Researcher: JSB Page 1 3/30/22
OLR Bill Analysis
sHB 5222
AN ACT CONCERNING PAID SOLICITORS OF CHARITABLE
FUNDS AND CHARITABLE ORGANIZATION TRANSPARENCY.
SUMMARY
This bill makes several changes in the Connecticut Solicitation of
Charitable Funds Act, generally codifying recent caselaw that deemed
certain provisions regulating paid solicitors unenforceable on
constitutional grounds (see BACKGROUND). The bill also (1) requires
charitable organizations to disclose their registration numbers when
soliciting or upon request and (2) allows smaller registered charitable
organizations to forgo a formal audit and instead obtain a financial
review from a certified public accountant (CPA).
By law, the Solicitation of Charitable Funds Act requires charitable
organizations that solicit money or support in Connecticut to register
with the Department of Consumer Protection (DCP), unless they are
exempt (e.g., religious and parent-teacher organizations, certain
organizations that normally receive less than $50,000 in contributions
annually). Paid solicitors (and some fundraising counsel) are also
required to register, post a bond, and file certain reports (CGS §§ 21a-
190d to 21a-190f).
This bill also makes technical and conforming changes.
EFFECTIVE DATE: Upon passage, except certain technical changes
are effective January 1, 2023.
PAID SOLICITORS
Regarding registered paid solicitors, the bill:
1. reduces, from 20 days to one business day, the notice a solicitor
must give to DCP before starting a campaign (i.e., by filing his or
her contract and solicitation notice form); 2022HB-05222-R000197-BA.DOCX
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2. eliminates the requirement that copies of the charitable campaign
solicitation literature, including the text of any proposed oral
solicitations, be shared with DCP ahead of the campaign;
3. eliminates the requirement that a solicitor, before making an oral
solicitation, disclose the percentage of the gross revenue that the
organization will receive; and
4. correspondingly eliminates the requirement that a written
confirmation of an oral pledge include information on the
percentage of revenue the organization will receive.
Additionally, the bill eliminates the requirement that DCP publicize
on its website the (1) terms of the contract between the solicitor and
organization, (2) campaign dates, and (3) percentage of fundraising
revenue the solicitor will keep. The bill also eliminates the DCP
commissioner’s authority to publicize this information elsewhere, as she
deems appropriate.
The bill narrows the solicitation campaign information solicitors
must provide to DCP upon request. Under the bill, while solicitors must
still maintain a record of contributors’ names and addresses (if known),
they are no longer required to share this information with DCP. As
under current law, solicitors must still provide DCP, if requested,
information on the dates and amounts of contributions. Current law
prohibits the department from disclosing this information, except if
necessary for investigative or law enforcement purposes. The bill
eliminates this restriction on DCP’s authority to disclose contributor
information.
CHARITABLE ORGANIZATIONS
Regarding registered charitable organizations, the bill:
1. requires organizations, when soliciting or upon request, to
disclose their DCP registration number;
2. requires organizations to display their DCP registration number
conspicuously on their website and printed and internet
advertisements; and 2022HB-05222-R000197-BA.DOCX
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3. raises the threshold above which an organization must submit an
audit report to DCP, while allowing smaller organizations to
instead submit a CPA’s financial “review report.”
Currently, charitable organizations with more than $500,000 in
annual gross revenue must include a CPA’s audit report in the annual
financial report they submit as part of the DCP registration process.
Under the bill, this is still a requirement for organizations with at least
$1 million in gross revenue, but organizations with gross revenues over
$500,000 and below $1 million can instead include a CPA’s financial
review report.
BACKGROUND
Related Caselaw on Paid Solicitors
In 2021, the U.S. District Court for the District of Connecticut issued
a preliminary injunction enjoining DCP from enforcing, on the grounds
that they likely violated free speech rights, the Solicitation of Charitable
Funds Act’s requirements that solicitors:
1. give DCP 20 days’ notice, and provide DCP copies of the text of
any intended solicitation, before starting a campaign and
2. keep records of donors and donations for DCP to inspect.
Additionally, while the court found that the Act’s requirement that
solicitors disclose to prospective donors the percentage of a contribution
that the charitable organization would receive did not appear to
comport with the First Amendment and U.S. Supreme Court caselaw, it
did not enjoin DCP from enforcing this requirement, as the department
said that it had already stopped enforcing it (Kissel v. Seagull, 552 F.
Supp. 3d 277).
COMMITTEE ACTION
General Law Committee
Joint Favorable Substitute
Yea 18 Nay 0 (03/15/2022)