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RULE PROPOSALS
VOLUME 42, ISSUE 15
ISSUE DATE: AUGUST 2, 2010
LAW AND PUBLIC SAFETY
DIVISION OF CONSUMER AFFAIRS
CHARITIES REGISTRATION UNIT

 

Proposed Readoption with Amendments: N.J.A.C. 13:48
Proposed New Rule: N.J.A.C. 13:48-9.3

Charitable Fund Raising Rules

Authorized By: Thomas R. Calcagni, Acting Director, Division of Consumer Affairs.

Authority: N.J.S.A. 45:17A-18 et seq., specifically 45:17A-21b.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2010-131 .

Submit written comments by October 1, 2010 to:
Thomas R. Calcagni, Acting Director
Office of the Director
Division of Consumer Affairs
P.O. Box 45027
Newark , New Jersey 07101

The agency proposal follows:

Summary

Pursuant to the provisions of Executive Order No. 66 (1978) and N.J.S.A. 52:14B-5.1, N.J.A.C. 13:48, the rules on charitable fund raising were scheduled to expire on January 21, 2010. Pursuant to Executive Order No. 1 (2010), the chapter expiration date is extended from January 21, 2010 until the completion of the review of administrative regulations and rules by the Red Tape Review Group, and until such time as the extended regulation or rule is readopted pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq.

These rules were promulgated to implement the Charitable Registration and Investigation Act (the Act), P.L. 1994, c. 16, N.J.S.A. 45:17A-18 et seq. as amended by P.L. 2005, c. 283, effective July 8, 2006. In compliance with Executive Order No. 66 (1978), the Division undertook a thorough review of the existing provisions of N.J.A.C. 13:48 in order to delete unnecessary rules and clarify existing provisions. The Division believes that the rules proposed for readoption with amendments and a new rule are necessary, reasonable, understandable and responsive to the purpose for which they were originally promulgated. The Division proposes to readopt this chapter with substantive, as well as technical amendments. The technical amendments are primarily to conform to the wording of the Act, as amended, to shorten references to the Act, for clarification, for consistency and to correct grammar. The following is a summary of the rules proposed for readoption with amendments and the new rule.

Subchapter 1 contains the general provisions relating to charitable fund raising. N.J.A.C. 13:48-1.1 provides that the Director of the Division of Consumer Affairs is charged with the enforcement and the administration of the Act. The proposed amendment provides the statutory citation, rather that the public law citation. N.J.A.C. 13:48-1.2 specifies the type of organization to whose charitable fund raising activities the rules apply and states how an organization may obtain a determination of the applicability of the Act and the rules. The proposed amendment to N.J.A.C. 13:48-1.2(c) adds an e-mail address where a potential registrant may obtain a determination form. N.J.A.C. 13:48-1.3 provides definitions of words and phrases used in this chapter. The proposed amendments to N.J.A.C. 13:48-1.3 are made to conform definitions to the Act or to clarify the meaning of certain terms. The term "commercial co-venturer" is proposed to be amended to capture assignees, subcontractors, independent contractors and successors in interest because the Division's Charities Registration Unit has found that businesses primarily engaged in commerce with which charities contract to benefit the charity through the sale of goods or anything of value, often engage other entities to perform the contract free of the rules that apply to commercial co-venturers. Amendments are proposed to the definition of the phrase "custody, control or access," including the addition of the word "possession," to the defined term to conform to the statutory change at N.J.S.A. 45:17A-27e. In addition, the amendment better captures the various ways that independent paid fund raisers handle a charitable organization's funds that subject them to bonding and certain reporting requirements. Additional examples are provided for the same purpose. The definition of "fund raising counsel" is proposed to be amended to conform to the definition in the Act by including "independent contractor" to the list of people/entities covered by the definition. The term "independent paid fund raiser" is proposed to be amended to include subcontractors and to make clear that the term includes a person who raises funds for a charitable organization by soliciting contributions on behalf of the organization. A definition of the Department of Education is proposed to be substituted for the definition of Secretary of State because the libraries that are exempt pursuant to N.J.A.C. 13:48-3.3(a)5 are now registered with the Department of Education instead of the Secretary of State. The term "solicitor" is proposed to be amended to include individuals who are paid for soliciting contributions to a charitable organization, other than officers, employees or volunteers of the organization, whether or not they work for an independent paid fund raiser. Other proposed amendments to definitions are made to conform to the Act. N.J.A.C. 13:48-1.4 provides the address of the Charities Registration Section for communication about all matters related to registration of charities.

