HB4697 95TH GENERAL ASSEMBLY

LRB095 15169 RAS 41149 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB4697

Introduced , by Rep. Jim Sacia

SYNOPSIS AS INTRODUCED:

225 ILCS 460/2	from Ch. 23, par. 5102
225 ILCS 460/4	from Ch. 23, par. 5104
225 ILCS 460/9	from Ch. 23, par. 5109

Amends the Solicitation for Charity Act. Requires certain charitable organizations registered under the Act to file a written report that includes a financial statement with the Attorney General within 36 months after the close of a 12-month reporting period (rather than on or before June 30 of each year, if its books are kept on a calendar basis, or within 6 months after the close of its fiscal year, if its books are kept on a fiscal year basis). Allows an organization that is required to file a written report for multiple 12-month periods to combine the financial statements for a maximum of 3 12-month periods in one 36-month reporting period. Makes related changes.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Solicitation for Charity Act is amended by changing Sections 2, 4, and 9 as follows:

(225 ILCS 460/2) (from Ch. 23, par. 5102)

Sec. 2. Registration; rules; penalties.

(a) Every charitable organization, except as otherwise provided in Section 3 of this Act, which solicits or intends to solicit contributions from persons in this State or which is located in this State, by any means whatsoever shall, prior to any solicitation, file with the Attorney General upon forms prescribed by him or her, a registration statement, accompanied by a registration fee of $15, which statement shall include the following certified information:

1. The name of the organization and the name or names under which it intends to solicit contributions.

2. The names and addresses of the officers, directors, trustees, and chief executive officer of the organization.

3. The addresses of the organization and the addresses of any offices in this State. If the organization does not maintain a principal office, the name and address of the person having custody of its financial records.

4. Where and when the organization was legally established, the form of its organization and its tax exempt status.

5. The purpose for which the organization is organized and the purpose or purposes for which the contributions to be solicited will be used.

6. The date on which the fiscal year of the organization ends.

7. 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.

8. The names and addresses of any professional fund raisers who are acting or have agreed to act on behalf of the organization.

9. Methods by which solicitation will be made.

10. Copies of contracts between charitable organizations and professional fund raisers relating to financial compensation or profit to be derived by the professional fund raisers. Where any such contract is executed after filing of registration statement, a copy thereof shall be filed within 10 days of the date of execution.

11. Board, group, or individual having final discretion as to the distribution and use of contributions received.

(b) The registration statement shall be signed by the president or other authorized officer and the chief fiscal officer of the organization.

(c) Such registration shall remain in effect unless it is either cancelled as provided in this Act or withdrawn by the organization.

(d) Every registered organization shall notify the Attorney General within 10 days of any change in the information required to be furnished by such organization under paragraphs 1 through 11 of subdivision (a) of this Section.

(e) In no event shall a registration of a charitable organization continue, or be continued, in effect after the date such organization should have filed, but failed to file, a an annual report in accordance with the requirements of Section 4 of this Act, and such organization shall not be eligible to file a new registration until it shall have filed the required annual report with the Attorney General. If such report is subsequently filed and accepted by the Attorney General such organization may file a new registration. If a person, trustee, or organization fails to timely register or maintain a registration of a trust or organization as required by this Act or if its registration is cancelled as provided in this Act, and if that trust or organization remains in existence and by law is required to be registered, in order to re-register or file a late registration a current registration statement must be filed accompanied by financial reports in the form required herein for all past years. In all instances where re-registration and late registration are allowed, the new registration materials must be filed, accompanied by a penalty registration fee of $200.

(f) Subject to reasonable rules and regulations adopted by the Attorney General, the register, registration statements, annual reports, financial statements, professional fund raisers' contracts, bonds, applications for registration and re-registration, and other documents required to be filed with the Attorney General shall be open to public inspection.

Every person subject to this Act shall maintain accurate and detailed books and records at the principal office of the organization to provide the information required herein. All such books and records shall be open to inspection at all reasonable times by the Attorney General or his or her duly authorized representative.

(g) Where any local, county or area division of a charitable organization is supervised and controlled by a superior or parent organization, incorporated, qualified to do business, or doing business within this State, such local, county or area division shall not be required to register under this Section if the superior or parent organization files a registration statement on behalf of the local, county or area division in addition to or as part of its own registration statement. Where a registration statement has been filed by a superior or parent organization as provided in Section 2(g) of this Act, it shall file the annual report required under Section 4 of this Act on behalf of the local, county or area division in addition to or as part of its own report, but the accounting information required under Section 4 of this Act shall be set forth separately and not in consolidated form with respect to every local, county or area division which raises or expends more than $4,000.

