WSR 97-16-035

PERMANENT RULES

SECRETARY OF STATE

[Filed July 30, 1997, 9:43 a.m.]

Date of Adoption: July 30, 1997.

Purpose: To revise the form for commercial fund-raiser registration. To clarify the financial standards for charitable organizations and commercial fund-raisers.

Citation of Existing Rules Affected by this Order: Amending WAC 434-120-130, 434-120-215, and 434-120-255.

Statutory Authority for Adoption: RCW 19.09.075, 19.09.079, and 19.09.210.

Adopted under notice filed as WSR 97-08-076 on April 2, 1997.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.

Number of Sections Adopted on the Agency's own Initiative: New 1, amended 3, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 1, amended 3, repealed 0.

Number of Sections Adopted using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.

Effective Date of Rule: Thirty-one days after filing.

July 30, 1997

Tracy Guerin

Assistant Secretary of State

NEW SECTION

WAC 434-120-040 Public information derived from registration. Registration forms, and attachments, filed by charitable organizations and commercial fund-raisers pursuant to WAC 434-120-105 and WAC 434-120-215 are available for public inspection or copying. For purposes of public reports derived from that registration information, the secretary shall calculate, and make available to the public, the following information:

(1) For charitable organizations, the percentage of total expenditures in a reporting year allocated to charitable program services. This shall be calculated as follows:

(a) For organizations required to file a federal information tax return, by dividing the amount reported as "program services" (e.g., line 13 of the form 990) by the amount reported as "total expenses" (e.g., line 17 of form 990) and multiplying by 100; or

(b) For organizations not required to file a federal informational tax return, by dividing the amount reported as expended for charitable purposes by the amount reported as total expenses.

(2) For commercial fund-raisers the percentage of the proceeds of charitable solicitations which are paid to or retained by charitable organizations. This shall be calculated by dividing the amount reported pursuant to WAC 434-120-215 (2)(n)(iii)(B) by the amount reported pursuant to WAC 434-120-215 (2)(n)(iii)(A), and multiplying by 100.

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AMENDATORY SECTION (Amending WSR 94-01-004, filed 12/1/93, effective 1/1/94)

WAC 434-120-130 ((Auditing)) Financial standards ((and requirements)). ((A charitable organization's solicitation report shall be signed by the following entities who attest that the figures are consistent with the annual financial statement:

(1) Those with a gross revenue of less than three hundred fifty thousand dollars a year, shall submit an annual solicitation report signed by the president and treasurer, or absent a board of directors and officers, two persons responsible for the organization, and the entity listed in the registration form as required by WAC 434-120-105(4) who prepared the financial statement or made the compilation, review, or audit report that supports the solicitation report; and

(2) Those having a gross revenue of more than three hundred fifty thousand dollars annually, shall submit an annual solicitation report signed by the president, treasurer, and the entity listed in the registration form according to WAC 434-120-105(4) who made the "audit report" of the solicitation report.

Upon the written request of the secretary, attorney general, or county prosecutor, an organization shall submit an audit report for the year requested within thirty working days from the date of request.)) Upon the request of the attorney general, secretary or the county prosecutor, a charitable organization shall submit a financial statement containing, but not limited to, the following information within thirty days from date of request.

(1) The gross amount of the contributions pledged and the gross amount collected.

(2) The amount thereof, given or to be given to charitable purposes represented together with details as to the manner of distribution as may be required.

(3) The aggregate amount paid and to be paid for the expenses of such solicitation.

(4) The amounts paid to and to be paid to commercial fund-raisers or charitable organizations.

(5) Copies of any annual or periodic reports furnished by the charitable organization, of its activities during or for the same fiscal period, to its parent organization, subsidiaries, or affiliates, if any.

[Statutory Authority: Chapters 34.05, 19.09, 11.110 and 43.07 RCW and 1993 c 471. 94-01-004, 434-120-130, filed 12/1/93, effective 1/1/94.]

AMENDATORY SECTION (Amending WSR 95-11-135, filed 5/24/95, effective 6/24/95)

WAC 434-120-215 Form. (1) Commercial fund-raisers registering under this act shall use the commercial fund-raiser registration form available ((from)) in the office of the corporations division. The secretary of state shall develop a form in compliance with this rule. The secretary's failure to affirmatively reject or return an incomplete registration or other filing that does not fully comply with these rules or chapter 19.09 RCW, shall not excuse the failure to comply. The secretary's acceptance of a registration or other filing which violates these rules or chapter 19.09 RCW shall not excuse the violation. A registration form is not complete, and will not be accepted for filing, unless it includes:

(((a) The organization's name, physical and mailing address, and telephone number of the commercial fund-raising entity and all names and addresses including without limitation all public or private postal box addresses under which contributions are solicited.