Subchapter 2 concerns the registration and other fees relating to charitable fund raising. N.J.A.C. 13:48-2.1 sets forth the amount of the fees. Proposed new N.J.A.C. 13:48-2.1(a)10 provides for a fee for filing a contract, or for its renewal or extension, between fund raising counsel or independent paid fund raisers and any other fund raising counsel or independent paid fund raisers. The proposed amendment to paragraph (a)7 provides for a late fee for registration filings of fund raising counsel and independent paid fund raisers. The proposed amendment to paragraph (a)8 provides that the registration fee for a solicitor working for an independent paid fund raiser is to be paid by the independent paid fund raiser when it registers the solicitor. The other proposed amendments to this subchapter are technical.

Subchapter 3 contains general requirements for charitable fund raising in New Jersey . N.J.A.C. 13:48-3.1 prohibits a charitable organization, other than an exempt organization, fund raising counsel, an independent paid fund raiser or a solicitor from soliciting or counseling solicitation of a New Jersey resident for a contribution before the Attorney General has had an opportunity to review a registration statement. N.J.A.C. 13:48-3.2 concerns acceptance of registration statements. N.J.A.C. 13:48-3.2(d) and 3.3(b) are proposed to be amended to reflect that the Attorney General may take appropriate action whenever appropriate as provided in the Act (N.J.S.A. 45:17A-22).

N.J.A.C. 13:48-3.3 delineates those organizations exempt from registration. The proposed amendments are technical in nature, except as discussed above. N.J.A.C. 13:48-3.4 concerns extensions of time for filing annual renewal statements. N.J.A.C. 13:48-3.5 states that forms for filing information required by the Act are available upon request and is proposed for amendment to include the Division's address and the Division's website where the forms are available. N.J.A.C. 13:48-3.6 requires a registrant to give the Attorney General notice of any change in the address on file with the Attorney General and specify that the notice must be mailed to the Attorney General by certified mail return receipt requested, but does not indicate to what address the notice should be mailed. Therefore, N.J.A.C. 13:48-3.6 is proposed for amendment to provide the address to which notice to the Attorney General of a registrant's change of address is to be sent, by referring to N.J.A.C. 13:48-1.4, where the address is provided.

Subchapter 4 addresses the requirements for registration by charitable organizations on the short form registration statement. N.J.A.C. 13:48-4.1 lists the organizations required to file the short form, as well as the information required for the initial and renewal short form registration. Paragraph (b)3 is proposed to be amended to specify that the purpose for which the charitable organization was formed is that stated in its governing documents. Paragraph (b)5 is proposed to be amended to require documents evidencing the organization's tax status, rather than a statement. Paragraph (b)7 is proposed to be amended to require a copy of the organization's complete filing with the IRS and indicating the other variants of the Form 990. Subparagraph (b)11ii requires a charitable [page=1677] organization to state whether it had ever been enjoined from soliciting contributions. A cease and desist order is in the nature of an injunction and, therefore, subparagraph (b)11ii is proposed to be amended to require the organization to state whether it had ever been ordered to cease and desist from soliciting contributions. The proposed amendment to N.J.A.C. 13:48-4.1(f) deletes the contingency for when there is only one officer, because as a matter of corporate governance an organization must have at least two officers. The other proposed amendments to N.J.A.C. 13:48-4.1 are technical. N.J.A.C. 13:48-4.2 states when a renewal is due and also provides for extensions. The proposed amendment to N.J.A.C. 13:48-4.2 is technical in nature. N.J.A.C. 13:48-4.3 sets forth the information that a charitable organization must include in its financial report when filing the short form registration or short form renewal. Paragraph (a)1 is proposed to be amended to require the email and web address, if available, of a charitable organization filing a short form registration statement. Paragraph (a)7 is proposed to be amended to require the identity of any independent paid fund raiser or fund raising counsel engaged by the reporting charitable organization and the dates of any solicitation campaign or charitable sales promotion conducted during the fiscal year. Paragraph (a)8 is proposed to be amended to specify that the financial report include the organization's complete filing with the IRS and indicating the other variants of the Form 990. The other proposed amendments to the section are primarily technical.

