In the state of California, charitable fundraising platforms are now required to meet new regulations aimed at promoting transparency, accountability, and responsible practices. These changes have been introduced to build trust among donors and beneficiaries. The new requirements include annual registration and reporting, disclosing information to donors, obtaining written consent from charity beneficiaries, limiting solicitation to reputable organizations, segregating funds, ensuring prompt distribution of donations, and transparently accounting for fees. By complying with these guidelines, platforms contribute to a more trustworthy and ethical environment for digital philanthropy.
Below is a handy checklist outlining these 7 essential aspects to California AB 488. We explore each requirement in detail, highlighting its importance and the positive impact it can have on charitable fundraising platforms and the organizations they support.
1. Annual registration and reporting
Under the new requirements, charitable fundraising platforms are mandated to register on an annual basis. This registration serves as a demonstration of their commitment to complying with the law. Additionally, platforms must provide detailed reports that showcase their adherence to regulatory guidelines. By ensuring regular registration and reporting, transparency and accountability within the industry are fostered, building trust among donors and beneficiaries.
2. Required disclosures
To enhance transparency and enable informed giving, platforms are obligated to disclose specific information to donors. This includes comprehensive details about any fees associated with the platform's services, as well as how the funds raised will be utilized by the charitable organizations. By providing this crucial information upfront, donors can make well-informed decisions about their contributions and have a clear understanding of how their donations will make an impact.
3. Written consent of charity beneficiaries
The requirement for written consent from charity beneficiaries before soliciting funds is a key aspect of the new regulations. This provision ensures that the platform operates with integrity and accountability. By obtaining explicit consent, platforms demonstrate their commitment to transparency and respect for the beneficiaries' wishes. It empowers charities to have control over the use of their name and reputation in fundraising efforts, promoting ethical practices within the sector.
4. Restricted solicitation
The restriction on soliciting funds solely for charities in good standing is a vital safeguard implemented by the regulations. By adhering to this requirement, platforms ensure that the donations they collect go to reputable and trustworthy organizations. This measure protects donors from potential fraud or mismanagement of funds and reinforces the importance of supporting organizations that have demonstrated their commitment to ethical practices and impact-driven work.
5. Fund segregation
One of the fundamental principles emphasized by the new regulations is the segregation of funds. Platforms must ensure that the funds raised through their platform are kept separate and distinct from other assets. This practice promotes clarity and transparency, as it allows for a clear delineation of the funds designated for charitable purposes. Fund segregation mitigates the risk of commingling funds and strengthens the platform's ability to account for the allocation and distribution of donations.
6. Prompt distribution segregation
Prompt distribution of donations and grants received is a crucial requirement that aligns with the urgency of charitable needs. Platforms are responsible for ensuring that the funds reach the intended charitable organizations in a timely manner. By facilitating prompt distribution, platforms enable charities to leverage the funds effectively and efficiently address the pressing needs they aim to alleviate. This requirement emphasizes the importance of timely action and impact in the realm of charitable giving.
7. Accounting of fees
Platforms are mandated to provide a transparent and comprehensive account of any fees charged and how they are allocated. This provision promotes financial transparency, ensuring that donors are aware of the costs associated with the platform's services and how those fees contribute to the platform's operations. By disclosing the breakdown of fees and their allocation, platforms uphold ethical practices and enable donors to make informed decisions about their contributions, fostering trust and confidence in the platform's operations.
Overall, these requirements aim to create a more accountable, transparent, and responsible environment for charitable fundraising platforms. By adhering to these guidelines, platforms contribute to building trust and confidence among donors, beneficiaries, and the wider community, fostering a robust and ethical charitable ecosystem.
How Change can help you with compliance today
Change is a valuable resource for companies seeking compliance with California AB 488 and navigating the complexities of cause marketing regulations. Our comprehensive platform provides the tools and guidance necessary to ensure adherence to the new requirements. With Change, companies can easily meet the annual registration and reporting obligations, maintain transparent communication by disclosing fee details and fund utilization, and obtain the necessary written consent from charity beneficiaries. We facilitate restricted solicitation, ensuring that donations go to reputable organizations, and enables fund segregation to maintain transparency and accountability. Change also prioritizes prompt distribution of donations and grants, aligning with the urgency of charitable needs. With their robust accounting features, companies can effortlessly track and report on fees, promoting financial transparency and building trust among donors.
Change empowers companies to comply with California AB 488, fostering a responsible and ethical cause marketing environment. Book a demo with us today to learn more.