notify the applicant, registrant, or exempt institution or organization of the secretary of state's intent to deny, suspend, or revoke an application or exemption. The notification must contain the reasons for the proposed action and must inform the applicant, registrant, or exempt institution or organization of the right to request an administrative hearing and to proceed under the provisions of the Montana Administrative Procedure Act within 30 days of receipt of the notification. The denial, suspension, or revocation is effective 30 days after receipt of the notification unless a request for an administrative hearing is received by the secretary of state before the expiration of the 30 days.
(3) Any charitable organization, person, professional fundraiser, fundraising counsel, or professional solicitor that solicits contributions in this state but does not maintain an office within the state shall designate a registered agent in this state upon whom process may be served, or if a designation of a registered agent has not been made, then service of process must be upon the secretary of state.
NEW SECTION. Section 8. Registration of professional fundraisers and fundraising counsel. (1) A person may not act as a professional fundraiser or fundraising counsel for a charitable organization before the person is currently registered with the secretary of state. Applications for registrations and renewals must be in writing sworn to under penalties of perjury in the form prescribed by the secretary of state.
(2) (a) A professional fundraiser or fundraising counsel applicant, at the time of making application, shall file with the secretary of state a bond in which the applicant is the principal obligor in the sum of $10,000 with a corporate surety licensed to do business in this state. The bond must run to the secretary of state for the use of the state and to any person who may have a cause of action against the obligor of the bond for malfeasance in connection with solicitation in this state.
(b) The amount of the bond required in subsection (2)(a) may not be considered as a limit on the total liability that may be incurred by a professional fundraiser or fundraising counsel for any malfeasance committed in connection with solicitation in this state.
(3) The aggregate limit of liability of a surety providing a bond required in subsection (2) may not exceed the sum of the bond.
(4) Registration must be for a period of 1 year, or a part of a year, expiring on June 30. The registration may be renewed upon written application, under oath, in the form prescribed by the secretary of state and upon the filing of the bond for an additional 1-year period.
(5) Every professional fundraiser and fundraising counsel required to register pursuant to this section shall file an annual written report with the secretary of state containing the information and documentation as the secretary of state may require.
NEW SECTION. Section 9. Professional fundraiser and fundraising counsel contracts -- reporting requirements. (1) All contracts entered into between professional fundraisers or fundraising counsel and charitable organizations, whether or not exempt from registration, that solicit contributions in this state, must be in writing and a copy of the contract must be filed by the professional fundraiser or fundraising counsel with the secretary of state at least 10 days prior to the performance by the professional fundraiser or fundraising counsel of any service in connection with the soliciting of contributions in this state.
(2) The contract must contain the following provisions:
(a) the legal name and address of the charitable organization as registered with the secretary of state, unless that charitable organization is exempt from registration;
(b) a statement of the charitable purpose for which the solicitation campaign is being conducted;
(c) a statement of the respective obligations of the professional fundraiser or fundraising counsel and the charitable organization;
(d) a statement of the fees or rate that will be paid to the professional fundraiser or fundraising counsel;
(e) the effective date and the termination date of the contract and the date that services will commence with respect to the solicitation in this state of contributions for a charitable organization;
(f) for fundraising counsel, a statement that the fundraising counsel will not at any time have custody or control of contributions; and
(g) a statement that the charitable organization exercises control and approval over the content and volume of any solicitation.
(2) Prior to the commencement of a solicitation campaign in this state, a professional fundraiser shall file the following:
(a) the fundraising methods to be used;
(b) the projected dates on which the solicitation campaign will commence and terminate;
(c) the location and telephone number from which the solicitation campaign will be conducted, if it will be conducted by telephone;
(d) the name and residence address of each person responsible for directing and supervising the conduct of the solicitation campaign;
(e) a statement of whether the professional fundraiser will at any time have custody of contributions;
(f) the account number and location of each bank account in which receipts from the campaign are to be deposited;
(g) a description of the charitable program for which the solicitation campaign is being carried out; and
(h) the written and signed consent of each charitable organization on whose behalf the professional fundraiser will be soliciting contributions or whose name will be mentioned during the solicitation.
(3) Not later than 90 days after a solicitation campaign has been completed or on the anniversary date of the commencement of a solicitation campaign lasting more than 1 year, a professional fundraiser shall furnish an accounting to the charitable organization with which the professional fundraiser has contracted of all contributions collected and expenses paid. The accounting must be in writing and a copy must be retained by the professional fundraiser and the charitable organization for 3 years. The professional fundraiser shall also file a report of the accounting with the secretary of state on forms prescribed by the secretary of state not later than 7 days after the accounting is furnished to the charitable organization.