Subchapter 5 addresses the long form registration statement. N.J.A.C. 13:48-5.1 requires that each charitable organization that is not exempt or qualified to file a short form must file a long form registration statement with the Attorney General and specifies the information required to be included in the long form registration statement. The proposed amendments to N.J.A.C. 13:48-5.1(b) require that the information in an initial registration statement also be provided in a renewal registration except for the documents by which the charitable organization was created, which are to be filed only with the initial registration. N.J.A.C. 13:48-5.2 specifies when a renewal long form registration must be renewed. The proposed amendment to N.J.A.C. 13:48-5.2 is technical in nature. N.J.A.C. 13:48-5.3 delineates the information that a registrant filing a long form registration must include in its financial report and states when an audit is required. Proposed amendments to N.J.A.C. 13:48-5.3(c) and (d) raise the audit threshold from $ 250,000 to $ 500,000 as permitted by the Act, N.J.S.A. 45:17A-24d(2), to ease the burden on smaller charitable organizations of the expense of an audit. Certain requirements in subsections (c) and (d) are set forth as separate paragraphs for clarity, other proposed amendments are grammatical.

Subchapter 6 addresses registration of local units by parent organizations. The heading of the subchapter is proposed to be amended to delete registration of charitable organization because the subchapter addresses registration of local units by parent organizations only. N.J.A.C. 13:48-6.1 sets forth the procedure to be followed by a parent organization that elects to register its local units, and when a local unit must register itself. The proposed amendment to N.J.A.C. 13:48-6.1 adds as a requirement that the parent organization's filing include a street address for local units.

Subchapter 7 addresses registration of fund raising counsel and independent paid fund raisers. N.J.A.C. 13:48-7.1 provides for registration of a fund raising counsel, independent paid fund raiser or any assignee, subcontractor or other successor in interest. N.J.A.C. 13:48-7.1(b)3, 7.2(a) and 7.3 are proposed for amendment to use the proposed defined term "custody, control, possession or access." N.J.A.C. 13:48-7.1(b)4iii is proposed to be amended to clarify that a cease and desist order, as well as an injunction is required to be reported. N.J.A.C. 13:48-7.1(b)6 is proposed to be amended to require that a renewal registration of a fund raising counsel and an independent paid fund raiser include a list of campaigns it conducted during the fiscal year. N.J.A.C. 13:48-7.2 requires that independent paid fund raisers and fund raising counsel having or intending to have custody, control, possession or access to any charitable organization's funds must file a $ 20,000 bond with the Attorney General. N.J.A.C. 13:48-7.2(d) is proposed for amendment to provide that the bond may be used to satisfy an assessment for a violation consistent with the Act (N.J.S.A. 45:17A-27g(1)). N.J.A.C. 13:48-7.3 sets forth requirements for effective registration of fund raising counsel and independent paid fund raisers.

Subchapter 8 concerns registration of solicitors. N.J.A.C. 13:48-8.1 is proposed for amendment to require that the independent paid fund raiser, as well as the solicitor sign the registration. N.J.A.C. 13:48-8.1 is also proposed for amendment to require that the solicitor's street address be provided on the registration form.

Subchapter 9 addresses contracts and charitable sales promotions reports. N.J.A.C. 13:48-9.1 requires that a fund raising counsel or an independent paid fund raiser file with the Attorney General a copy of any contract with any charitable organization. Subsection (a) is proposed to be amended to provide for a contract filing form to assist the Division in reviewing contracts. Subsection (b) requires that the contract contain a description of the relationship between the charitable organization and the fund raising counsel or the independent paid fund raiser and prescribes the information to be included in the contract. Subsection (c) specifies who must sign the contracts and subsection (d) provides for the filing fee. Subsections (b), (c) and (d) are proposed to be amended to clarify that the subsections apply to all contracts between a charitable organization and a fund raising counsel or an independent paid fund raiser. Paragraph (b)4 is proposed to be amended to use the proposed defined term "custody, control, possession or access." Paragraph (b)6 requires that fund raising counsel and independent paid fund raisers report the basis on which they will be compensated under a contract with a charitable organization. The paragraph is proposed for amendment to reflect that some fund raising counsel and independent paid fund raisers are compensated on the basis of rate and time.

N.J.A.C. 13:48-9.1 is proposed to be further amended to add a new subsection (e), which specifies the additional information that a charitable organization's contract must include if a fund raising counsel or independent paid fund raiser has or intends to have custody, control, possession or access to a charitable organization's solicited contributions. N.J.A.C. 13:48-9.1(e), which presently contains the reporting requirements for all fund raising counsel and independent paid fund raisers is proposed to be recodified as N.J.A.C. 13:48-9.1(f), and proposed for amendment to prescribe the reports required for a fund raising counsel or independent paid fund raiser that at any time has or intends to have custody, control, possession or access to a charitable organization's solicited contributions.

