A N     A C T

RELATING TO BUSINESSES AND PROFESSIONS

Introduced By: Senator Leo R. Blais

Date Introduced : February 9, 1999

It is enacted by the General Assembly as follows:

SECTION 1. Sections 5-53-1, 5-53-2, 5-53-2.1, 5-53-3, 5-53-3.1, 5-53-3.2, 5-53-3.3, 5-53-4, 5-53-5, 5-53-6, 5-53-7, 5-53-8, 5-53-9, 5-53-10, 5-53-11, 5-53-12, 5-53-13 and 5-53-14 of the General Laws in Chapter 5-53 entitled "Solicitation by Charitable Organizations" are hereby repealed.

{DEL 5-53-1. Definitions. -- DEL} {DELThe following definitions within this chapter shall apply: DEL}

{DEL (1) "Charitable organization". - means (i) any benevolent, educational, philanthropic, humane, patriotic, social service, civic, fraternal, police, labor, religious, eleemosynary person and/or person or persons holding themselves out to be a charitable organization or one which has received a tax exemption as a charitable organization from the United States government or any state or municipality; (ii) any person who solicits or obtains contributions solicited from the public for charitable purposes after January 1, 1977; (iii) any chapter, branch area office or similar affiliate or any person soliciting contributions within the state for a charitable organization which has its principal place of business outside of Rhode Island or any chapter, branch area office or similar affiliate of a charitable organization which solicits funds independently of that organization shall be subject to all the provisions of this part; these definitions shall not be deemed to include duly constituted religious organizations, societies and institutions or any group affiliated with and forming an integral part of that organization, provided that no part of the net income of which inures to the direct benefit of any individual and which have received a declaration of current tax exempt status from the United States government. No such affiliated group shall be required to obtain a declaration of current tax exempt status if the parent or principal organization shall have obtained one. DEL}

{DEL (2) "Charitable purpose". - means any benevolent, educational, humane, patriotic, social service, civic, fraternal, police, labor, religious, eleemosynary purpose provided that no part of the net earnings inures to the benefit of any private shareholder or individual, no substantial part of the activities is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office. DEL}

{DEL (3) "Contributions". - means the promise or grant of any money, property or anything of value obtained through solicitation except payments by members of any organization for fees, dues, fines, assessments, or for services rendered to individual members. DEL}

{DEL (4) "Department". - means the department of business regulations unless otherwise described. DEL}

{DEL (5) "Director". - means the term director shall mean the director of the department of business regulation. DEL}

{DEL (6) "Federated fund raising organizations". - means a federation of independent charitable organizations which have voluntarily joined together, for purposes of raising and distributing money for and among themselves and where membership does not confer operating authority and control of the individual agencies upon the federated group organization. DEL}

{DEL (7) "Parent organization". - means that part of a charitable organization which coordinates, supervises, or exercises control over policy, fund-raising, expenditures, and assists or advises one or more chapters, branches or affiliates in this state. DEL}

{DEL (8) "Person". - means any individual organization, trust, foundation, group, association, individual, partnership, corporation (foreign or domestic), association, society, or any combination of them. DEL}

{DEL (9) "Professional fund-raising counsel". - means (1) any person who, whether within or without the state for compensation or other consideration plans, conducts, manages, carries on, advises, or performs any services whether directly or indirectly in connection with soliciting contributions in Rhode Island for or on behalf of any charitable organization whether such solicitation is done individually or through agents, servants or employees of that person or through agents, servants or employees specially recruited for a charitable solicitation on the payroll of a charitable organization who are engaged in the solicitation of contributions under the direction of that person. DEL}

{DEL (2) A bona fide salaried officer or regular, non-temporary employee of a charitable organization shall not be deemed to be a professional fund-raising counsel. No attorney, investment counselor, or banker who advises an individual, corporation, or association to make a charitable contribution shall be deemed, as a result of that advice, to be a professional fund-raising counsel. DEL}

{DEL (10) "Professional solicitor". - means any person who, for compensation or other consideration, solicits contributions for, or on behalf of a charitable organization, whether such solicitation is performed personally or through their agents, servants, or employees or through agents, servants, or employees specially employed by, or for, a charitable organization, who are engaged in the solicitation of contributions under the direction of that person, or a person who plans, conducts, manages, carries on, advises, or acts as a consultant, whether directly or indirectly, to a charitable organization in connection with the solicitation of contributions but does not qualify as a "professional fund-raising counsel" within the meaning of this chapter. A bona fide full time salaried officer or employee of a charitable organization maintaining a permanent establishment within the state shall not be deemed to be a professional solicitor. No attorney, investment counselor, or banker who advises an individual or association to make a charitable contribution shall be deemed, as a result of such advice, to be a professional solicitor. DEL}

{DEL (11) "Solicit" and "solicitation". - means (i) to appeal, request, directly or indirectly for money, credit, property, financial assistance, or other thing of value by means of mail, personal contact, written material, radio, television, news media, magazines, or other periodicals or any means of communication on the plea or representation that such money, credit, property, financial assistance, or other thing of value will be used for a charitable purpose as those purposes are defined in this section. DEL}

{DEL (ii) "Solicitation". - shall be deemed to have taken place when the request sought is made, whether or not the person making the request receives any contribution referred to in this section. DEL}

{DEL 5-53-2. Registration of charitable organizations. -- DEL} {DEL (a) No charitable organization, except those granted exemption in section 5-53-1, which intends to solicit contributions from persons within the state or have funds solicited on its behalf by a professional fund-raising counsel, professional solicitor or other charitable organizations shall solicit contributions unless it shall, prior to any solicitation, file a registration statement with the department upon prescribed forms. In addition, in order to obtain a renewal of registration, the charitable organizations shall file the statements required by this chapter within ninety (90) days subsequent to the end of its fiscal year. It shall be the duty of the president, chairperson or principal officer of the charitable organization to file the statements required under this chapter. The statements shall be sworn to and shall contain the following information: DEL}

{DEL (1) The name of the organization and the purpose for which it was organized. DEL}

{DEL (2) The principal address of the organization and the address of any offices in this state. If the organization does not maintain an office, the name and address of the person having custody of its financial records. DEL}

{DEL (3) The names and addresses of any chapters, branches, or affiliates in this state. DEL}

{DEL (4) The place where and the date when the organization was legally established, the form of its organization, and a reference to any determination of its tax exempt status under the internal revenue code. DEL}

{DEL (5) The names and addresses of the officers, directors, trustees, and the principal salaried executive staff officer. DEL}

{DEL (6) (i) A copy of the annual financial statement of the organization audited by an independent certified public accountant for the organization's immediately preceding fiscal year, or a copy of a financial statement audited by an independent certified public accountant covering, in a consolidated report, complete information as to all the preceding year's fund-raising activities of the charitable organization, showing kind and amount of funds raised, costs and expenses incidental thereto, and allocation or disbursements of funds raised, and if the organization employs a professional solicitor, the report shall indicate how and from whom each contribution obtained by that professional solicitor was received and how the contribution was used. DEL}

{DEL (ii) Organizations having annual gross budgets of one hundred thousand dollars ($100,000) or less shall be considered to have met the financial requirements of this section by providing the following financial statements for the immediately preceding fiscal year prepared by an independent public accountant or certified public accountant: DEL}

{DEL (A) Statement of revenues, expenses, and changes in fund balances. DEL}

{DEL (B) Balance sheet. DEL}

{DEL (iii) At the discretion of the director, audited annual financial statements of organizations with budgets of one hundred thousand dollars ($100,000) or less may be required. DEL}

{DEL (7) A description of the method or methods of solicitations including whether the organization intends to solicit contributions from the public directly or have such done on its behalf by others. DEL}