(h) The Attorney General may make rules of procedure and regulations necessary for the administration of this Act. Copies of all such rules of procedure and regulations and of all changes therein, duly certified by the Attorney General, shall be filed in the office of the Secretary of State.

(i) If a person, organization, or trustee fails to register or if registration of a trust or organization is cancelled as provided in this Act, the person, organization or trustee is subject to injunction, to removal, to account, and to appropriate other relief before the circuit court exercising chancery jurisdiction. In addition to any other relief granted under this Act, the court may impose a civil penalty of not less than $500 nor more than $1,000 against the organization or trust estate that failed to register or failed to maintain a registration required under this Act. The collected penalty funds shall be used for charitable trust enforcement and for providing charitable trust information to the public.

(Source: P.A. 90-469, eff. 8-17-97; 91-444, eff. 8-6-99.)

(225 ILCS 460/4) (from Ch. 23, par. 5104)

Sec. 4. (a) Every charitable organization registered pursuant to Section 2 of this Act which shall receive in any 12 month period ending upon its established fiscal or calendar year contributions in excess of $150,000 and every charitable organization whose fund raising functions are not carried on solely by staff employees or persons who are unpaid for such services, if the organization shall receive in any 12 month period ending upon its established fiscal or calendar year contributions in excess of $25,000, shall have 36 months after the close of such 12-month period within which to file a written report with the Attorney General upon forms prescribed by him or her. This , on or before June 30 of each year if its books are kept on a calendar basis, or within 6 months after the close of its fiscal year if its books are kept on a fiscal year basis, which written report shall include a financial statement covering the applicable immediately preceding 12 month period of operation. An organization that is required to file a written report for multiple 12-month periods may combine the financial statements for a maximum of 3 12-month periods in one 36-month reporting period and, when necessary, the Attorney General shall provide for a grace period in the case of such combination reporting. Such financial statement shall include a balance sheet and statement of income and expense, and shall be consistent with forms furnished by the Attorney General clearly setting forth the following: gross receipts and gross income from all sources, broken down into total receipts and income from each separate solicitation project or source; cost of administration; cost of solicitation; cost of programs designed to inform or educate the public; funds or properties transferred out of this State, with explanation as to recipient and purpose; cost of fundraising; compensation paid to trustees; and total net amount disbursed or dedicated for each major purpose, charitable or otherwise. Such report shall also include a statement of any changes in the information required to be contained in the registration form filed on behalf of such organization. The report shall be signed by the president or other authorized officer and the chief fiscal officer of the organization who shall certify that the statements therein are true and correct to the best of their knowledge, and shall be accompanied by an opinion signed by an independent certified public accountant that the financial statement therein fairly represents the financial operations of the organization in sufficient detail to permit public evaluation of its operations. Said opinion may be relied upon by the Attorney General.

(b) Every organization registered pursuant to Section 2 of this Act which shall receive in any 12 month period ending upon its established fiscal or calendar year of any year contributions:

(1) in excess of $15,000, but not in excess of $25,000, during a fiscal year shall file only a simplified summary financial statement disclosing only the gross receipts, total disbursements, and assets on hand at the end of the year on forms prescribed by the Attorney General; or

(2) in excess of $25,000, but not in excess of $150,000, if it is not required to submit a report under subsection (a) of this Section, shall file a written report with the Attorney General upon forms prescribed by him or her, on or before June 30 of each year if its books are kept on a calendar basis, or within 6 months after the close of its fiscal year if its books are kept on a fiscal year basis, which shall include a financial statement covering the immediately preceding 12-month period of operation limited to a statement of such organization's gross receipts from contributions, the gross amount expended for charitable educational programs, other charitable programs, management expense, and fund raising expenses including a separate statement of the cost of any goods, services or admissions supplied as part of its solicitations, and the disposition of the net proceeds from contributions, including compensation paid to trustees, consistent with forms furnished by the Attorney General. Such report shall also include a statement of any changes in the information required to be contained in the registration form filed on behalf of such organization. The report shall be signed by the president or other authorized officer and the chief fiscal officer of the organization who shall certify that the statements therein are true and correct to the best of their knowledge.