Proposed new N.J.A.C. 13:48-9.1(g) specifies the reporting requirements for an independent paid fund raiser or fund raising counsel that does not have custody, control, possession or access to a charitable organization's solicited contributions.

N.J.A.C 13:48-9.2 requires each charitable organization that permits a charitable sales promotion to be conducted on it's behalf to file a copy of a contract with the commercial co-venturer and sets forth the minimum requirements of the contract. Proposed new N.J.A.C. 13:48-9.2(b)5 requires the charitable sales promotion contract to include a statement that the parties are subject to the Act and the rules of the chapter. N.J.A.C. 13:48-9.2(e)2 is proposed to be amended to require a certification by an officer or principal of the commercial co-venturer, as to the amount of income received from the charitable sales promotion, to conform to N.J.S.A. 45:17A-29b(1).

New N.J.A.C. 13:48-9.2(e)4 is proposed to require the campaign report to include a copy of each advertisement, publication, solicitation, or other material used as part of the charitable sales promotion, to conform to N.J.S.A. 45:17A-29b3.

N.J.A.C. 13:48-9.3, providing the process to be followed if the contract requirements are not satisfied, is proposed to be recodified as N.J.A.C. 13:48-9.4, and subsection (d) is proposed to be amended to delete the clause that limits the basis on which the Attorney General can take appropriate action after acceptance of a registration statement to information subsequently discovered, conforming to N.J.S.A. 45:17A-22. New N.J.A.C. 13:48-9.3 provides requirements for contracts and agreements between fund raising counsel or independent paid fund raisers and other fund raising counsel or independent paid fund raisers. The new rule applies to fund raising counsel and independent paid fund raisers who contract with other entities to perform certain of their responsibilities to a charitable organization. It imposes on them requirements comparable to those applicable to contracts between them and the charitable organization.

[page=1678] Subchapter 10 sets forth recordkeeping requirements. N.J.A.C. 13:48-10.1 sets forth the general recordkeeping requirements for charitable organizations. N.J.A.C. 13:48-10.2 sets forth the rules pertaining to recordkeeping requirements for independent paid fund raisers or fund raising counsel intended to have custody, control, or access to a charitable organization's monies and is proposed for amendment to include "possession" as well. N.J.A.C. 13:48-10.2(a)3 is proposed to be amended to impose additional recordkeeping requirements in the case of donations of vehicles. New N.J.A.C. 13:48-10.2(a)6 is added to conform to N.J.S.A. 45:17A-29b(3), mandating that every fund raising counsel and independent paid fund raiser maintain copies of each advertisement, publication, solicitation or other material used as part of the charitable sales promotion to directly or indirectly induce a contribution. New subsection (b) is proposed to require that independent paid fund raisers and fund raising counsel who do not have custody, control, possession or access to a charitable organization's funds also keep records.

Subchapter 11 contains the rules on fund raising practices. N.J.A.C. 13:48-11.1 requires that independent paid fund raisers deposit contributions within five business days of receipt and N.J.A.C. 13:48-11.2 sets forth the rules concerning solicitations and disclosures to the public. Subsection (a) is proposed to be amended to reorganize the subsection to clarify that the exemption from registration under N.J.A.C. 13:48-3.3 applies only to charitable organizations.

N.J.A.C. 13:48-11.3 contains the rules for disclosures to the public relating to honor boxes and public vending machines. The proposed amendment to N.J.A.C. 13:48-11.3 is a clarification that exempt entities do not have to provide a registration number, as they are not registered.

Subchapter 12 sets forth a charitable organization's responsibility for fund raising activities. New N.J.A.C. 13:48-12.1(a)4 is added, requiring charitable organizations to establish a procedure to report gross and net contributions if the independent paid fund raiser does not have custody, control, possession or access to the organization's contributions. N.J.A.C. 13:48-12.2 sets forth the duty of each charitable organization, fund raising counsel or independent paid fund raiser to cooperate with an inquiry, inspection or investigation conducted by, or on behalf of, the Attorney General.