{DEL (8) Information as to whether the organization is authorized by any other governmental authority to solicit contributions and whether it is or has ever been enjoined by any court from soliciting contributions. DEL}

{DEL (9) The general purpose or purposes for which the contributions to be solicited shall be used. DEL}

{DEL (10) The name or names under which it intends to solicit contributions. DEL}

{DEL (11) The names of the individuals or officers of the organization who will have final responsibility for the custody of the contributions. DEL}

{DEL (12) The names of the individuals or officers of the organization responsible for the final distribution of the contributions. The director of business regulation or his or her designee shall examine each initial application of charitable organizations for the right to solicit funds and each renewal application of charitable organizations for the right to solicit funds and if found to be in conformity with the requirements of this chapter and all relevant rules and regulations it shall be approved for registration. DEL}

{DEL (13) A listing of the names, addresses, and the compensation of all individuals, directors, officers, agents, servants, and/or employees of the organization who receive an annual compensation, commission or other remuneration in excess of twelve thousand five hundred dollars ($12,500). Each chapter, branch, affiliate, or member agency of a federated fund-raising agency may report the information required by this subdivision to its parent organization and that parent organization shall furnish such information as to its Rhode Island chapters, branches, affiliates, or member agencies in consolidated form to the department, or each chapter, branch, affiliate, or member agency of a federated fund-raising agency may report the information required by this subdivision separately to the department. DEL}

{DEL (b) The registration forms and any other documents prescribed by the department shall be signed by an authorized officer, an independent public accountant, and by the chief fiscal officer of the charitable organization and shall be verified under oath. DEL}

{DEL (c) Every charitable organization which submits a proper registration to the department shall pay an annual registration fee of seventy-five dollars ($75.00). DEL}

{DEL (d) Both the branch, chapter, area office, or similar affiliate soliciting in the state as well as the parent of a charitable organization which has its principal place of business outside of the state shall be subject to the provisions hereof. DEL}

{DEL (e) The department of business regulation shall make or cause to be made such investigation of any applicant as it shall deem necessary. As a result of its investigation and action, the department shall certify to the secretary of state its approval or disapproval of the application. No applicant shall be approved if one or more of the following facts is found to exist: DEL}

{DEL (1) That one or more of the statements in the application are not true. DEL}

{DEL (2) That the applicant is or has engaged in a fraudulent transaction or enterprise. DEL}

{DEL (3) That a solicitation would be a fraud upon the public. DEL}

{DEL (4) That solicitation and fund-raising expenses (including not only payments to professional solicitors, but also payments to professional fund-raisers, and internal fund-raising and solicitation salaries and expenses) during any of the three (3) years immediately preceding the date of application have exceeded fifty percent (50%) of the total moneys, pledges, or other property raised or received by reason of any solicitation and/or fund raising activities or campaigns. As used in this subdivision, the term "internal fund-raising and expenses" shall include but not be limited to, such portions of the charitable organization's salary and overhead expenses as were fairly allocable (on a time or other appropriate basis) to its solicitation and/or fund-raising expense. In the event special facts or circumstances are presented showing that expenses higher than fifty percent (50%) were not unreasonable, the department has the discretion to allow those higher expenses. DEL}

{DEL (5) That the expected cost of solicitation and fund-raising expenses for the specific year in which the application is submitted (including not only payments to professional solicitors, but also payments to professional fund-raising and internal fund-raising and solicitation salaries and expenses) will exceed fifty percent (50%) of the total money, pledges, or other property to be raised or received by reason of any solicitation and/or fund-raising activities or campaigns. As used in this subdivision, the term "internal fund-raising and expenses" shall include, but not be limited to, such portions of the charitable organization's salary and overhead expenses as will be fairly allocable (on a time or other appropriate basis) to its solicitation and/or fund-raising expenses. In the event special facts or circumstances are presented showing that expenses higher than fifty percent (50%) will not be unreasonable, the commission has the discretion to allow a higher expense. DEL}

{DEL (6) That such activities to be financed will be incompatible with the health, safety, or welfare of the citizens of the state. DEL}

{DEL 5-53-2.1. Veterans' organizations. -- DEL} {DEL (a) No person shall solicit charitable contributions on behalf of any veterans' organization unless the veterans' organization is chartered under chapter 6 of title 7. All veterans' organizations chartered under chapter 6 of title 7 shall comply with the applicable sections of this chapter. DEL}

{DEL (b) Any person who solicits charitable contributions on behalf of any veterans' organization which is not chartered under chapter 6 of title 7 shall be guilty of a misdemeanor and subject to a fine not to exceed one thousand dollars ($1,000). DEL}

{DEL 5-53-3. Exemptions from registration requirements. -- DEL} {DEL (a) The following persons and charitable organizations shall not be required to file an annual registration statement with the department: DEL}

{DEL (1) Educational institutions including parent-teacher associations, the curriculums of which in whole or in part are registered or approved by the board of governors for higher education either directly or by acceptance of accreditation by an accrediting body recognized by the board of governors for higher education. DEL}

{DEL (2) Churches of recognized denominations and religious organizations, societies and institutions operated, supervised, or controlled by a religious organization or society which solicit from other than their own membership. Institutions indirectly affiliated with but which are not operated, supervised, or controlled by any religious organizations or religious society which own, maintain, and operate homes for the aged, orphanages, and homes for unwed mothers. DEL}

{DEL (3) Persons requesting contributions for the relief of any individual specified by name at the time of the solicitation when all of the contributions collected without any deductions whatsoever, are turned over to the named beneficiary for his or her use. DEL}

{DEL (4) (i) Charitable organizations which do not intend to solicit and receive and do not actually raise or receive contributions from the public in excess of three thousand dollars ($3,000) during a calendar year or do not receive contributions from more than ten (10) persons during a calendar year, if all of their functions including fund raising activities, are carried on by persons who are unpaid for their services and if no part of their assets or income inures to the benefit of or is paid to any officer or member. DEL}

{DEL (ii) Provided however, if the contributions raised from the public, whether all of such is or is not received by any charitable organization during any calendar year, shall be in excess of three thousand dollars ($3,000), it shall within thirty (30) days after the date it shall have received total contributions in excess of three thousand dollars ($3,000), register with a report to the department as required by this chapter. DEL}

{DEL (5) Hospitals which are non-profit and charitable. DEL}

{DEL (6) Organizations which solicit only from their own membership. The term membership shall not include those persons who are granted a membership upon making a contribution as the result of a solicitation. DEL}

{DEL (7) Public libraries. DEL}

{DEL (8) Persons soliciting contributions solely from corporations or charitable foundations. DEL}

{DEL (9) Foundations or associations exclusively for the benefit of religious organizations, educational institutions, non-profit or charitable hospitals and public libraries. DEL}

{DEL (10) Veteran's organizations and their auxiliaries. DEL}

{DEL (11) Grange organizations and their auxiliaries. DEL}

{DEL (12) Historical societies duly organized under the laws of this state. DEL}

{DEL (13) Free non-profit public art museums. DEL}

{DEL (b) Any charitable organization claiming to be exempt from the registration provisions of this chapter and which is about to or does solicit charitable contributions shall submit, annually to the department on forms to be prescribed by the department, the name, addresses and purpose of the organization and a statement setting forth the reason for the claim of exemption. If exempt, the department shall issue, annually, a letter of exemption which may be exhibited to the public. No registration fee shall be required of any exempt organization. DEL}

{DEL 5-53-3.1. Records of contributions. -- DEL} {DEL Every charitable organization required to file a registration statement under section 5-53-2, except those granted exemption in section 5-53-3, shall maintain a record of each contribution in excess of fifty dollars ($50.00), including, but not limited to, the name and address of the contributor, the amount of the contribution, and the date the contribution was received. The record shall be maintained in good order. Upon demand, the record shall be made available to the department for inspection. Provided, however, that in the event that a charitable organization receives periodic contributions from an employer which has automatically withheld contributions from the compensation of its employees, the charitable organization shall be required to maintain a record of the name and address of the employer and the total amount received. DEL}