(c) For any fiscal or calendar year of any organization registered pursuant to Section 2 of this Act in which such organization would have been exempt from registration pursuant to Section 3 of this Act if it had not been so registered, or in which it did not solicit or receive contributions, such organization shall file, on or before June 30 of each year if its books are kept on a calendar basis, or within 6 months after the close of its fiscal year if its books are kept on a fiscal year basis, instead of the reports required by subdivisions (a) or (b) of this Section, a statement certified under penalty of perjury by its president and chief fiscal officer stating the exemption and the facts upon which it is based or that such organization did not solicit or receive contributions in such fiscal year. The statement shall also include a statement of any changes in the information required to be contained in the registration form filed on behalf of such organization.

(d) As an alternative means of satisfying the duties and obligations otherwise imposed by this Section, any veterans organization chartered or incorporated under federal law and any veterans organization which is affiliated with, and recognized in the bylaws of, a congressionally chartered or incorporated organization may, at its option, annually file with the Attorney General the following documents:

(1) A copy of its Form 990, as filed with the Internal Revenue Service.

(2) Copies of any reports required to be filed by the affiliate with the congressionally chartered or incorporated veterans organization, as well as copies of any reports filed by the congressionally chartered or incorporated veterans organization with the government of the United States pursuant to federal law.

(3) Copies of all contracts entered into by the congressionally chartered or incorporated veterans organization or its affiliate for purposes of raising funds in this State, such copies to be filed with the Attorney General no more than 30 days after execution of the contracts.

(e) As an alternative means of satisfying all of the duties and obligations otherwise imposed by this Section, any person, pursuant to a contract with a charitable organization, a veterans organization or an affiliate described or referred to in subsection (d), who receives, collects, holds or transports as the agent of the organization or affiliate for purposes of resale any used or second hand personal property, including but not limited to household goods, furniture or clothing donated to the organization or affiliate may, at its option, annually file with the Attorney General the following documents, accompanied by an annual filing fee of $15:

(1) A notarized report including the number of donations of personal property it has received on behalf of the charitable organization, veterans organization or affiliate during the proceeding year. For purposes of this report, the number of donations of personal property shall refer to the number of stops or pickups made regardless of the number of items received at each stop or pickup. The report may cover the person's fiscal year, in which case it shall be filed with the Attorney General no later than 90 days after the close of that fiscal year.

(2) All contracts with the charitable organization, veterans organization or affiliate under which the person has acted as an agent for the purposes listed above.

(3) All contracts by which the person agreed to pay the charitable organization, veterans organization or affiliate a fixed amount for, or a fixed percentage of the value of, each donation of used or second hand personal property. Copies of all such contracts shall be filed no later than 30 days after they are executed.

(f) The Attorney General may seek appropriate equitable relief from a court or, in his or her discretion, cancel the registration of any organization which fails to comply with subdivision (a), (b) or (c) of this Section within the time therein prescribed, or fails to furnish such additional information as is requested by the Attorney General within the required time; except that the time may be extended by the Attorney General for a period not to exceed 60 days upon a timely written request and for good cause stated. Unless otherwise stated herein, the Attorney General shall, by rule, set forth the standards used to determine whether a registration shall be cancelled as authorized by this subsection. Such standards shall be stated as precisely and clearly as practicable, to inform fully those persons affected. Notice of such cancellation shall be mailed to the registrant at least 15 days before the effective date thereof.

(g) The Attorney General in his or her discretion may, pursuant to rule, accept executed copies of federal Internal Revenue returns and reports as a portion of the foregoing annual reporting in the interest of minimizing paperwork, except there shall be no substitute for the independent certified public accountant audit opinion required by this Act.

(h) The Attorney General after canceling the registration of any trust or organization which fails to comply with this Section within the time therein prescribed may by court proceedings, in addition to all other relief, seek to collect the assets and distribute such under court supervision to other charitable purposes.

(i) Every trustee, person, and organization required to file a an annual report shall pay a filing fee of $15 with each annual financial report filed pursuant to this Section. If a proper and complete annual report is not timely filed, a late filing fee of an additional $100 is imposed and shall be paid as a condition of filing a late report. Reports submitted without the proper fee shall not be accepted for filing. Payment of the late filing fee and acceptance by the Attorney General shall both be conditions of filing a late report. All late filing fees shall be used to provide charitable trust enforcement and dissemination of charitable trust information to the public and shall be maintained in a separate fund for such purpose known as the Illinois Charity Bureau Fund.

