United States

Amendment to Florida’s Solicitation of Contributions Act

MUSE  | 

In the wake of recent abuse reported, the commissioner of Florida's Department of Agriculture and Consumer Services, Adam Putnam, determined it was time to increase the oversight and compliance obligations of Florida's charitable organizations. House Bill 629 was approved and signed into law effective July 1, 2014. The amendment to the Solicitation of Contributions Act made some significant changes to Florida's charitable solicitation law.

The Florida Solicitation of Contributions Act requires anyone who solicits donations from people in the state of Florida to register with the Department of Consumer Services and renew annually. This applies to charitable organizations, sponsors, professional solicitors and professional fundraising consultants.

Registration and reporting requirements

Charitable organizations or sponsors that intend to solicit in or from the state of Florida must now register, regardless of whether they are soliciting Florida's residents. Charitable organizations that have not yet received their determination letter from the IRS must go ahead and register and then provide a copy of their determination letter, once received, upon renewal.

Under the amendment, any changes involving conviction or incarceration of a charitable organization or sponsor's officers, directors, trustees or employees for any felony or any crime involving fraud, theft, larceny, embezzlement, fraudulent conversion, misappropriation of property or any crime resulting from acts committed while involved in the solicitation of contributions must be reported to the department within 10 days after the change occurs. Failure to timely disclose such information may result in automatic suspension.

Charitable organizations or sponsors and their officers, directors, trustees and employees may not knowingly allow officers, directors, trustees and employees to solicit contributions if they have certain criminal histories. The amendment provides that individuals who have been convicted of a felony in the last 10 years involving charitable solicitations, fraud, theft or embezzlement are prohibited from soliciting contributions on behalf of a charitable organization and from being employed by or acting as a professional fundraising consultant or solicitor.

Exemptions to registration

The existing law included a broad exemption from the registration requirements for certain organizations, including bona fide religious organizations, educational institutions, state agencies or other government entities, and charitable organizations that limit the solicitation of contribution to their members. 

Organizations with less than $25,000 in total revenue during the fiscal year are exempt if their fundraising activities are performed by volunteers, members or uncompensated officers. If the organization exceeds $25,000 at any time during its fiscal year, the organization must register within 30 days of crossing the $25,000 revenue threshold.

The amendment added an exemption for blood establishments.

Financial statements and reports

Under the existing law, organizations were required to submit an annual financial statement, including a statement of functional expenses, for the immediately preceding year or a copy of their Form 990. 

Prior to the amendment, charitable organizations could choose to provide a financial report that was audited, reviewed or compiled. Under the amendment, different levels of attestation by an independent certified public accountant are required based upon the amount of annual contributions received. 

Annual contributions 
Required level of attestation
Less than $500,000
Optional – audit, review or compilation
$500,000 - $1,000,000
Audit or review
$1,000,000 and greater
Audit


Forms 990 submitted by charitable organizations in lieu of a financial statement must be prepared by a certified public accountant or a professional who has some experience in preparing such forms in the ordinary course of their business.

The department may require a review or audit of any organization where it finds discrepancies.

The amendment requires charitable organizations or sponsors that receive more than $1 million in total revenue but spend less than 25 percent of their annual functional expenses on program service costs to provide more detailed financial information. This information must provide details regarding total salaries, travel expenses, fundraising expenses, overhead and administrative expenses, business transactions with related parties, and the names of service providers who earned more than $100,000. This supplemental information must be provided within 30 days after receiving a request for such information.

The existing law required parent organizations that include chapters, branches or affiliates to file a consolidated financial statement that incorporated the financial activities for each. Under the amendment, parent organizations are required to report specific financial information for all of their chapters, branches or affiliates. Additionally, any chapter, branch or affiliate that is required to file a Form 990 to the IRS must submit a copy to the department.

Conflict of interest policy

While for federal purposes, a conflict of interest policy is not required, simply considered a best practice, for Florida's solicitation purposes, the act now requires charitable organizations and sponsors to adopt a conflict of interest transaction policy. A copy of the annual certification of the policy must be submitted to the department as part of the organization's annual registration. 

Disaster relief solicitation

The amendment increases the scrutiny of charitable organizations soliciting for disaster relief that have not been registered with the department for at least four consecutive years.

Charitable organizations or sponsors that raise more than $50,000 or more in contributions during the aftermath of natural disasters or other crisis must submit financial information regarding contributions and program service expenses on a quarterly basis.

The act required the department to post a notice on its website of each disaster crisis subject to these new reporting requirements.

Collection receptacles

Under the amendment, charitable organizations that use collection receptacles for donated items (such as clothing or other goods) for resale are required to display a permanent sign or label on each side of the receptacle that discloses name, address, phone number and registration number of the organization. This information must be printed in letters that are at least three inches in height and no less than one-half inch in width, in a color that contrasts with the color of the collection receptacle. Upon request, a charitable organization or sponsor must provide a donor with documentation of its tax-exempt status.

Disclosure requirements

The existing law required that all registered organizations that solicit in Florida include a standard disclosure, along with the organization's registration number in every solicitation, confirmation, receipt or reminder of a contribution.

A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION ON CONSUMER SERVICES BY CALLING TOLL-FREE WITHIN THE STATE.  REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION BY THE STATE.

The statement must now include both the department's toll-free number, 1.800.435.7352, and the department's website, www.800helpfla.com.

This information must also be placed on the organization's website or on any Web page that identifies a mailing address where contributions are sent, a telephone number to process contributions or a Web page that provides for online processing of contributions.

Penalties

As part of the enhanced penalties, the amendment gives the department the authority to remove an organization's sales tax exemption as a penalty for the violation of the Solicitation of Contributions Act.

In addition, administrative penalties for violations of the Solicitation on Contributions Act have increased to up to $5,000. Penalties for fraudulent or deceptive acts have increased to up to $10,000. Fines for failure to file a registration for a 501(c)(3) remain at $500.

Conclusion

Floridians are caring and compassionate, generously donating to a variety of causes. The new law increases the scrutiny and compliance obligations of charitable organizations in an effort to be better stewards of Floridians' kindness and preserve the reputation of Florida's nonprofit community.