{DEL 5-53-3.2. Identification cards. -- DEL} {DEL (a) Upon payment of the registration fee under section 5-53-2(c), every charitable organization which submits a proper registration which has been approved by the department shall issue an identification card to each professional solicitor. Each identification card shall include the name and address of the charitable organization, the purpose for which the contribution is solicited, the tax exempt status of the charitable organization, and the percentage of the contribution which may be deducted for income tax purposes. DEL}

{DEL (b) The identification card shall be presented for each solicitation by a professional solicitor which is made in person. In the event that telephone solicitation is used by the charitable organization, the professional solicitor shall prepare and execute an affidavit stating that the information contained on the identification card has been given to the potential contributor. DEL}

{DEL 5-53-3.3. Receipt to donor. -- DEL} {DEL Every professional solicitor shall provide each donor or contributor with a receipt for his or her contribution. The receipt shall include the following information: DEL}

{DEL (1) The purpose for which the contribution is to be used; and DEL}

{DEL (2) The percentage of the fund contributed by the donor or contributor to be used for the charitable purpose. DEL}

{DEL 5-53-4. Limitations on payments for solicitation or fund-raising activities. -- DEL} {DEL (a) (1) No charitable organization shall pay or agree to pay to a professional solicitor or his or her agents, servants, or employees in the aggregate a total amount in excess of twenty-five percent (25%) (including reimbursement for expenses incurred and direct payment or expenses incurred) of the total moneys, pledges, or other property raised or received by reason of any solicitation activities or campaigns. DEL}

{DEL (2) No charitable organization shall incur solicitation and fund-raising expenses (including not only payments to professional solicitors, but also payments to professional fund-raisers, and internal fund-raising and solicitation salaries and expenses) in excess of fifty percent (50%) of total moneys, pledges, or other property raised or received by reason of any solicitation, gift, and/or fund-raising activities or campaigns. As used in this subsection, the term "internal fund-raising and expenses" shall include, but not be limited to, such portions of the charitable organization's salary and overhead expenses as are fairly allocable (on a time or other appropriate basis) to its solicitation and/or fund-raising expense. In the event special facts or circumstances are presented showing expenses higher than fifty percent (50%), the department has the discretion to allow such higher funds and may impose such conditions as the commission or the attorney general of Rhode Island shall deem necessary for such exemption. DEL}

{DEL (b) For purposes of this section, the total moneys, funds, pledges, or other property raised or received shall not include the actual cost to the charitable organization or professional solicitor of goods sold or service provided to the public in connection with the soliciting of contributions. DEL}

{DEL (c) Every contract or written agreement between professional fund-raising counsel and a charitable organization shall be filed with the department within ten (10) days after such contract or written agreement is concluded. DEL}

{DEL (d) Every contract or a written statement of the nature of the arrangement to prevail in the absence of a contract between a professional solicitor and a charitable organization shall be filed with the department within ten (10) days after that contract or written agreement is concluded. If the contract or arrangement with a professional solicitor does not provide for compensation on a percentage basis, the department shall examine the contract to ascertain whether the compensation to be paid in those circumstances is likely to exceed twenty-five percent (25%) of the total moneys, pledges, or other property raised or received as a result of the contract or arrangement; if the reasonable probabilities are that the compensation will exceed twenty-five percent (25%) of the total moneys, pledges, or other property, the department shall disapprove the contract or arrangement within ten (10) days after its filing. No registered charitable organization or professional solicitor shall carry out or execute a disapproved contract, or receive or perform services, or receive or make payments pursuant to a disapproved contract. Any party to a disapproved contract shall, upon written request made within thirty (30) days of disapproval, be given a hearing before the director of business regulation within thirty (30) days after that request is filed. DEL}

{DEL 5-53-5. Limitation of solicitation activities of charitable organizations. -- DEL} {DEL No charitable organizations subject to this chapter shall solicit funds from the public except for charitable purposes or expend funds raised for charitable purposes for non-charitable purposes. DEL}

{DEL 5-53-6. Registration of professional fund-raising counsel and professional solicitors -- Bonds -- Records -- Books. -- DEL} {DEL (a) No person shall act as a professional fund-raising counsel or professional solicitor for a charitable organization subject to the provisions of this chapter, unless he or she has first registered with the department. Applications for that registration shall be in writing under oath or affirmation in the form prescribed by the department and contain that information as the department may require. The application for registration by a professional fund-raising counsel or a professional solicitor shall be accompanied by an annual fee in the sum of two hundred dollars ($200). A partnership or corporation, which is a professional fund-raising counsel or professional solicitor, may register for and pay a single fee on behalf of all its members, officers, agents, and employees. However, the names and addresses of all officers, agents, and employees of professional fund-raising counsel and all professional solicitors, their officers, agents, servants, or employees employed to work under the direction of a professional solicitor must be listed in the application. DEL}

{DEL (b) The applicant shall, at the time of making application, file with and have approved by the department a bond in which the applicant shall be the principal obligor in the sum of ten thousand dollars ($10,000) with one or more sureties satisfactory to the department whose liability in the aggregate as those sureties will at least equal the said sum and maintain the bond in effect so long as a registration is in effect. The bond shall run to the state for the use of the department and any person who may have a cause of action against the obligor of those bonds for any losses resulting from malfeasance, nonfeasance, or misfeasance in the conduct of solicitation activities. A partnership or corporation which is a professional fund-raising counsel or professional solicitor may file a consolidated bond on behalf of all its members, officers and employees. DEL}

{DEL (c) Each registration shall be valid throughout the state for a period of one year and may be renewed for additional one year periods upon written application under oath in the form prescribed by the attorney general and the payment of the fee prescribed herein. DEL}

{DEL (d) The director of the department of business regulation or his or her designate shall examine each application, and if he or she finds it to be in conformity with the requirements of this chapter and all relevant rules and regulations and the registrant has complied with the requirements of this chapter and all relevant rules and regulations, he or she shall approve the registration. Any applicant who is denied approved registration may, within fifteen (15) days from the date of notification of that denial, request, in writing, a hearing before the department which hearing shall be held within fifteen (15) days from the date of the request. DEL}

{DEL 5-53-7. Information filed to become public records. -- DEL} {DEL Registration statements and applications, reports, professional fund-raising counsel contracts or professional solicitor contracts, and all other documents and information required to be filed under this chapter or by the department shall become public records in the office of the department, and shall be open to the general public for inspection at such time and under such conditions as the department may prescribe. DEL}

{DEL 5-53-8. Records to be kept by charitable organizations. -- DEL} {DELEvery charitable organization subject to the provisions of this chapter shall, in accordance with the rules and regulations prescribed by the department, keep true fiscal records as to its activities in Rhode Island as may be covered by this chapter in such form as will enable it accurately to provide the information required by this chapter. Upon demand, those records shall be made available to the department for inspection. Those records shall be retained for a period of at least three (3) years after the end of the period of registration to which they relate. DEL}

{DEL 5-53-9. Reciprocal agreements. -- DEL} {DEL The department may enter into reciprocal agreements with the appropriate authority of any other state for the purpose of exchanging information with respect to charitable organizations, professional fund-raising counsel and professional solicitors. Pursuant to those agreements, the department may accept information filed by a charitable organization, professional fund-raising counsel or professional solicitor with the appropriate authority of another state in lieu of the information required to be filed in accordance with the provisions of this chapter, if that information is substantially similar to the information required under this chapter. The department shall also grant exemption from the requirement for the filing of annual registration statement with the department to charitable organizations organized under the laws of another state having their principal place of business outside the state whose funds are derived principally from sources outside the state and which have been granted exemption from the filing of registration statements by the state under whose laws they are organized if that state has a statute similar in substance to the provisions of this chapter. DEL}

