With the rise of online charitable giving, new regulations have emerged to ensure transparency and proper use of donated funds.
Recently, California introduced AB 488, known as the Charitable Solicitation Registration Act, affecting companies engaging in online charitable activities, including round-ups at checkout.
California AB 488 requires certain legal entities using the internet to facilitate donations to register with the California Attorney General’s Registry of Charitable Trusts.
Beginning June 12, 2024, these new registration and filing requirements become applicable to charitable fundraising platforms.
This includes seemingly innocuous donation campaigns like round-ups at checkout.
Under AB 488, companies must register and file specific forms and reports.
This regulation is part of California's broader effort to include online charitable platforms and the charities they support within the regulatory framework.
These platforms often enable users to donate to listed charities through purchases and other activities, emphasizing transparency and accountability in charitable fundraising.
Following California's lead, Hawaii is introducing similar legislation, effective January 1, 2026.
This new bill will authorize the Department of the Attorney General to regulate charitable fundraising platforms and platform charities.
The details of the bill are still being ironed out, but there are a few key points that the bill mentions.
Key provisions include regulating the misuse of funds, imposing vicarious liability for misuse, and exempting national disaster charitable organizations.
The bill also aims to regulate charitable activities during declared federal disasters.
In fact, the urgency of such regulation was highlighted by the August 2023 wildfires on Maui, which showcased the challenges of managing a massive influx of donations.
Ensuring these donations reached the intended recipients and preventing fraud became a significant task for officials.
For companies involved in online charitable campaigns, maintaining compliance with these new regulations is crucial. Here’s what you should do:
Before launching your campaign, apply for registration as a charitable fundraising platform in California using this link here. This becomes effective June 12, 2024.
Before launching round-ups at checkout, discuss the implications of the new laws with your nonprofit partners to ensure alignment on compliance requirements.
Verify that your website or mobile app displays the necessary disclosures, especially on the checkout page, to inform donors appropriately.
If your campaigns are facilitated by third-party platforms (like Change), ensure they are aware of the new requirements and capable of fulfilling all aspects of the law.
This includes displaying required disclosures, confirming the charity’s good standing, and ensuring timely donation disbursements.
When in doubt, speak with legal experts to ensure your company fully complies with the new laws and regulations.
By taking these steps, companies can not only comply with new regulations but also foster trust and transparency with their customers and donors.
Embracing these changes positively will help enhance the impact of your charitable campaigns and ensure the integrity of the donations collected.
As more states adopt regulations similar to California’s AB 488, companies engaged in charitable fundraising will need to stay informed and adapt to maintain compliance.
These laws, though seemingly complex, ultimately aim to build a more transparent and trustworthy environment for online giving.
Ultimately, it’s all about consumer protection and being transparent.
This also happens to be a really effective way to build trust with your customers.
By following the outlined steps, you’ll be able to navigate these changes smoothly and continue to support meaningful causes effectively.
These new regulations are another reason to consider outsourcing your compliance.
Change has a turnkey solution to facilitate Commercial Co-Venturer compliance in all the states that require it.
Learn more about Change's commercial co-venturer compliance solution here.
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