Charitable Promotions, Commercial Co-Ventures, Donors Choose, Round-Up, and Peer-To-Peer Solicitations

It’s not often that you get BIG news in Charitable Promotions Law. But last year, California passed a comprehensive law that goes into effect on January 1, 2023.

So, for all of you brands out there who are planning your 2023 charitable promotions, here’s a primer on the new law (for now, based on the most recent proposed regulations). (Also, apologies for the length, but this really is a condensed version – the statute and regulations are a bear to get through – grrh.)

Who’s Affected by the New CA Law

• Any Company that conducts online charitable promotions. This includes:

• Round up or other donations made by consumer on Company’s website;

• Donors choose programs on Company’s website;

• Peer-to-peer donation programs on Company’s website;

• CCVs conducted at least in part online – IF Company donates to 7 or more different Charities during a calendar year.

What to Do to Comply

Registration/Reporting:

1. Register with California Attorney General before soliciting.
   1. $625 Fee
   2. Completion of Form PL-1 (no bond)
2. File annual report on or before July 15 for activities for preceding calendar year. (Form PL-4)
3. Renew registration each year by January 15. (Form PL-2)

Good Standing Charities Only:

1. Perform a manual search of the Registry of Charitable Trusts database on the Calif. Attorney General’s website. (https://rct.doj.ca.gov/Verification/Web/Search.aspx?facility=Y)
2. Company cannot work with a Charity that is on the May Not Operate or Solicit for Charitable Purposes List.

NOTE: Charity has a 5 business day grace period to properly get off this list.

NOTE: If Charity is or becomes ineligible to receive donations, Company must notify donors or purchasers (email ok) within 15 days and request them to recommend an alternate charity. Company must send donations to alternate recommended charity within 30 days.

Charity Consent:

Donations from Consumer OR Donors Choose OR Peer-to-Peer

1. A written agreement with the Charity to use its name in solicitation that includes:
   1. Signed by one authorized officer, director, trustee or other duly authorized representative of Charity.
   2. Specify time period for sending donations.
   3. Providing that Company will hold donations in a separate account.
   4. Providing that Company will promptly ensure donations are sent to Charity with an accounting.
   5. Any fees deducted from or added to a donation.
      1. NOTE: “Fees” consist of any amount from the original donation that is not passed onto the Charity, including distribution, platform, service, technology, or transaction fees, and digital payment processing fees.
   6. Permit Charity to approve information about Charity in solicitation and that if not approved, it shall be removed (except if peer-to-peer).
   7. Permit Charity to acknowledge persons who made donations and specify any other terms regarding the sharing or use of information provided by such persons.
   8. If more than one Company is involved, all Companies must be identified in the agreement and Charity shall be able to select which Companies it gives consent to.
2. Agreement is available for inspection by California Attorney General.
3. Agreement may be entered into electronically.

NOTE: Consent/written agreement NOT required if:

1. Company only references Charity’s name, address, phone, website, or registration number.
2. Company conspicuously discloses that Charity has NOT provided consent and has NOT reviewed or approved the content.
3. Company removes Charity upon written request from Charity within 3 business days of verification.

Commercial Co-Ventures

1. Must have consent from Charity, including an agreement with all of the above provisions.
2. Can avoid registration as a commercial co-venturer (except if new law applies when 7 or more Charites per year are donated to pursuant to online CCVs), if agreement includes:
   1. Signature of 2 officer of Charity;
   2. Donations to be made quarterly with an accounting.

Disclosures

Donations from Consumers OR Donors Choose OR Peer-to-Peer

1. If Company allows donors to designate or restrict how donations may be used by the Charity:
   1. Before a person can complete a donation, Company must conspicuously disclose that donations may be used by Charity on an unrestricted basis, regardless of designations or restrictions made by donors.
   2. “Conspicuously disclose” means
      1. Located adjacent to the main content;
      2. Same or larger type than the main content, with optional use of bold, italics, capitalization or more noticeable font or color.
      3. If hyperlink permitted, hyperlink must be adjacent to main content.
2. Tax Donation Receipts: Company must provide donors with tax donation receipt within 5 business days of donation.
3. Company must notify donors in writing (email ok) when their donations were sent to Charity within 15 days after donation was sent, unless donors affirmatively request not to be notified.

Commercial Co-Ventures

1. New law does not really affect typically CCV disclosures which should include (in 10 pt. type):
   1. Name and address of Charity
   2. Per unit donation (% or $)
   3. Any minimum or maximum donation.
   4. Dates of promotion.

Sending Donations to Charity

Donations from Consumer OR Donors Choose OR Peer-to-Peer

1. Time Period for Donation:
   1. Donations directly made to consenting Charities:
      1. If 100 or more Charities, donations must be sent within 30 days after made.
      2. If fewer than 100 Charities, donations must be sent within 15 days after made.
   2. Donations directly made to non-consenting Charities:
      1. If fewer than 100 Charities, donations must be sent within 30 days after made.
      2. If 100 or more Charities, donations must be made within 45 days after made.
   3. Donations made directly to Company:
      1. For 100 or more non-consenting Charities, donations must be made within 60 days.
      2. For fewer than 100 non-consenting Charities, donations must be made within 45 days.
      3. For 100 or more consenting Charities, donations must be made within 45 days after made.
      4. For fewer than 100 consenting Charities, donations must be made within 30 days after made.
2. Additional Information Provided to Charity:
   1. Legal name of Company.
   2. Date each donation was made and sent.
   3. Amount of each donation, any fees imposed and by whom, and amount after deduction of fees.
      1. NOTE: “Fees” consist of any amount from the original donation that is not passed onto the Charity, including distribution, platform, service, technology, or transaction fees, and digital payment processing fees.
   4. Name and contact information (email/phone) of each donor who has provided prior written consent for disclosure.
   5. For peer-to-peer, also include: name and contact (email/phone) of persons engaging in peer-to-peer if consent provided and information on how donation may be used, if applicabl

Commercial Co-Ventures

1. Donations to be made within 15 days after the end of each 90 day period of promotion.
2. Donation to include:
   1. Information about acts of solicitation that caused donation to be made.
   2. Amount of each donation, with an accounting, including any fees imposed and by whom.

Feel free to reach out to me if you have any questions. (202) 222-3110 or rlaplaca@verrill-law.com

The information contained in this report is for general reference purposes only and is not to be considered legal advice or opinion. © 2022 Verrill Dana LLP