{DEL 5-53-10. Prohibited acts. -- DEL} {DEL (a) No charitable organization, professional fund-raising counsel or professional solicitor, subject to the provisions of this chapter, shall use or exploit the fact of registration so as to lead the public to believe that such registration in any manner constitutes an endorsement or approval by the state. Provided, however, that the use of the following statement shall not be deemed a prohibited exploitation "Registered with the Rhode Island department of business regulations as required by law. Registration does not imply endorsement of a public solicitation for contributions." DEL}

{DEL (b) No person shall, in connection with the solicitation of contributions for or the sale of goods or services of a person other than a charitable organization, misrepresent to or mislead anyone by any manner, means, practice or device whatsoever, to believe that the person on whose behalf that solicitation or sale is being conducted is a charitable organization or that the proceeds of that solicitation or sale will be used for charitable purposes, if such is not the fact. DEL}

{DEL (c) No person shall in connection with the solicitation of contributions or the sale of goods or services for charitable purposes represent to or lead anyone by any manner, means, practice, or device whatsoever, to believe that any other person sponsors or endorses that solicitation of contributions, sales of goods or services for charitable purposes or approves of those charitable purposes or a charitable organization connected therewith when such other person has not given consent to the use of his or her name for these purposes; any member of the board of directors or trustees of a charitable organization or any other person who has agreed either to serve or to participate in any voluntary capacity in the campaign shall be deemed thereby to have given his or her consent to the use of his or her name in that campaign. DEL}

{DEL (d) No person shall make any representation that he or she is soliciting contributions for or on behalf of a charitable organization or shall use or display any emblem, device, or printed matter belonging to or associated with a charitable organization for the purpose of soliciting or inducing contributions from the public without first being authorized to do so by the charitable organization. DEL}

{DEL (e) No professional solicitor shall solicit in the name of or on behalf of any charitable organization unless that solicitor has: DEL}

{DEL (1) Written authorization of two (2) officers of that organization, a copy of which shall be filed with the department. That written authorization shall bear the signature of the solicitor and shall expressly state on its face the period for which it is valid, which shall not exceed one year from the date issued. DEL}

{DEL (2) That authorization shall be carried with him or her when making solicitations and that authorization shall be upon request exhibited to persons solicited of, police officers, or agents of the department. DEL}

{DEL 5-53-11. Nonresident charitable organizations, professional fund-raising counsel and solicitors -- Designation of director of department of business regulation as agent for service of process -- Notice of service upon director of department of business regulation. -- DEL} {DEL Any charitable organization or professional fund-raising counsel or professional solicitor having its or his or her principal place of business without the state or organized under and by virtue of the laws of a foreign state, which or who shall solicit contributions from people in this state, shall be subject to the provisions of this chapter and shall be deemed to have irrevocably appointed the director of the department of business regulation as its or his or her agent upon whom may be served any summons, subpoena, subpoena duces tecum, or other process directed to that charitable organization, professional fund-raising counsel or professional solicitor or any partner, principal officer, or director thereof in any action or proceeding brought under the provisions of this chapter. Service of that process upon the attorney general shall be made by personally delivering to and leaving with him or her a copy thereof at the office of the attorney general, and that service shall be sufficient service provided that notice of that service and a copy of that process are forthwith sent by the attorney general to that charitable organization or professional fund-raising counsel or professional solicitor by registered or certified mail with return receipt requested at its or his or her office, as set forth in the registration form required to be filed in the department pursuant to this chapter or in default of the filing of that form, at the last address known to the attorney general. DEL}

{DEL 5-53-12. Enforcement and penalties. -- DEL} {DEL (a) If any charitable organization, professional fund-raising counsel or professional solicitor fails to file any registration application or statement, report or other information required to be filed by the department under this chapter, or otherwise violates the provisions of this chapter, the department shall notify the delinquent charitable organization, professional fund-raising counsel or professional solicitor by mailing a notice by registered or certified mail, with return receipt requested, to its or his or her last known address. If the required registration application or statement, annual report, or other information is not filed or if the existing violation is not discontinued within two (2) weeks after the formal notification or receipt of that notice the department may cancel, suspend the registration of, or refuse to accept delinquent charitable organization, professional fund-raising counsel, or professional solicitor. DEL}

{DEL (b) The department, upon its own motion or upon complaint of any person, may, if it has reasonable ground to suspect a violation, investigate any charitable organization, professional fund-raising counsel or professional solicitor to determine whether that charitable organization, professional fund-raising counsel or professional solicitor has violated the provisions of this chapter or has filed any application or other information required under this chapter which contains false or misleading statements. If the department finds that any application or other information contains false or misleading statements, or that a registrant under this chapter has violated the provisions thereof, the registration may be suspended or canceled. Any person whose registration is suspended or canceled may, within fifteen (15) days from the date of written notification of that suspension or cancellation request, in writing, a hearing before the department, which hearing shall be held within thirty (30) days from the date of the request. Any person who has exhausted all administrative remedies available to him or her within the department in accordance with the Administrative Procedures Act (chapter 35 of title 42) and who is aggrieved by a final decision of the department is entitled to judicial review in accordance with the provisions of the Administrative Procedures Act (chapter 35 of title 42). DEL}

{DEL (c) The registration of any charitable organization, professional fund-raising counsel or professional solicitor, which or who knowingly makes a false or misleading statement in any registration application or statement, report or other information required to be filed by the department or this chapter, shall be revoked. DEL}

{DEL (d) Any person who violates this chapter may be liable for a civil penalty in a suit brought by the attorney general of this state of not more than five hundred dollars ($500) for each violation. DEL}

{DEL (e) In addition to the foregoing, any person who willfully and knowingly violates any provisions of this chapter, or who shall willfully and knowingly give false or incorrect information to the department in filing statements or reports required by this chapter, whether that report or statement is verified or not, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced for the first offense to pay a fine of not more than one thousand dollars ($1,000) or undergo imprisonment for not more than one year, or both, and for the second and any subsequent offense to pay a fine of not more than five thousand dollars ($5,000) or to undergo imprisonment for not more than five (5) years, or both. DEL}

{DEL (f) Whenever the attorney general shall have reason to believe or the attorney general has been advised by the director (who shall have given due notice and full hearing to the charitable organization, professional fund-raiser or professional solicitor) that a fund-raising counsel, charitable organization or professional solicitor is operating in violation of the provision of this chapter or has knowingly and willfully made any false statements in any initial or any renewal application to solicit or in any other information required to be filed by this chapter or whenever a charitable organization, professional fund-raising counsel or professional solicitor has failed to file a registration statement required by this chapter, or whenever there is employed or is about to be employed in any solicitation or collection of contributions for a charitable organization any device, scheme, or artifice to defraud or to obtain money or property by means of any false pretense, representation or promise, or whenever the officers or representatives of any charitable organization, professional solicitor have refused or failed after notice to produce any records of that organization, or whenever the funds raised by solicitation activities are not devoted or will not be devoted to the charitable purposes of the charitable organization, in addition to all other actions authorized by law, the attorney general of the state may bring an action in the name of the state against that charitable organization and its officers, the professional fund-raising counsel or professional solicitor or any other person who has violated this chapter or who has participated or is about to participate in any solicitation or collection by employing any device, scheme, artifice, false representation or promise, to defraud or obtain money or other property, to enjoin such charitable organization or professional fund-raising counsel or professional solicitor or other person from continuing that violation, solicitation or collection, or engaging therein, or doing any acts in furtherance thereof and for such other relief as the court deems appropriate. The court may make such additional orders and/or judgments as may be necessary to restore to any person in interest any monies or property, real or personal, which may have been acquired by means of any practice in this chapter declared to be unlawful. The department may refuse to grant an initial application to solicit, may refuse to renew an application and may revoke a registration of any charitable organization, professional fund-raising counsel or professional solicitor which or who knowingly makes a false statement in any initial registration application or renewal application or statement, annual report or other information required to be filed by the department or the chapter. DEL}

