- Economic Impact
|SB 638/ HB 629 - Frequently Asked Questions|
Frequently Asked Questions
Who were the sponsors of this bill?
Senator Jeff Brandes (R-St. Petersburg) and Rep. Jim Boyd (R-Bradenton).
What is the objective of this legislation?
Commissioner Adam Putnam, reacting to the Tampa Bay Times investigative series called The 50 Worst Charities, wants to prevent the misuse of Floridian’s charitable contributions by cracking down on fraudulent and deceptive organizations.
Who does this legislation affect?
This legislation applies to any organization that solicits contributions and files an annual charitable solicitation registration with the state. It will have an effect on charitable nonprofits, public foundations, and community foundations. It will especially affect third- party solicitors.
If I am a nonprofit organization, how will this legislation affect my…
Board: The legislation requires that organizations adopt a conflict of interest policy.
Management of Programs: The legislation requires charities that have a) more than $1 million in total revenue and b) spend less than 25% of their annual expenses on program services to file more detailed financial reports, providing information such as percentage and amount of revenue going to total salaries, fundraising, travel and overhead; and names of employees, consultants, and service providers paid more than $100,000. The proposal would also deny tax benefits in the state of Florida for charities that devote less than 25% of funds to program service expenses, averaged over three years. It gives the department the authority to issue an exception for charities that are fundraising for a purpose outside of program services, such as raising funds to increase infrastructure or build a new building, as long as that purpose is being disclosed in its solicitations.
Reporting and Monitoring: This is likely where most charities will feel the effects of this new law the most, as new types of reporting will be required. Charities that receive between $500,000 and $1 Million from the state will be required to submit a reviewed financial statement from a Certified Public Accountant. Charities that receive more than $1 million will be required to submit an audited financial statement. This is a new requirement that brings Florida in line with the majority of other states. It also requires charities that solicit funds in the wake of a natural disaster (or other "tragedy”) to submit additional information to the state. Charities will also be required to put basic contact information on collection receptacles. Organizations collecting less than $25,000 per year, or that qualify for certain special exemptions, will be subject to fewer reporting requirements.
How will this new reported information be used?
The legislation’s intent is to make it easier for Floridians to make informed decisions when giving to charitable nonprofits. The bill will create an interactive database at 800helpfla.com (also known as The Gift Givers Guide) that will allow Floridians to find all the information collected (covering leadership, locations, contact information, financials and any violations) on charities through a search function.
What are the penalties for charities that do not comply?
Administrative penalties for violations of the Solicitation of Contributions Act have increased to up to $5,000. A charitable nonprofit can be fined up to $10,000 per "fraudulent or deceptive” act; and, the Department of Agriculture and Consumer Services may temporarily suspend the registration of a charitable organization whose officers or proprietors engage in criminal activity involving fraud, theft, or crimes arising from professional solicitation.
What is the difference between a "professional fundraising consultant” and a "professional solicitor”?
Current Florida law defines a "professional fundraising consultant” as any person who helps a charity with any service related to charitable solicitations (planning, advising, etc.) but does not solicit him/herself. A "professional solicitor,” is any person who is compensated for directly soliciting contributions—excluding employees of charitable organizations.
How will this law affect Professional Fundraising Consultants?
The legislation allows the Department of Agriculture and Consumer Services to ban professional fundraising consultants that are found to have been disciplined or who administered organizations that were disciplined in other states before moving to Florida.
How will this legislation affect Professional Solicitors?
The new law will most greatly impact this particular group, which stems from findings in the Tampa Bay Times series, 50 Worst Charities. The law will require professional solicitors to submit scripts used to conduct solicitations and other solicitation information, bringing these requirements more in line with the requirements placed on typical telemarketers. It also requires professional solicitors to disclose additional information, including:
The Department of Agriculture and Consumer Services will now be able to ban professional solicitors that have been found to have been disciplined or who administered organizations that were disciplined in other states before moving to Florida. It requires anyone associated with a professional solicitor—including directors, owners and employees—to apply for a license which includes the submission of fingerprints. Professional solicitors will also be prohibited from soliciting any officers, directors, trustees, or employees who were found guilty of, or pled guilty or nolo contendere to any felonies and crimes involving fraud, theft, larceny, embezzlement, fraudulent conversion, misappropriation of property, or crimes arising from the conduct of a solicitation within the last 10 years. The legislation would also make it a violation for a professional solicitor to fail to abide by an agreement to provide a certain percentage of donations to a charity, thus allowing the department to take action. The penalties for non-compliance would be a $5,000 fine per violation (up from $1,000 per violation).
Isn’t this bill just more onerous red tape for nonprofits to deal with?
Not necessarily. This bill has been vetted and reviewed by The Florida Nonprofit Alliance, and representatives of the United Way of Florida, Florida Philanthropic Network, Nonprofit Center of Northeast Florida, and several "blue ribbon” charities sought out by Commissioner Putnam. Most of the requirements simply bring Florida in line with best practices already adopted by other states. Also, the bill will crack down on bad actors in the state that make honest charitable nonprofits look bad. This bill aims to keep Florida from becoming an unregulated safe harbor for scam artists. That said, the bill is not perfect. For example, mandating spending percentages, like the 25% figure that appears in this bill, have been called unconstitutional in other states where they have been proposed. None the less, the department and Commissioner Putnam have made an earnest effort to balance cracking down on bad actors and making sure that new requirements are not overly burdensome to the lion’s share of charitable nonprofits doing things the right way. If you see something in the bill you think needs changing you should contact your legislator.
Who should I contact about this bill?
The Florida Nonprofit Alliance would be happy to answer your questions as best as we can. You can call us at (407) 694-5213. .
If you’d like to
speak with a legislator, the bill sponsors and Commissioner Putnam’s office are listed below: