WSR 97-08-076
PROPOSED RULES
SECRETARY OF STATE
(Corporations Division)
[Filed April 2, 1997, 8:50 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 97-03-014.
Title of Rule: Chapter 434-120 WAC, Charitable solicitation organizations and charitable trust.
Purpose: To revise the form for charitable organization registration and commercial fund-raiser registration. To clarify the financial standards for charitable organizations and commercial fund-raisers.
Statutory Authority for Adoption: RCW 19.09.075, 19.09.079, 19.09.210, and 19.09.315.
Statute Being Implemented: RCW 19.09.075, 19.09.079, 19.09.210, and 19.09.315.
Summary: There have been request[s] from constituents to clarify, review and revise the registration and financial reporting requirements for charities and commercial fund-raisers.
Reasons Supporting Proposal: These rules update forms to comply with other WAC changes and simplify reporting requirements for charitable organizations.
Name of Agency Personnel Responsible for Drafting: Frances Sant, 505 East Union, 1st Floor, Olympia, WA 98504, (360) 753-7120, ext. 261; Implementation and Enforcement: Colleen Kemp, 505 East Union, 1st Floor, Olympia, WA 98504, (360) 753-7120, ext. 258.
Name of Proponent: Office of the Secretary of State, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: WAC 434-120-040, new section to describe how registrants financial information will be used and provided to the general public; WAC 434-120-105, description of the content of the registration form and solicitation report for charitable organizations; WAC 434-120-130, description of financial standards for charitable organizations; WAC 434-120-215, description of the content of the registration form and solicitation report for commercial fund-raisers; and WAC 434-120-255, description of financial standards for commercial fund-raisers.
Proposal Changes the Following Existing Rules: WAC 434-120-105, information collected on registration and renewal forms will facilitate better information for public disclosure. Use of the federal information tax return (990 and 990PF) and use of the uniform registration form, with the required addendum will be accepted.
WAC 434-120-130, charitable organizations shall provide a financial statement within thirty days from date of request.
WAC 434-120-215, information collected on registration and renewal forms will facilitate better information for public disclosure.
WAC 434-120-255, commercial fund-raisers shall provide a financial statement within thirty days from date of request.
No small business economic impact statement has been prepared under chapter 19.85 RCW. There is no fiscal impact being made on small business by this rule-making order.
Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption.
Hearing Location: Office of the Secretary of State, 2nd Floor, Legislative Building, Olympia, WA 98504, on May 28, 1997, at 8:30 a.m.
Assistance for Persons with Disabilities: Contact Barbara Simeon by May 15, 1997, TDD (360) 586-4250, or (360) 586-0393.
Submit Written Comments to: Frances Sant, P.O. Box 40244, Olympia, WA 98504-0244, FAX (360) 664-4250, by May 23, 1997.
Date of Intended Adoption: June 30, 1997.
April 1, 1997
Donald F. Whiting
Assistant Secretary of State
NEW SECTION
WAC 434-120-040 Public information derived from registration. Registrations forms, and attachments, filed by charitable organizations and commercial fund-raiser 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.
[]
AMENDATORY SECTION (Amending WSR 94-01-004, filed 12/1/93, effective
1/1/94)
WAC 434-120-105 Form. (1) Charitable organizations registering
under this act shall use ((the combined charitable organization,
charitable trust, and public benefit)) the registration form available
in the office of the corporations division ((or shall provide, by letter,
the required information organized and topically sectioned in exactly the
following manner:)). The Secretary of State shall develop a form in
compliance with this rule. The secretary may accept the Uniform
Registration Statement developed by the National Association of State
Charity Officials if accompanied by an addendum developed by the
secretary for use in Washington, if the uniform form and addendum contain
all of the information required by 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.
(2) A registration form is not complete, and will not be accepted for filing, unless it includes:
(((1) Section I. The name, address, and telephone number of the
charitable organization; and the name under which the organization will
solicit contributions.
(2) Section II. he name, address, and telephone number of the
corporate officers, directors of the board, or persons accepting
responsibility for the organization; and the names of the three officers,
directors, or employees who receive the greatest amount of compensation
from the organization. If this is a consolidated registration, then list
the names of the three officers or employees of the parent organization.
(3) Section III. The purpose of the charitable organization; the
names and addresses of beneficiaries or the selected group of persons or
activities which the charitable organization supports; and to whom assets
would be given in the event of dissolution.
(4) Section IV. Whether or not the organization has a federal
income tax exempt status, and, if so, the basis. Attach a copy of the
letter or other written proof of the status declaration if granted under
26 U.S.C. 501 (c)(3) by the Internal Revenue Service. Include the name,
address, and telephone number of the entity that prepares, compiles,
reviews, or audits the financial statement of the charitable
organization.))
(a) The name of the organization, and every address (including both physical address and any mailing address if different), telephone number(s), FAX numbers(s), and taxpayer identification number, including those of all offices, chapters, branches, and affiliates used in charitable solicitations reflected in the registration including any electronic mail or Internet addresses used by the organization;
(b) All of the names under which the organization will solicit contributions;
(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 charitable solicitations, 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 purpose of the charitable organization, including, if applicable, the names and addresses of any specific beneficiaries which the charitable organization supports and to whom assets would be distributed to in the event of dissolution;
(j) Whether the charitable organization is exempt from federal income tax, and, if so, attaching a copy of the letter by which the Internal Revenue Service granted such status to its initial registration;
(k) 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;
(l) 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 commercial fund raiser and any commercial coventurer who have the authority to expend funds or incur obligations on behalf of the organization;
(m) An irrevocable appointment of the secretary to receive service of process in noncriminal proceedings as provided in RCW 19.09.305;
(n) A solicitation report of the charitable organization for the preceding fiscal year including:
((5) Section V. A financial statement in the form of a solicitation
report, which includes the following information:
(a) From a newly formed entity that has not completed its first
accounting year, the annual budget expenditures approved by the board of
directors or other responsible person(s), which must clearly identify the
reported figures as budget estimates not based upon actual funds
expended; or, from an entity that has completed one or more accounting
years but has not previously registered under this act, its actual
expenditures from the preceding fiscal year, and its proposed budget for
the coming fiscal year; and
(i) The number and types of solicitations planned; and
(ii) From the existing entity, total revenue for the preceding year
and the amount that was used for the charitable purpose;
In addition, seven months after registration all newly formed
entities shall file a six month report containing actual budget figures.