{DEL 5-53-13. Payment and appropriation of fees. -- DEL} {DEL All fees shall be paid to the state treasurer and shall be deposited as general revenues. DEL}

{DEL 5-53-14. Severability. -- DEL} {DEL If any section of this chapter or the application thereof to any person or circumstance is held invalid by a court of competent jurisdiction, the remainder of the chapter and the application of that section to other persons or circumstances shall not be affected thereby. The invalidity or unconstitutionality of any section or sections or part of any section or sections of this chapter shall not affect the validity of the remainder of this chapter and to this end the sections of this chapter are severable. DEL}

SECTION 2. Title 5 of the General Laws entitled "Businesses and Professions" is hereby amended by adding thereto the following chapter:

{ADD 5-53.1-1. Definitions. -- ADD} {ADD The following words and phrases as used in this chapter shall have the following meanings unless a different meaning is required by the context. ADD}

{ADD (a) "Charitable organization" means any organization soliciting for a charitable purpose or any organization holding themselves out as such. ADD}

{ADD (b) "Charitable purpose" means, but is not limited to, any benevolent, educational, humane, patriotic, social service, civic, philanthropic, scientific, literary or eleemosynary purpose. ADD}

{ADD (c) "Contribution" means the promise or grant of any money, property or anything of value obtained through solicitation except payments by members of any organization for fees, dues, fines, assessments, or for services rendered to individual members. ADD}

{ADD (d) "Department" means the department of business regulation. ADD}

{ADD (e) "Director" means the director of the department. ADD}

{ADD (f) "Fraudulent act" means that a party made a false representation of a material fact or concealed a material fact with the intention to deceive; that the party intended that a person rely on this material representation or misinformation and that there was justifiable reliance on this representation or misinformation. ADD}

{ADD (g) "Fund raising counsel" means any person who for compensation consults with a charitable organization or who plans, manages, advises, or assists with respect to the solicitation of contributions for or on behalf of a charitable organization, but who does not have access to contributions or other receipts from a solicitation and who does not solicit. Bona fide volunteers or employees of a charitable organization or an attorney-at-law retained by a charitable organization, shall not be deemed a fund raising counsel. ADD}

{ADD (h) "Membership" means the collective body of any charitable organization comprised of persons having voting rights and other powers of governance and who derive a direct benefit or privilege as a member thereof. ADD}

{ADD (i) "Person" means and shall include any individual, organization, group, association, partnership, corporation, trust, limited liability company, and combination of the foregoing, however formed, as well as any and all other entities, however formed. ADD}

{ADD (j) "Professional fund raiser" means any person who directly or indirectly for compensation or other consideration plans, manages, conducts, carries on, or assists in connection with a solicitation for charitable purposes or individually solicits or who employs or otherwise engages on any basis another person to solicit for or on behalf of any charitable organization, or who engages in the business of, or holds himself, herself or itself out to persons as independently engaged in the business of soliciting for such charitable purpose. Bona fide volunteers or employees of a charitable organization or fund raising counsel shall not be deemed a professional fund raiser. ADD}

{ADD (k) "Professional solicitor" means any person who is employed or retained for compensation by a professional fund raiser to solicit contributions for charitable purposes. Bona fide employees of a charitable organization or fund raising counsel shall not be deemed a professional solicitor. ADD}

{ADD (l) "Senior Level Executive Employee" means any employee of a charitable organization whose compensation is in excess of the amount specified as requiring disclosure on United States Internal Revenue Service Form 990 (or the appropriate successor form by whatever name or number it may be called or designated). ADD}

{ADD (m) "Solicit" and "solicitation" means to appeal or request, directly or indirectly, whether express or implied, for money, credit, property, financial assistance, or any other thing of value by means of mail, personal contact, written material, radio, telephone, television, news media, magazines or other periodicals or any other means of plea or representation that such money, credit, property, financial assistance, or other thing of value will be used for a charitable purpose. ADD}

{ADD Solicitation shall be deemed to have taken place when the appeal or request is made, whether or not the person making the appeal or request receives any contributions. ADD}

{ADD 5-53.1-2. Registration of charitable organizations. -- ADD} {ADD (a) Every charitable organization, except as otherwise provided in section 5-53.1-3, which acts, operates, transacts business in this state or which intends to solicit contributions from persons in this state by any means whatsoever, shall, prior to any solicitation, file with the director upon forms prescribed by the department, the following information: ADD}

{ADD (1) The name of the charitable organization and the name or names under which it intends to solicit contributions; ADD}

{ADD (2) The names and addresses where each can regularly be found of the officers, directors, members (if a limited liability company), trustees, partners or senior level executive employees for the charitable organization, as the case may be, as well as the person or persons responsible for the day to day operations of the charitable organization; ADD}

{ADD (3) The addresses of the charitable organization and the addresses of any offices in this state. If the charitable organization does not maintain an office, the name and address of the person having custody of its financial records; ADD}

{ADD (4) Where and when the charitable organization was established, the form of its organization and its tax exempt status, if any, issued by the United States Internal Revenue Service; ADD}

{ADD (5) A general description of all the uses for which the contribution to be solicited will be applied; ADD}

{ADD (6) The date on which the fiscal year of the charitable organization ends; ADD}

{ADD (7) Whether the charitable organization is authorized by any other governmental agency to solicit contributions and whether it or any of its present officers, directors, members (if a limited liability company), trustees, partners or the senior level executive employees are or have ever been enjoined by any court from soliciting contributions or have been found by a final judgment to have engaged in unlawful practices regarding solicitation of contributions or administration of charitable assets and whether its registration or license has been suspended or canceled by any governmental agency together with the reasons for such suspension or cancellation; ADD}

{ADD (8) The names and addresses of any professional fund raisers or fund raising counsels who are acting or have agreed to act in this state on behalf of the charitable organization along with a copy of the contract for such services; ADD}

{ADD (9) The charitable organization's most recent annual report, if any, in accordance with the requirements of section 5-53.1-4; ADD}

{ADD (10) The names and addresses of any chapters, branches, affiliates or other organizations that during the immediately preceding fiscal year of the charitable organization share the contributions or other revenue raised in this state. Provided, however, that any contribution to another organization which is merely transferred by or through a United Way, a federated fund, or an incorporated community appeal, which transferee organization is selected by the donor, need not be included; ADD}

{ADD (11) The percentage of contributions received in the immediately preceding fiscal year which was spent for fund raising and for administration; ADD}

{ADD (12) A listing of the names and the compensation of the charitable organization's five (5) most highly compensated individuals in excess of the amount specified as requiring disclosure on United State Internal Revenue Service Form 990 (or the appropriate successor form by whatever name or number it may be called or designated), including, without limitation, directors, officers, members (if a limited liability company), trustees, partners, employees or agents, for the immediately preceding fiscal year, and the total number of individuals, including, without limitation, directors, officers, members (if limited liability company), trustees, partners, employees, and agents of the charitable organization, earning annual compensation in excess of the amount referred to above for the immediately preceding fiscal year; ADD}

{ADD (13) Whether any director, officer, member (if a limited liability company), trustee, partner, employee or agent or senior level executive employee of the charitable organization has been convicted of a felony, or pled nolo contendere to a felony charge, or held liable in a civil action by final judgment if such felony or civil action involved fraud, embezzlement, fraudulent conversion or misappropriation of property; and ADD}