(4) (a) Not later than 5 days after receipt of each contribution, a professional fundraiser shall deposit the entire amount of the contribution in an account at a bank or other federally insured financial institution in the name of the charitable organization with which the professional fundraiser has contracted.
(b) Each contribution collected by the professional fundraiser must be solely in the name of that charitable organization, and the charitable organization shall have sole control of all withdrawals from the account. The professional fundraiser may not be given the authority to withdraw any deposited funds from the account.
(5) During each solicitation campaign and for not less than 3 years after its completion, a professional fundraiser shall maintain the following records that must be made available to the secretary of state upon request:
(a) a record of each contribution that at any time is in the custody of the professional fundraiser, including the name and address of each contributor and the date and amount of the contribution; and
(b) the location of each bank or financial institution in which the professional fundraiser has deposited revenue from the solicitation campaign and the account number of each account into which the deposits were made.
(6) Any material change in an information filed with the secretary of state pursuant to this section must be reported in writing by the professional fundraiser or fundraising counsel to the secretary of state not more than 7 days after the change occurs.
NEW SECTION. Section 10. Professional solicitor -- registration. A person may not act as a professional solicitor in the employ of a professional fundraiser that is required to register pursuant to [section 3] unless the person is currently registered as a professional solicitor with the secretary of state. Application for registration or renewal must be in writing sworn to under penalties of perjury in the form prescribed by the secretary of state. The registration or renewal is effective for a period of l year, or part of a year, and expires on June 30.
NEW SECTION. Section 11. Books and records. Each charitable organization, professional fundraiser, professional solicitor, or fundraising counsel, whether or not required to register pursuant to [sections 1 through 19], shall keep true and correct books and records of solicitation activities that are covered by [sections 1 through 19]. The books and records must be open to inspection at all reasonable times by the secretary of state. The records must be retained for a period of at least 3 years.
NEW SECTION. Section 12. Charitable solicitation requirements. (1) (a) Prior to orally requesting a contribution or contemporaneously with written requests for a contribution, a professional fundraiser or professional solicitor is responsible for clearly and conspicuously disclosing:
(i) the name of the professional fundraiser conducting the charitable solicitation campaign as on file with the secretary of state;
(ii) that the professional fundraiser is being paid for the solicitation services;
(iii) if the request is made by a professional solicitor, the name of the professional solicitor acting on behalf of the professional fundraiser; and
(iv) the name of the charitable organization as on file with the secretary of state and a description of how the contributions raised by the solicitation will be utilized for a charitable purpose by the charitable organization or, if a charitable organization does not exist, a description as to how the contributions raised by the solicitation will be utilized for a charitable purpose.
(b) All responses given by a professional fundraiser or a professional solicitor to an oral or written request for information must be truthful.
(c) In the case of a solicitation campaign conducted orally, whether by telephone or otherwise, a written confirmation, receipt or reminder sent to a person who has contributed or has pledged to contribute must include a clear and conspicuous disclosure of the information required under subsection (1)(a).
(2) If requested by the person being solicited, the professional fundraiser or professional solicitor shall inform that person of the fixed percentage of the gross revenue or the reasonable estimate of the percentage of the gross revenue that the charitable organization or sponsor will receive as benefit from the solicitation campaign.
(3) In addition to the information required by subsection (1), a written confirmation, receipt, or reminder of a contribution made pursuant to an oral solicitation and any written solicitation must contain and conspicuously set out the following statement:
"The registration and financial information of (insert the legal name of the charity as registered with the secretary of state) may be obtained from the Montana secretary of state's office. Registration by the secretary of state does not imply endorsement by the secretary of state."
(4) Prior to orally requesting or contemporaneously with written requests for advertising to appear in a for-profit publication that relates to, purports to relate to, or that could reasonably be construed to relate to a charitable purpose, the professional fundraiser or fundraising counsel is responsible for clearly and conspicuously disclosing that:
(a) the publication is a for-profit, commercial enterprise; and
(b) the publication is not directly affiliated with or sponsored by a charitable organization.
(5) Each container must have an easily readable printed or typed notice affixed to the container in a conspicuous place and accessible to the public, informing the public of the following:
(a) the approximate annual percentage paid, if any, to a person to maintain, service, or collect the contributions raised by the solicitation; and
(b) the net percentage or sum paid for the most recent calendar year to the specified charitable purpose.