Subchapter 13 addresses acts or omissions that are considered violations of the Act and rules. N.J.A.C. 13:48-13.1 states that it is a violation of the Act for any charitable organization or person who is required to file a registration statement to fail to do so. N.J.A.C. 13:48-13.2 specifies acts and practices that are considered to be unlawful practices. N.J.A.C. 13:48-13.3 provides grounds upon which a registration may be denied, suspended or revoked. The proposed amendments to subsection (a) make the specified acts grounds for denying, suspending or revoking a registration applicable if committed by an officer, director, trustee or a principal salaried employee, as well as by the registrant itself as provided in N.J.S.A. 45:17A-33b. It is also proposed for amendment by adding new N.J.A.C. 13:48-13.3(a)6, adding, as grounds for denial, suspension or revocation of a registration, that the registrant or any of the individuals listed in subsection (a) has been adjudged liable in certain administrative or civil proceedings pursuant to a statutory amendment at N.J.S.A. 45:17A-33b(6).

Subchapter 14 sets forth the penalties for a violation of the Act or the rules. N.J.A.C. 13:48-14.1 provides for civil penalties or restitution in addition to or as an alternative to revocation or suspension of a registration. The proposed amendment to N.J.A.C. 13:48-14.1 increases the amount of the civil penalties for violations of the Act as authorized under N.J.S.A. 45:17A-33(d). N.J.A.C 13:48-14.2 provides the circumstances under which a charitable organization aggrieved by a violation of the law or rules may initiate a civil action or assert a counterclaim in a court of competent jurisdiction against the violator. N.J.A.C. 13:48-14.3 sets forth circumstances under which a parent organization will be held accountable for action relating to information filed on behalf of a local unit and under which a local unit will not be accountable for the misconduct of a parent organization.

Subchapter 15 imposes certain requirements on organizations engaged in charitable activity that limit membership to former law enforcement officers. N.J.A.C. 13:48-15.1 requires such organizations to file notices of intent to solicit funds with the Attorney General and the county prosecutor in counties where solicitations occur.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The rules proposed for readoption with amendments and a new rule will permit the Division of Consumer Affairs to continue to implement and administer the Charitable Registration and Investigation Act and provide enforcement authority to protect against fraud and questionable practices in fund raising. The rules affect all charitable organizations, fund raising counsel, commercial co-venturers, independent paid fund raisers and solicitors who conduct fund raising in the State of New Jersey, and the rules provide these entities with regulatory guidance relating to their registration and fund raising activities. Additionally, the rules will protect the public from fraud and deceptive practices by providing regulatory safeguards and make available information concerning charitable fund raising in the State of New Jersey.

Economic Impact

The proposed amendments to the rules proposed for readoption do not increase the amount of the fees provided for in N.J.A.C. 13:48-2.1. But the added report required to be filed under the proposed amendment in N.J.A.C. 13:48-9.2(g) must be accompanied by a fee in the same amount as the fee for filing reports under subsection (f). The proposed new rule, N.J.A.C. 13:48-9.3, requires that contracts and agreements between fund raising counsel or independent paid fund raisers and other fund raising counsel or independent paid fund raisers be filed with the Attorney General. The proposed amendment in N.J.A.C. 13:48-2.1(a)10 provides for a filing fee in the same amount as the fee for filing contracts between a charitable organization and any fund raising counsel, independent paid fund raiser or commercial co-venturer provided for in paragraph (a)9. Amendments proposed to N.J.A.C. 13:48-2.1 do not increase the amount of the late fees but apply them uniformly.

Proposed amendments to N.J.A.C. 13:48-5.3(c) and (d) raise the audit threshold from $ 250,000 to $ 500,000, which will ease the burden on smaller charitable organizations of the expense of an audit. The proposed amendment to N.J.A.C 13:48-7.2 provides that the required $ 20,000 bond may be imposed to satisfy an assessment for violation of the Act. The proposed amendments to N.J.A.C. 13:48-14.1(a)1 increase the amount of the penalties that may be assessed for violations of the Act. The increases parallel the increases in the amount of penalties that may be assessed under N.J.S.A. 56:8-13 for violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.

The Division does not anticipate any other new or additional economic impact on charitable organizations as a result of the readoption with amendments of the existing rules. Any additional costs to fund raising entities as a result of the rules proposed for readoption with amendments are expected to be minimal. The readopted fee schedule will have no effect upon the public, since its direct impact is confined to charitable organizations and personnel involved in solicitation campaigns. Additionally, the Division believes that the fees are not excessive and do not impinge on the total revenue that is applied to charitable purposes. Consumers will be protected from fraud by the controls and consumer protections embodied in the rules. Such protections in the rules may enhance contributions by increasing the public's trust in charitable organizations.