{DEL{ADD (14) Such other information as the director may request by rule or order. ADD}DEL}

{ADD (b) A charitable organization is deemed to have met the filing requirements above by submitting a copy or duplicate original of form 990 (or the Appropriate Successor form by whatever name it may be called) provided; however, that such organization responds to paragraphs numbered 3, 7, 8, 11, and 13 above. ADD}

{ADD (c) The registration form shall be signed under penalty of perjury by two authorized officials of the charitable organization, one of whom shall be a director or trustee.. ADD}

{ADD (d) For filing such registration, the department shall receive a fee of seventy-five dollars ($75), to be paid at the time of registration. ADD}

{ADD (e) Registration under this section shall expire one (1) year following the approval of the application by the department, unless the director prescribes a different period by rule or order. Re-registration shall also be for a similar period of one (1) year and may be effected by filing an application on forms prescribed by the director no later than thirty (30) days prior to the expiration of the prior registration. ADD}

{ADD (f) Every registered charitable organization shall notify the director within thirty (30) days of any material change, of which it has actual knowledge, in the information required to be furnished by such charitable organization under this section. For the purposes hereof, the requirement to notify the director of a material change shall apply only with respect to paragraphs (1), (3), (4), (5), (6), (7), (8), (9) and (13). ADD}

{ADD (g) Registration statements, financial reports, professional fund raisers' contracts, and all other documents required to be filed pursuant to this chapter shall become public records in the office of the director, except as may be otherwise specifically prohibited by this chapter or by the provisions of title 38, chapter 2 of the Rhode Island General Laws. ADD}

{ADD (h) No charitable organization, professional fund raiser or fund raising counsel shall use or exploit the fact of registration, in any manner whatsoever, so as to lead the public to believe that registration in any manner constitutes and endorsement or approval by the state. ADD}

{ADD 5-53.1-3. Certain persons exempted. -- ADD} {ADD (a) The following persons shall not be required to file a registration statement with the department: ADD}

{ADD (1) Educational institutions, including parent-teacher associations, the curricula of which in whole or in part are registered or approved by a governmental agency as well as all other educational institutions within this state who are recognized or certified as educational institutions by a generally recognized and accepted regional or national educational accrediting organization. ADD}

{ADD (2) Persons requesting any contributions for the relief of any individual, specified by name at the time of the solicitation, if all of the contributions collected, without any deductions whatsoever, are turned over to the named beneficiary. ADD}

{ADD (3) Any charitable organization which does not intend to solicit and receive and does not actually raise or receive contributions in excess of twenty-five thousand dollars ($25,000) during a fiscal year of such charitable organization, provided none of its fundraising functions are carried on by professional fund raisers and no part of its assets or income inures to the benefit of or is paid to any officer, director, member (if a limited liability company), trustee, partner or member of such charitable organization. ADD}

{ADD For the purpose of this paragraph (3), contributions received from corporations, charitable foundations, government agencies, or a duly registered federated fund, incorporated community appeal, or United Way, shall not be included in determining the total amount of contributions received. ADD}

{ADD If, during the fiscal year of any such charitable organization, the gross contributions received by such charitable organization, during that fiscal year exceed twenty-five thousand dollars ($25,000), it shall within thirty (30) days after the date it shall have received total contributions in excess of twenty-five thousand dollars ($25,000) register with the director as required by section 5-53.1-2. ADD}

{ADD (4) Organizations which solicit only from their own membership. The term membership shall not include those persons who are granted a membership upon making a contribution as the result of a solicitation. ADD}

{ADD (5) Persons soliciting contributions solely from corporations, charitable foundations, or governmental agencies. ADD}

{ADD (6) Foundation or associations exclusively for the benefit of religious organizations, education institutions, non-profit or charitable hospitals and public libraries. ADD}

{ADD (7) Hospitals which are non-profit and charitable. ADD}

{ADD (8) Veterans' organizations and their auxiliaries so long as the veterans' organizations are chartered under chapter 6 of title 7. ADD}

{ADD (9) Public libraries. ADD}

{ADD (10) Historical societies duly organized under the laws of this state. ADD}

{ADD (11) Free, not for profit public art museums ADD}.

{ADD (12) Grange organizations and their auxiliaries. ADD}

{ADD (13) Churches or recognized denominations and religious organizations, societies and institutions operated, supervised or controlled by a religious organization or society which solicit from other than their own membership. Institutions indirectly or affiliated with but which are not operated, supervised or controlled by any religious organizations or religious society which own, maintain and operate homes for the aged, orphanages and homes for unwed mothers. ADD}

{ADD(14) Volunteer Fire and Rescue AssociationsADD}

{ADD (b) Any charitable organization claiming to be exempt from the registration requirements of this chapter shall submit such information as the director may request to substantiate an exemption under this section. ADD}

{ADD 5-53.1-4. Reports and records of registered charitable organizations. -- ADD} {ADD (a) Every charitable organization registered pursuant to section 5-53.1-2 shall file with the director a copy of the annual financial statement of the organization audited by an independent certified public accountant for the organization's immediately preceding fiscal year, or a copy of a financial statement audited by an independent certified public accountant covering, in a consolidated report, complete information as to all the preceding year's fund raising activities of the charitable organization, showing kind and amount of funds raised, costs and expenses incidental thereto, and allocation or disbursements of funds raised. Charitable organizations having annual gross income of ADD} {DEL three DEL} {ADD five ADD} {ADD hundred thousand dollars ADD} {DEL ($300,000) DEL} {ADD 500,000 ADD} {ADD or less shall be considered to have met the financial requirements of this section by providing either (a) form 990 or (b) the following financial statements for the immediately preceding fiscal year compiled by an independent public or certified accountant: ADD}

{ADD (1) Statement of activities; and ADD}

{ADD (2) Statement of Financial Position. ADD}

{ADD The director may require audited annual financial statements of charitable organizations with budgets of ADD} {DEL three DEL} {ADD five ADD} {ADD hundred thousand dollars ADD} {DEL ($300,000) DEL} {ADD ($500,000) ADD} {ADD or less when the director has reasonable cause to believe that a violation of this chapter has occurred. ADD}

{ADD (b) Any charitable organization registered pursuant to section 5-53.1-2, which is the parent organization of one or more affiliates thereof within the state, such affiliates may comply with the reporting requirements of subsection (a) of this section, by filing a combined written report upon forms prescribed by the director. ADD}

{ADD As used in this section the term "affiliate" shall include any chapter, branch, auxiliary, or other subordinated unit of any registered charitable organization, howsoever designated, whose policies, fund raising activities, and expenditures are supervised or controlled by such parent. ADD}

{ADD There shall be appended to each combined report a schedule, containing such information as may be prescribed by the director reflecting the activities of each affiliate, which shall contain a certification, under penalty of perjury, by an official of the organization, certifying that the information contained therein is true. ADD}

{ADD The failure of a parent organization to file an appropriate combined written report shall not excuse either the parent organization or its affiliates from complying with the provisions of subsection (a) of this section. ADD}

{ADD A combined report filed pursuant to this section shall be accompanied by a fee of seventy-five dollars ($75) plus seventy-five dollars ($75) for each organization included in such report. ADD}

{ADD (c) The director may accept a copy of a current annual report previously filed by a charitable organization with any other governmental agency in compliance with the provisions of this chapter provided that the report filed with such other governmental agency shall be substantially similar in content to the report required by this section. ADD}

{ADD 5-53.1-5. Books and records. -- ADD} {ADD Every charitable organization registered or required to register pursuant to section 5-43.1-2 shall keep and maintain books, records and reports for at least three (3) years after the end of the period of registration to which they relate which shall, upon reasonable advance written notice, be available for inspection at the principal office of such organization, by the director. Provided, however, that the organization shall not be required to make available the names and addresses of members and donors, except with their consent or through legal process where good cause has been shown by the director to question the organization's compliance with this chapter and access to said information is necessary to determine compliance. Nothing contained herein shall be construed to limit an organization's ability to challenge such process on constitutional grounds. ADD}