(b) The name(s); address(es); and telephone number(s); of the individual(s); responsible for the activities of the entity in Washington; and a list of the states and Canadian provinces in which the entity has solicited funds;

(2) The name(s), address(es), and telephone number(s) of the owner(s) and principal officer(s) of the commercial fund-raising entity; and the names of the three officers or employees receiving the greatest amount of compensation from the organization;

(3) The name and address of the entity that prepares, reviews, or audits the financial statement;

(4)(a) For an entity that has never before registered under the Solicitations Act, a solicitation report based on the aggregate financial fund-raising conducted in other states or, if an accounting year has not been completed in any state, a solicitation report filed by the end of the fourth operating month which reports actual financial information regarding the organization's first three months of operations in Washington, a three-month report containing actual financial information.

(b) For those who have previously conducted solicitations in Washington state, a solicitation report based on the previous accounting year. The report shall contain the following information:

(i) The number and types of fund-raising services conducted;

(ii) The name of each charitable organization to whom this entity has provided fund-raising services;

(iii) The total value of contributions received on behalf of each charitable organizations by or as response to the commercial fund-raiser, its affiliate or another entity retained by the commercial fund-raiser;

(iv) The actual amounts of money raised for each charitable organization after the fund-raising costs paid by each charitable organization has been deducted in accordance with the written agreement made prior to the solicitation;

(v) The name, address, and telephone number of any other commercial fund-raiser retained in the conduct of providing fund-raising services;

(5)(a) For funds that were raised and paid on a net revenue basis to each contracting organization or for each campaign in which the charitable organization paid any portion of the expenses, a solicitation report consistent with the audited annual financial statement signed by the entity who is listed as required by subsection (3) of this regulation; or

(b) For funds that were raised and paid on a percentage of gross revenue basis, a solicitation report, which shows the total revenue from each campaign conducted for each individual organization and the amount received by each charitable organization. This report must be verified and signed by the entity, who is required to be listed in subsection (3) of this section, and the president or treasurer of the charitable organization for which the funds were raised. The fund-raiser shall submit individual solicitation reports for each campaign.

(6) An irrevocable appointment of the secretary to receive service of process in noncriminal proceedings.

All commercial fund-raiser registrations shall be signed by an officer or owner of the commercial fund-raiser.)) (2) A registration form is not complete, and will not be accepted for filing, unless it includes:

(a) The name of the organization, and every address (including both physical address and any mailing address if different), telephone number(s), FAX number(s), of the commercial fund-raising entity under which contributions are being solicited or received, including any electronic mail or Internet addresses used by the organization;

(b) The name(s); address(es); and telephone number(s) of the individual(s) responsible for fund-raising activities of the entity in Washington;

(c) If incorporated, the corporate name, unified business identifier number, state and date of incorporation, or if not incorporated, the type of organization and date established;

(d) The end date of its current fiscal year;

(e) The court or other forum, case number and title of all legal actions, if any, in which a judgment or final order was entered, or action is currently pending, against any organization or individual required to be identified in the registration. "Actions" include any administrative or judicial proceeding alleging that the entity has failed to comply with these rules, chapter 19.09 RCW, or state or federal laws pertaining to taxation, revenue, charitable solicitation, or recordkeeping, whether such action has been instituted by a public agency or a private person or entity;

(f) A list of all states where the organization is registered for fund-raising, including any other names under which the organization is currently registered or has been registered in the past three years;

(g) The name, address, and telephone number of the officers or of persons accepting responsibility for the organization;

(h) The names of the three officers or employees receiving the greatest amount of compensation from the organization;

(i) The name and address of the person or entity with authority for the preparation of financial statements or the maintenance of financial information on behalf of the organization;

(j) The name, address, and telephone number of an individual with expenditure authority who can respond to questions regarding expenditures of funds, and the names and addresses of any charitable organizations who have given the commercial fund-raiser authority to expend funds or incur obligations on behalf of the organization;

(k) An irrevocable appointment of the secretary to receive service of process in noncriminal proceedings as provided in RCW 19.09.305;

(l) A solicitation report of the fund-raising activities of the entity for the preceding fiscal year including:

(i) The types of fund-raising services conducted;

(ii) The name of each charitable organization to whom this entity has provided fund-raising services;

(iii) The total dollar value of the following:

(A) Contributions received, either by your organization or the charities with whom you contract, as a result of services provided by your organization during the year shown above. (This is the total amount of money raised, regardless of who has possession of funds.)