(6) The provisions of this section do not apply to persons requesting contributions for the relief or benefit of an individual, specified by name at the time of the solicitation, if all of the contributions collected are turned over to the named beneficiary and provided that all fundraising functions are carried on by persons who are unpaid, directly or indirectly, for their services.
NEW SECTION. Section 13. Prohibited activity -- civil penalty. (1) It is a violation of [sections 1 through 19] for a person to:
(a) misrepresent the purpose or beneficiary of a solicitation;
(b) misrepresent the purpose or nature of a charitable organization;
(c) use or exploit the fact of registration so as to lead the public to believe that registration constitutes an endorsement or approval by the state;
(d) misrepresent that any other person sponsors or endorses a solicitation;
(e) use the name of a charitable organization, or to display any emblem, device, or printed matter belonging to or associated with a charitable organization without the express permission of the charitable organization;
(f) make any false or misleading statement on a document required by [sections 1 through 19];
(g) fail to comply with the registration, filing, reporting, or disclosure requirements of [sections 1 through 19];
(h) commit an unfair or deceptive act or practice;
(i) fail to provide complete and timely payment to a charitable organization of the proceeds from a solicitation campaign or a charitable sales promotion;
(j) employ a device, scheme, or artifice to defraud;
(k) make a false or misleading statement in the solicitation of contributions in this state or to omit to state a fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading;
(l) engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon a person;
(m) refuse or fail, after notice, to produce a record required to be kept under [sections 1 through 19]; or
(n) obtain money or property by means of a false pretense, representation, or promise.
(2) It is a violation of [sections 1 through 19] for a charitable organization to:
(a) engage in a financial transaction that is not related to the accomplishment of its charitable purpose or that jeopardizes or interferes with the ability of the charitable organization to accomplish its charitable purpose;
(b) expend an unreasonable amount of money for solicitation or management;
(c) use a name that is the same as or confusingly similar to the name of another charitable organization unless the latter organization consents in writing to its use;
(d) represent itself as being associated with another charitable organization without the express written acknowledgment and endorsement of the other charitable organization;
(e) use the services of an unregistered professional fundraiser or fundraising counsel or professional solicitor; or
(f) violate any registration, filing, reporting, or disclosure provisions of [sections 1 through 19].
(4) It is a violation of [sections 1 through 19] for a professional fundraiser, professional fundraising counsel, or professional solicitor to:
(a) perform services on behalf of an unregistered charitable organization; or
(b) violate a registration, filing, reporting, or disclosure provision of [sections 1 through 19].
(5) It is a violation of [sections 1 through 19] for a person, in connection with a public safety organization solicitation, to:
(a) use representation that implies that the contribution is for or on behalf of a public safety organization or use an emblem, a device, or printed matter belonging to or associated with a public safety organization, unless authorized in writing to do so by the public safety organization;
(b) use a name, symbol, or statement that is similar to that used by a public safety organization in a manner that is intended to confuse or mislead a person being solicited;
(c) represent or imply that the solicitor is a peace officer or member of a public safety organization if the solicitor is not; or
(d) represent that those who respond affirmatively to the solicitation will receive favored treatment by public safety personnel.
(6) A misrepresentation may be accomplished by words or conduct or failure to disclose a material fact. Regardless of a person's intent or the lack of injury, the acts and practices listed in subsections (1) through (5) are prohibited in the planning, conduct, or execution of any solicitation or charitable sales promotion.
(7) In addition to any other remedies available to the secretary of state for a violation of this section, the secretary of state may impose a civil penalty of up to $2,500 for each violation of a provision of this section.
NEW SECTION. Section 14. Secretary of state to restrain unlawful acts. (1) Whenever the secretary of state has reason to believe that a person is using, has used, or is about to knowingly use any method, act, or practice in violation of the provisions of [section 13] and that proceeding would be in the public interest, the secretary of state may bring an action in the name of the state against the person to restrain by temporary or permanent injunction or temporary restraining order the use of the method, act, or practice, upon giving appropriate notice to that person.
(2) The notice must state generally the relief sought and must be served in accordance with [sections 7 and 17] at least 20 days before the hearing of the action in which the relief sought is a temporary or permanent injunction. The notice for a temporary restraining order is governed by 27-19-315.
(3) The action may be brought in the district court of the district in which the person resides or encompasses the person's principal place of business or, with consent of the parties, may be brought in the district court of Lewis and Clark county.
(4) The courts are authorized to issue temporary or permanent injunctions or temporary restraining orders to restrain and prevent violations of [section 13], and the injunctions must be issued without bond.