{ADD 5-53.1-6. Non-resident charitable organizations; designation of director as agent for service of process; service of process. -- ADD} {ADD Any charitable organization having its principal place of business outside of this state or organized under the laws of a foreign state, and which shall solicit contributions from persons in this state, shall be deemed to have irrevocably appointed the director as its agent upon whom may be served any summons, subpoena, subpoena duces tecum, or other process directed to such charitable organization, or any partner, principal, officer, member (if a limited liability company), trustee or director thereof, with the same effect as if the charitable organization existed in this state. ADD}

{ADD Whenever lawful process shall be served upon the director, the director shall forward a copy of the process served on him or her by mail, postpaid, directed to the charitable organization. For each copy of the process served the director shall collect, for the use of the state, the sum of five dollars ($5.00), which shall be paid by the plaintiff at the time of service. ADD}

{ADD 5-53.1-7. Prohibited activity. -- ADD} {ADD In addition to any other violations of this chapter no person shall: ADD}

{ADD (a) Make any material statement which is untrue in an application for registration, registration statement, or written annual report; or fail to disclose a material fact in an application for registration, registration statement, or written annual report; or ADD}

{ADD (b) Engage in any fraudulent or illegal act, device, scheme, artifice to defraud or for obtaining money or property by means of false pretenses, representation or promise, transaction or enterprise in connection with any solicitation for charitable purposes, any solicitation or collection of funds or other property for a charitable organization, or with the registration, reporting and disclosure provisions of this chapter; or ADD}

{ADD (c) Fail to apply contributions in a manner substantially consistent with the stated solicitation statement created pursuant to section 5-53.1-12 and/or with the section 5-53.1-2 (a) (5) registration statement of the charitable organization; or ADD}

{ADD (d) Knowingly or with reason to know, enter into any contract or agreement with or employ any unregistered professional fund raiser, fund raising counsel or professional solicitor; or ADD}

{ADD (e) Enter into any contract or agreement with or raise any funds for any charitable organization required to be registered pursuant to this chapter knowing or with reason to know that such charitable organization is not duly registered; or ADD}

{ADD (f) Fails to file as required by this chapter any fund raising contract, or any other documents; or ADD}

{ADD (g) Represent in any manner whatsoever that registration constitutes an endorsement or approval by the state; or ADD}

{ADD (h) Solicit contributions for charitable purposes without either: (A) being a registered charitable organization, if required to be registered; (B) having a written contract or agreement with a charitable organization or registered charitable organization if required to be registered, authorizing solicitation on its behalf; or (C) being bona fide employees or volunteers of a charitable organization; or ADD}

{ADD (i) Act as or enter into any contract as a professional fund raiser, fund raising counsel, or professional solicitor without having registered; or ADD}

{ADD (j) Fail to maintain books and records or refuse or fail after receiving written notice by mail, to produce any books and records in accordance with subsection 5 and as otherwise required by this chapter; or ADD}

{ADD (k) Knowingly and intentionally use in the course of soliciting contributions for or on behalf of a charitable organization a name, symbol, or service mark so closely related or similar to that used by another established charitable organization that the use thereof would tend to confuse or mislead the public; or ADD}

{ADD (l) Solicit contributions on behalf of any veterans' organization which is not chartered under chapter 6 of title 7. ADD}

{ADD 5-53.1-8. Professional fund raisers and fund raising counsel. -- ADD} {ADD (a) No person shall act, operate or transact business as a professional fund raiser or fund raising counsel in this state before he, she or it has registered with the director or after the expiration or cancellation of such registration. Applications for registration and re-registration shall be in writing, under oath and penalty of perjury, in the form prescribed by the director and be accompanied by an annual fee in the sum of two hundred dollars ($200). A professional fund raiser who has access or the ability to access or control funds that are being solicited shall at the time of making application for registration or re-registration, file with, and have approved by, the director a bond. In said bond, the filer shall be the principal obligor, in the sum of ten thousand dollars ($10,000), with one or more sureties whose liability in the aggregate as such sureties will at least equal the said sum. The said bond which may be in the form of a rider to a larger blanket liability bond shall run to the director for the use of the state and to any person who may have a cause of action against the obligor of said bond for any malfeasance or misfeasance in the conduct of such solicitation. Registration or re-registration when effected shall be for a period of one (1) year, or a part thereof, expiring on the thirtieth (30th) day of June. An application for re-registration shall be filed no more than thirty (30) days prior to the expiration of the registration. Applications for registration and re-registration and bonds when filed with the director, shall become public records in the office of the director. If there is any material change in the information provided in any such application for registration and re-registration, the applicant or registrant shall notify the director in writing within twenty (20) days of such change. ADD}

{ADD (b) A professional fund raiser and fund raising counsel shall maintain accurate and current books and records of all activities as such while required to be registered under subsection (a) of this section; and, until at least three (3) years shall have elapsed after the end of the effective period of the registration to which they relate, such books and records shall be maintained in an office available for inspection and examination by the director. Provided, however, that any such books and records obtained by the director shall not be available to the public for inspection. Provided further, however, that the professional fund raiser or fund raising counsel shall not be required to make available to the director the names and addresses of members and donors, except with their consent or the consent of the organization or through legal process where good cause has been shown by the director to question compliance with this chapter and access to said information is necessary to determine compliance. Nothing contained herein shall be construed to limit an organization's ability to challenge such process on constitutional grounds. ADD}

{ADD 5-53.1-9. Contracts of professional fundraisers and fundraising counsel. -- ADD} {ADD (a) No person shall act as a professional fundraiser or fundraising counsel before he, she or it has a written contract with the charitable organization. A true and correct copy of each contract entered into between a professional fundraiser or fundraising counsel and a charitable organization shall be filed by the professional fundraiser or fundraising counsel who is a party thereto with the director within ten (10) days after it is signed. True and correct copies of such contracts shall be kept on file in the offices of the charitable organization and the professional fundraiser or fundraising counsel during the term thereof and until the expiration of a period of three (3) years subsequent to the date the solicitation of contributions provided for therein actually terminates. ADD}

{ADD (b) Every contract between a professional fundraiser and a charitable organization shall contain or shall be deemed to contain a provision that within five (5) days of receipt all funds received from solicitation shall be deposited in a bank account in the sole name of the charitable organization or shall be delivered to the organization for deposit. ADD}

{ADD 5-53.1-10. Professional solicitor. -- ADD} {ADD No person shall act as a professional solicitor in the employ of a professional fundraiser required to register pursuant to section 5-53.1-8 before he or she has registered with the director or after the expiration or cancellation of such registration. Applications for registration and re-registration shall be in writing, under oath, in the form prescribed by the director. Registration or re-registration, when effected, shall be for a period of one (1) year, or a part thereof, expiring on the 30th day of June. An application for re-registration shall be filed thirty (30) days prior to the expiration of the registration. Applications for registration and re-registration, when filed with the director, shall become public records in the office of the director. ADD}

{ADD 5-53.1-11. Nonresident professional fundraisers, fundraising counsel and professional solicitors; designation of director as agent for service of process; service of process. -- ADD} {ADD Any professional fundraiser, fundraising counsel or professional solicitor having his, her or its principal place of business outside of this state or organized under the laws of a foreign state, who or which shall solicit contributions or act as a fundraising counsel in this state shall be deemed to have irrevocably appointed the director as his, her or its agent upon whom may be served any summons, subpoena, subpoena duces tecum, or other process directed to such professional fundraiser, fundraising counsel or professional solicitor or any partner, principal, officer, member, trustee or director thereof, with the same effect as if the professional fundraiser, fundraising counsel or professional solicitor existed in this state. ADD}