(j) There is created hereby a separate special fund in the State Treasury to be known as the Illinois Charity Bureau Fund. That Fund shall be under the control of the Attorney General, and the funds, fees, and penalties deposited therein shall be used by the Attorney General to enforce the provisions of this Act and to gather and disseminate information about charitable trustees and organizations to the public.

(Source: P.A. 90-469, eff. 8-17-97; 91-444, eff. 8-6-99.)

(225 ILCS 460/9) (from Ch. 23, par. 5109)

Sec. 9. (a) An action for violation of this Act may be prosecuted by the Attorney General in the name of the people of the State, and in any such action, the Attorney General shall exercise all the powers and perform all duties which the State's Attorney would otherwise be authorized to exercise or to perform therein.

(b) This Act shall not be construed to limit or restrict the exercise of the powers or the performance of the duties of the Attorney General which he otherwise is authorized to exercise or perform under any other provision of law by statute or otherwise.

(c) Whenever the Attorney General shall have reason to believe that any charitable organization, professional fund raiser, or professional solicitor is operating in violation of the provisions of this Act, or if any of the principal officers of any charitable organization has refused or failed, after notice, to produce any records of such organization or 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 for obtaining money or property by means of any false pretense, representation or promise, or any false statement has been made in any application, registration or statement required to be filed pursuant to this Act, in addition to any other action authorized by law, he may bring in the circuit court an action in the name, and on behalf of the people of the State of Illinois against such charitable organization and any other person who has participated or is about to participate in such solicitation or collection by employing such device, scheme, artifice, false representation or promise, to enjoin such charitable organization or other person from continuing such solicitation or collection or engaging therein or doing any acts in furtherance thereof, or to cancel any registration statement previously filed with the Attorney General.

In connection with such proposed action the Attorney General is authorized to take proof in the manner provided in Section 2-1003 of the Code of Civil Procedure.

(d) Upon a showing by the Attorney General in an application for an injunction that any person engaged in the solicitation or collection of funds for charitable purposes, either as an individual or as a member of a copartnership, or as an officer of a corporation or as an agent for some other person, or copartnership or corporation, has been convicted in this State or elsewhere of a felony or of a misdemeanor where such felony or misdemeanor involved the misappropriation, misapplication or misuse of the money or property of another, he may enjoin such persons from engaging in any solicitation or collection of funds for charitable purposes.

(e) The Attorney General may exercise the authority granted in this Section against any charitable organization or person which or who operates under the guise or pretense of being an organization exempted by the provisions of Section 3 and is not in fact an organization entitled to such an exemption.

(f) In any action brought under the provisions of this Act, the Attorney General is entitled to recover costs for the use of this State.

(g) Any person who knowingly violates this Section may be enjoined from such conduct, removed from office, enjoined from acting for charity and subject to punitive damages as deemed appropriate by the circuit court.

(h) Any person who violates this Section shall not be entitled to keep or receive monies, fees, salaries, commissions or any compensation, as a result of the solicitations or fund raising campaigns, and at the request of the Attorney General such monies, fees, salaries, commissions or any compensation shall be forfeited and subject to distribution to charitable use as a court of equity determines.

(i) The Attorney General may publish an annual report of all reporting charitable organizations based on information contained in reports filed hereunder stating the amount of money each organization received through solicitation and the amount of money which was expended on program service activity and the percentage of the solicited assets that were expended on charitable activity.

(j) The Attorney General shall cancel the registration of any organization, professional fund raiser, or professional solicitor who violates the provisions of this Section.

(k) Any person who solicits financial contributions or the sale of merchandise, goods, services, memberships, or advertisements in violation of the prohibitions of subsection (d-1) of Section 11 of this Act, or commits false personation, use of title, or solicitation as defined by Section 17-2 of the Criminal Code of 1961 shall, in addition to any other penalties provided for by law, be subject to civil remedy by cause of action brought by the Attorney General or a Public Safety Personnel Organization affected by the violation.

In addition to equitable relief, a successful claimant or the Attorney General shall recover damages of triple the amount collected as a result of solicitations made in violation of this Act, plus reasonable attorney's fees and costs.

A plaintiff in any suit filed under this Section shall serve a copy of all pleadings on the Attorney General and the State's Attorney for the county in which the suit is filed.

(Source: P.A. 91-301, eff. 7-29-99.)