(b) From charitable organizations registering for the second or more
years, the following information from the preceding fiscal year:))
(iii) ((A solicitation report that contains the gross revenue
applied to charitable purposes, fund raising costs, and other expenses,
which are figured in accordance with WAC 434-120-125, including the
amount of any compensation allocated to charitable purposes and paid to
a commercial fund raiser or other entity, who is not a bona fide
employee, as defined in RCW 19.09.020(1), for fund raising services; and
(iv))) The name, physical address, and telephone number of any
commercial fund raiser used by the organization;
(i) The types of solicitations conducted; and
(ii) The name, physical address, and telephone number of any commercial fund-raiser, including any commercial coventurer conducting solicitations on behalf of the organization in Washington during the period covered by this report; and
(iii) Either;
(A) A copy of the charitable organization's federal informational tax return (Form 990 or Form 990 PF, but not form 990EZ) covering the period covered by this report. The form shall include lines on which to report the amounts reported on the return as "program services' and "total expenses"; or
(B) If the charitable organization files a federal informational tax return (Form 990 EZ) or is not required to file a federal information tax return, the total dollar value of all support received from solicitations and all other sources, total expenditures during the reporting period and the amount of those expenditures devoted directly to charitable program services;
(o) The form shall also include a space within which any charitable 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 charitable solicitations 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, if it raises at least twelve thousand five hundred dollars during that six months.
(4) A parent organization may file a consolidated registration form,
including the solicitation report, when registering including the
solicitation information required for each of its related foundations,
supporting organizations, chapters, branches, or affiliates in the state
of Washington, which are supervised or controlled by the parent
organization. A parent organization may report financial information
either separately or in consolidated form for all subsidiary
organizations. A filing by the parent organization relieves each
subsidiary organization identified in that filing of any duty to file
independently. ((Alternatively, it may file a single combined
solicitation report including funds raised by all such units of the
parent organization and listing the individual names of all units who
raised five thousand dollars or more in the preceding year.
(6) Section VI: A signed statement from the entity who prepares,
compiles, reviews, or audits the financial statement who is listed under
the requirement of WAC 434-120-105(4), attesting that the figures of the
solicitation report are consistent with the organization's annual
financial statement; and a written list of the copies of any annual or
periodic reports on file that were made by the charitable organization
and its subsidiaries, or affiliates, if any, which substantiate the
figures; and
(7) An irrevocable appointment of the secretary to receive service
of process in non-criminal proceedings.))
(5) All charitable solicitation organization registrations shall be
signed by the president, treasurer, or comparable officer of the
organization or, in the absence of officers, person responsible for the
organization, whose signature shall be notarized.
[Statutory Authority: Chapters 34.05, 19.09, 11.110 and 43.07 RCW and
1993 c 471. 94-01-004, 434-120-105, filed 12/1/93, effective 1/1/94.]
Reviser's note: RCW 34.05.395 requires the use of underlining and
deletion marks to indicate amendments to existing rules. The rule
published above varies from its predecessor in certain respects not
indicated by the use of these markings.
Reviser's note: The typographical errors in the above section
occurred in the copy filed by the agency and appear in the Register
pursuant to the requirements of RCW 34.08.040.
[AMENDATORY SECTION (Amending WSR 94-01-004, filed 12/1/93, effective
1/1/94)]
WAC 434-120-130 ((Auditing standards and requirements)) Financial
standards. ((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 30 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.]
Reviser's note: The bracketed material preceding the section above
was supplied by the code reviser's office.
Reviser's note: The typographical errors in the above section
occurred in the copy filed by the agency and appear in the Register
pursuant to the requirements of RCW 34.08.040.
[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 the)) 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.
(2) 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.))
(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 fundraising 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 fundraising activities of the entity in Washington.
(c) If incorporated, the corporate name, unified business indentifier 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 fundraising, 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;
(k) 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;
(l) 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.
(m) An irrevocable appointment of the secretary to receive service of process in noncriminal proceedings as provided in RCW 19.09.305;
(n) 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 fundraising 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 fundraising services.
(o) The form shall also include a space within which any 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 fundraising 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-raisers registrations shall be signed by an officer or owner of the commercial fund-raiser.
(((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.))
[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.]
Reviser's note: The spelling error in the above section occurred
in the copy filed by the agency and appears in the Register pursuant to
the requirements of RCW 34.08.040.
Reviser's note: The bracketed material preceding the section above
was supplied by the code reviser's office.
Reviser's note: The typographical errors in the above section
occurred in the copy filed by the agency and appear in the Register
pursuant to the requirements of RCW 34.08.040.
[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 standards and requirements)) 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 30 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
fundraising 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.]
Reviser's note: The bracketed material preceding the section above
was supplied by the code reviser's office.
Reviser's note: The typographical errors in the above section
occurred in the copy filed by the agency and appear in the Register
pursuant to the requirements of RCW 34.08.040.
Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.