{ADD Whenever lawful process shall be served upon the director, the director shall forward a copy of the process served on him or her by mail, postpaid, directed to the professional fundraiser, fundraising counsel or professional solicitor. For each copy of the process served the director shall collect, for the use of the state, the sum of five dollars ($5.00), which shall be paid by the plaintiff at the time of service. ADD}

{ADD 5-53.1-12. Solicitation. -- ADD} {ADD (a) Any written solicitation used by or on behalf of any charitable organization shall provide a description of the programs and activities for which it has expended or will expend contributions it receives from the solicitation or shall include therein a statement that, upon written request to a specified person at the charitable organization, a person may obtain from the charitable organization such a description. In addition, any such written solicitation shall state in clear and unambiguous language whether or not contributions are deductible for federal income tax purposes in accordance with applicable law. The requirements of this section shall be satisfied by written notice to the donor or prospective donor. The aforesaid written notice requirement is deemed satisfied if made once during the solicitation process, including at the time of confirmation of receipt of any contribution. ADD}

{ADD (b) If any charitable organization solicits contributions for or makes contributions through a solicitation to another organization which is not its affiliate as defined in section 5-53.1-4, such written solicitation shall include a statement that such contributions have been made and that a list of all organizations which have received contributions from the soliciting organization during the most recently completed fiscal year of the charitable organization for which information is required to be filed in accordance with section 5-53.1-2. may be obtained from that organization. Provided, however, that a United Way, federated fund or incorporated community appeal, by or through which a donation is merely transferred to another organization selected by the donor, need not include such donor selected transferee organizations in the list. The requirements of this section shall be satisfied by written notice to the donor or prospective donor. The aforesaid written notice requirement is deemed satisfied if made once during the solicitation process, including at the time of confirmation of receipt of any contribution. ADD}

{ADD (c) A charitable organization shall comply with all requests made pursuant to subsections (a) and (b) of this section within fifteen (15) days of their receipt. ADD}

{ADD 5-53.1-13. Unauthorized use of names when soliciting or collecting contributions. -- ADD} {ADD (a) No person shall, for the purpose of soliciting contributions from persons in this state, use the name of any other person, as one who has sponsored or endorsed the charitable organization or its activities without the written consent of such other person. ADD}

{ADD (b) A person shall be deemed to have used the name of another person for the purpose of soliciting contributions if (i) such latter person's name is listed or referred to on any stationary, advertisement, brochure or correspondence in or by which a contribution is solicited by or on behalf of a charitable organization in connection with a request for a contribution, and (ii) such latter person's name is listed or referred to as one who has financially contributed to, or has expressly sponsored or endorsed the charitable organization or its activities. This section shall not apply to the bona fide listing of the organization's staff, committeeADD}{ADDsADD}{ADD or board of directors. ADD}

{ADD (c) Nothing contained in this section shall prevent the publication of names of contributors without their written consent, in an annual or other periodic report issued by a charitable organization for the purpose of reporting on its operations and affairs to its membership or for the purpose of reporting contributions to contributors. ADD}

{ADD 5-53.1-14. Enforcement and penalties -- Director. -- ADD} {ADD (a) Whenever the department, upon its own motion or upon complaint of any person has reason to believe that any person is violating any of the provisions of this chapter, may, if warranted, take any of the following actions: ADD}

{ADD (1) revoke, suspend or deny a registration of a charitable organization or professional fundraiser or professional solicitor or fundraising counsel; ADD}

{ADD (2) assess an administrative fine against the violator of up to one thousand dollars ($1,000) for each act or omission constituting a violation. ADD}

{ADD Provided, in determining the amount of the fine to be assessed under paragraph (2) above, the director shall take into account such factors as the nature and severity of the violation and the willfulness of the violation; ADD}

{ADD (3) issue an order to that person commanding them to appear before the department at a hearing to be held not sooner than ten (10) days nor later than twenty (20) days after issuance of the order to show cause why the department should not issue an order to the person to cease and desist from the violation of the provisions of this chapter. An order to show cause may be served on any person by any person by mailing a copy of the order to the person at any address at which that person had done business or at which the person may live. If upon the hearing the department shall be satisfied that the person is in fact violating any provision of this chapter, then the department shall order that person, in writing, to cease and desist from the violation. At any hearing, the department shall not be bound by common law rules of evidence, but may receive and consider any statements, documents, and things which shall be considered by it necessary or useful in arriving at its decision. If that person shall thereafter fail to comply with the order of the department, the superior court for Providence County shall have jurisdiction upon the complaint of the department to restrain and enjoin that person from violating this chapter. The findings and order of the department shall constitute prima facie evidence that the person ordered by the department to cease and desist has violated the provisions of this chapter. The attorney general shall afford the department any necessary assistance in obtaining relief in the superior court. ADD}

{ADD (b) The director shall, before denying, revoking or suspending any registration or assessing a civil penalty, notify the applicant or registrant in writing and provide an opportunity for hearing in accordance with the provisions of the administrative procedures act (chapter 35 of title 42) and in accordance with such other rules and regulations as the director may promulgate to effectuate the purposes of this chapter ADD} {DEL.DEL} {ADD, and any person who has exhausted all administrative remedies available to him and who is aggrieved by a final decision of the department is entitled to judicial review in accordance with the provisions of the Administrative Procedures Act. (Chapter 35 of title 42) ADD} {ADD Such written notice may be served by personal delivery to the person or by regular mail to his, her or its last known business address. A hearing must be requested within thirty (30) days of receipt of the notice from the director or shall be automatically waived. Any hearing shall be held within thirty (30) days of the receipt of the request by the director, at such time and place as the director shall prescribe. The director or the director's designee may issue subpoenas in accordance with the laws of Rhode Island, compel the attendance of witnesses at the hearing, administer oaths, take proof and make determinations of relevant facts. The respondent may appear at the hearing and may cross-examine all witnesses and produce evidence on his, her or its behalf. The director or the director's designee shall not be bound by the rules of evidence during the conduct of the hearing. A final determination shall be made by the director or the director's designee. ADD}

{ADD 5-53.1-15. Enforcement -- Attorney general. -- ADD} {ADD (a) Any person who willfully and knowingly violates any provisions of this chapter shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced for the first offense to pay a fine of not more than one thousand dollars ($1,000) or undergo imprisonment for not more than one year, or both, and for the second and any subsequent offense to pay a fine of not more than five thousand dollars ($5,000) or to undergo imprisonment for not more than five (5) years, or both. ADD}

{ADD (b) Whenever the attorney general shall have reason to believe or the attorney general has been advised by the director (who shall have given due notice and full hearing to the person) that the person is in violation of the provisions of this chapter, in addition to all other actions authorized by law, the attorney general may bring an action in the name of the state against that person to enjoin such person from continuing the violation or doing any acts in furtherance thereof and for such other relief as the court deems appropriate. The court may make such additional orders and/or judgments as may be necessary to restore to any person in interest any monies or property, real or personal, which may have been acquired by means of any practice found to be in violation of this chapter. ADD}

{ADD 5-53.1-16. Payment of fees. -- ADD} {ADD All fees required to be paid pursuant to this chapter shall be paid to the state treasurer. ADD}

{ADD 5-53.1-17. Rules, regulations and orders. -- ADD} {ADD The director may promulgate rules and regulations necessary to effectuate the purposes of this chapter. ADD}

{ADD 5-53.1-18. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstance is for any reason held invalid, the remainder of the chapter and the application of that provision to other persons or circumstances shall not be affected thereby. ADD}

SECTION 3. This act shall take effect upon passage.