NEW SECTION. Section 15. Assurance of compliance. In the administration of [sections 1 through 19], the secretary of state may accept an assurance of voluntary compliance with respect to any method, act, or practice considered to be violative of [section 13] from a person who has engaged or was about to engage in the method, act, or practice. The assurance must be in writing and must be filed with and subject to the approval of the district court of the county in which the alleged violator resides or that encompasses the violator's principal place of business or the district court of Lewis and Clark county. Assurance of voluntary compliance is not an admission of violation for any purpose. Matters closed as provided in this section may be reopened by the secretary of state for further proceedings in the public interest.
NEW SECTION. Section 16. Investigative demand. (1) When it appears to the secretary of state that a person has engaged in, is engaging in, or is about to engage in an act or practice declared to be unlawful by [section 13] or when the secretary of state believes it to be in the public interest that an investigation should be made to ascertain whether a person in fact has engaged in, is engaging in, or is about to engage in an act or practice declared to be unlawful by [section 13], the secretary of state may execute in writing and cause to be served upon a person believed to have information, documentary material, or physical evidence relevant to the alleged or suspected violation an investigative demand requiring the person to furnish, under oath or otherwise, a report in writing setting forth the relevant facts and circumstances of which the person has knowledge or to appear and testify or produce relevant documentary material or physical evidence for examination at a reasonable time and place as may be stated in the investigative demand.
(2) At any time before the return date specified in the investigative demand or within 20 days after the demand has been served, whichever period is shorter, a petition to extend the return date or to modify or set aside the demand, stating good cause, may be filed in the district court of the county in which the person served with the demand resides or that encompasses the person's principal place of business or in the district court of Lewis and Clark county.
NEW SECTION. Section 17. Authority of secretary of state -- service of process. (1) To accomplish the objectives and to carry out the duties prescribed by [sections 1 through 19], the secretary of state may issue subpoenas to a person, administer an oath or affirmation to a person, conduct hearings in aid of an investigation or inquiry, prescribe forms, and promulgate rules that establish the procedures for issuing subpoenas and conducting investigatory hearings.
(2) Service of a notice, demand, or subpoena under [sections 1 through 19] must be made personally within this state, if possible. If personnel service in this state is not possible, substitute service may be made in the manner provided in the Montana Rules of Civil Procedure.
NEW SECTION. Section 18. Enforcement of secretary of state orders -- contempt. If a person fails or refuses to file a statement or report or to obey a subpoena or investigative demand issued by the secretary of state, the secretary of state may, after notice, apply to the district court and request an order:
(1) granting injunctive relief to restrain the person from engaging in conduct that is involved in the alleged or suspected violation;
(2) (a) vacating, annulling, or suspending the corporate charter of a corporation created under the laws of this state;
(b) revoking or suspending the certificate of authority to do business in this state of a foreign corporation; or
(c) revoking or suspending other licenses, permits, or certificates issued pursuant to law to the person that are used to further the allegedly unlawful practice; and
(3) granting other relief as may be required until the person files the statement or report or obeys the subpoena or investigative demand. Disobedience of a final order entered under this section by a court must be punished as contempt of court.
NEW SECTION. Section 19. Penalties. (1) A person who violates the terms of an injunction or temporary restraining order issued under [section 14] shall forfeit and pay to the state a civil penalty of not more than $10,000 for each violation.
(2) In an action brought under [section 14], if the court finds that a person is willfully using or has willfully used a method, act, or practice declared unlawful in [section 13], the secretary of state may, upon petition to the court, recover on behalf of the state a civil penalty of not more than $500 for each violation.
(3) A person who purposely or knowingly engages in a fraudulent course of conduct declared unlawful by [section 13] shall upon conviction be fined not more than $2,000, imprisoned for not more than 1 year, or both, in the discretion of the court. Nothing in this subsection limits any other provision of [sections 1 through 19].
(4) For purposes of this section, a willful violation occurs when the party committing the violation knew or should have known that the conduct was a violation of [section 13].
NEW SECTION. Section 20. Codification instruction. [Sections 1 through 19] are intended to be codified as an integral part of Title 30, chapter 14, and the provisions of Title 30, chapter 14, apply to [sections 1 through 19].
- END -
Latest Version of HB 280 (HB0280.01)
Processed for the Web on January 14, 1999 (5:33PM)
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Status of this Bill
| 1999 Session | Leg. Branch HomePrepared by Montana Legislative Services
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