Changes to the Colorado Charitable Solicitations Act

On November 9, 2012, Colorado Secretary of State Scott Gessler approved changes to the regulations created by his office designed to implement and carry out the Colorado Charitable Solicitations Act.  The rules are available here.

The Act was passed several years ago by the Colorado Legislature, and was intended to promote transparency and good stewardship of nonprofit resources, as well as to provide proper regulation of fundraisers. The law requires Colorado nonprofits to file annual reports and for all persons who raise funds within the State of Colorado to register prior to conducting any fundraising.  The information provided in the annual reports is designed to assist consumers in evaluating nonprofits and requests made during fundraising.

Many of the changes to the regulations are minor and clarifying, but some are substantial:

  • First, the regulations establish a bright line set of excuses (“bona fide personal emergency”) for nonprofits who fail to timely file their annual report.
  • Second, all reports now must be filed electronically.
  • Third, expedited hearing rules were established for nonprofits denied or who lose registration status.
  • Fourth, consumers will now be able to quickly see whether a nonprofit or fundraiser is in good standing.
  • Fifth, if the Secretary of State finds inconsistencies in an application, he now may require a nonprofit to produce an IRS Form 990 to complete evaluation of a registration.
  • Sixth, most nonprofits must now file their annual registration statement by May 15 of each year.  Seventh, a late fee may now be imposed for late registrations.

Changes were also made to fundraiser registration.  To start, registrations for professional fundraisers are now for one year, and the renewal registration must be sought 60 days before the annual date. Also, a paid solicitor must file a completed solicitation notice no later than 15 days before a solicitation campaign starts.  Further, a report for the campaign must be filed within 90 days after the campaign end date listed on the notice.  The new rule increases fines for fundraising conducted without registration, for both charitable organizations and professional fundraisers. Finally, non-compliant organizations and fundraisers must have completed information filings with the Secretary of State before they can withdraw registrations.

Another important new rule deals with internet solicitation.  Colorado based charities which permit online contributions, and non-Colorado based charities that target Coloradans or which regularly receive contributions from Colorado, must also register under the Act.

Other changes require “subcontractor” fundraisers to file all reports that their principals would otherwise be required to file.  Further, such subcontractors who make telephone solicitations are required to identify themselves and the paid solicitor they represent.

The Charitable Solicitations Act has the laudable goal of protecting both Colorado charities and consumers.  Time will tell whether the new changes accomplish those goals.

Michael W. Reagor