(B) Funds either retained by, or paid to, the charities with whom you contract, after your fees and any expenses have been subtracted. (This is the portion of money raised that the charities receive or keep after all fund-raising expenses have been deducted.)

(iv) The name, address, and telephone number of any other commercial fund-raiser retained in the conduct of providing fund-raising services;

(m) The form shall also include a space within which any of the organization may provide additional information which the organization believes would be of assistance in understanding other reported information, or to provide context for reported information.

(3) Solicitation reports shall not report estimates, but shall report actual figures. If the organization did not directly or indirectly conduct any fund-raising activities in the previous accounting year, it shall file a supplemental registration form no later than the end of the ninth month after registering which provides a complete solicitation report with actual figures from the first six months of activity after registering.

(4) All commercial fund-raiser registrations shall be signed by an officer or owner of the commercial fund-raiser.

[Statutory Authority: RCW 11.110.070 and 19.09.315. 95-11-135, 434-120-215, filed 5/24/95, effective 6/24/95. Statutory Authority: Chapters 34.05, 19.09, 11.110 and 43.07 RCW and 1993 c 471. 94-01-004 and 94-02-011, 434-120-215, filed 12/1/93 and 12/22/93, effective 1/1/94 and 1/23/94.]

AMENDATORY SECTION (Amending WSR 94-01-004 and 94-02-011, filed 12/1/93 and 12/22/93, effective 1/1/94 and 1/23/94)

WAC 434-120-255 ((Auditing)) Financial standards. ((Each commercial fund raiser shall make one or more annual solicitation reports for each campaign conducted or in which it participated, whether engaged by another commercial fund raiser or by a charitable organization to solicit or conduct a solicitation. Each solicitation report shall be signed by the entity listed under WAC 434-120-215(3), who attests that the figures are consistent with the annual financial statement:

(1) Those whose solicitations or offers to solicit result in less than three hundred fifty thousand dollars from all contributions made on behalf of charitable organizations in Washington shall have on file for three years the complete compilation, review, or audit report of the financial statement that was filed in the form of a solicitations report and signed by the entity named as required by WAC 434-120-215(3).

(2) Those whose solicitations and offers to solicit result in more than three hundred fifty thousand dollars from all contributions made on behalf of charitable organizations in the state of Washington shall have on file an audit report of the financial statement that was filed in the form of a solicitation report and signed by the entity named as required by WAC 434-120-215(3).

(3)(a) A commercial fund raiser who engages another commercial fund raiser to solicit funds or conduct a solicitation on behalf of a charitable organization is responsible for and shall include the total contributions and the total expenses related to that campaign in its solicitations report of that campaign.

(b) If a reporting commercial fund raiser's contributions and expenses for a campaign are included in another commercial fund raiser's solicitations report, the reporting fund raiser shall list in its report the name of that fund raiser, the name of the charitable organization, the dates of the campaign, and the total contributions and expenses for which it was responsible.

The annual financial statement in the form of a solicitation report, as verified in accordance with the auditing standards, shall be filed with the application required in WAC 434-124-215.

(4) Upon written demand by the secretary, the attorney general, or the county prosecutor, a commercial fund raiser shall submit an audit report for the year requested within thirty working days.)) Upon the request of the attorney general, secretary or the county prosecutor, a commercial fund-raiser shall submit a financial statement containing, but not limited to, the following information within thirty days from date of request.

(1) The gross amount of the contributions pledged and the gross amount collected.

(2) The amount thereof, retained by the charitable organization, given or to be given to charitable organizations represented together with details as to the manner of distribution as may be required.

(3) The aggregate amount paid and to be paid for the expenses of such solicitation.

(4) The amounts paid to and to be paid to charitable organizations.

(5) Copies of any annual or periodic reports furnished by the fund-raising organization, of its activities during or for the same fiscal period, to its parent organization, subsidiaries, or affiliates, if any.

[Statutory Authority: Chapters 34.05, 19.09, 11.110 and 43.07 RCW and 1993 c 471. 94-01-004 and 94-02-011, 434-120-255, filed 12/1/93 and 12/22/93, effective 1/1/94 and 1/23/94.]

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