Federal Standards Statement

A Federal standards analysis is not required because the rules proposed for readoption with amendments and a new rule are governed by N.J.S.A. 45:17A-18 et seq., and are not subject to any Federal requirements or standards.

Jobs Impact

The Division believes that the rules proposed for readoption with amendments and a new rule will not result in the generation or loss of jobs in New Jersey.

Agriculture Impact Statement

The rules proposed for readoption with amendments and new rule will not have an impact on the agriculture industry in the State of New Jersey.

[page=1679] Regulatory Flexibility Analysis

If, for the purposes of the Act, any of the 24,580 charitable organizations, 302 fund raising counsel and independent paid fund raisers and 2,443 solicitors registered with the Division are small businesses, then the following analysis applies.

Several reporting requirements are set forth in the rules proposed for readoption with amendments. The reporting requirement contained in N.J.A.C. 13:48-3.4 requires that the annual filing of the renewal statement and financial report is due no later than six months after the close of an organization's fiscal year unless the organization has been granted an extension.

N.J.A.C. 13:48-3.6 requires each registrant to inform the Attorney General of any change of address in writing at the address set forth in N.J.A.C. 13:48-1.4. N.J.A.C. 13:48-4.3 requires each charitable organization that files a short form registration statement to submit a completed financial report, the dates of the solicitation campaigns and a copy of its IRS filings.

N.J.A.C. 13:48-5.1 requires that each charitable organization that is not exempt or not otherwise required to file, or not qualified to file a short form, file a long form registration statement with Attorney General. N.J.A.C. 13:48-5.3 requires each long form filer to submit a completed financial report with its renewal including certified and audited financial statements. The proposed amendment to this rule raises the audit threshold from $ 250,000 to $ 500,000 as permitted by the Act, easing the burden on smaller charitable organizations of the expense of an audit.

N.J.A.C. 13:48-7.1 requires each fund raising counsel, independent paid fund raiser or any assignee, subcontractor or other successor in interest to file a registration statement. Any material change in information must be reported to the Attorney General within 10 business days. Two amendments are being proposed to this rule to require that a cease and desist order, as well as an injunction must be reported and to require that a renewal registration of a fund raising counsel and independent paid fund raiser include a list of campaigns it conducted during the fiscal year for or on behalf of a charitable organization.

N.J.A.C. 13:48-7.2 requires that independent paid fund raisers and fund raising counsel intending to have custody, control, possession or access to a charitable organization's funds file a $ 20,000 bond with the Attorney General.

N.J.A.C. 13:48-8.1 requires each solicitor for an independent paid fund raiser to register and requires any material change to be reported to the Attorney General within 10 business days. Two amendments are being proposed to require that the independent paid fund raiser and solicitor sign the registration and the solicitor's street address must be included on the registration form.

Several reporting requirements are being proposed to N.J.A.C. 13:48-9.1. All fund raising counsel and independent paid fund raisers must file with the Attorney General a copy of any contract with a charitable organization together with a contract filing form supplied by the Division, at least 10 days prior to the performance of any service within the State. N.J.A.C. 13:48-9.1(b)6 is proposed to be amended to require that fund raising counsel and independent paid fund raisers report the basis on which they will be compensated under a contract with a charitable organization. N.J.A.C. 13:48-9.1 is proposed to be amended to add new subsection (e), which specifies the additional information that a charitable organization's contract must include if a fund raising counsel or independent paid fund raiser has or intends to have custody, control, possession or access to a charitable organization's solicited contributions. New N.J.A.C. 13:48-9.1(e), which presently contains the reporting requirements for all fund raising counsel and independent paid fund raisers is proposed to be recodified as N.J.A.C. 13:48-9.1(f), and amended to prescribe the reports required for a fund raising counsel or independent paid fund raiser that at any time has or intends to have custody, control, possession or access to a charitable organization's solicited contributions.

To comply with the reporting requirements of N.J.A.C. 13:48-9.2, each charitable organization permitting a charitable sales promotion to be conducted on its behalf must file a copy of the sales promotion contract, which includes a description of the promotion and other relevant information. N.J.A.C. 13:48-9.2(e)2 is proposed to be amended to require a certification by an officer or principal of the commercial co-venturer as to the amount of income received from the charitable sales promotion, to conform to N.J.S.A. 45:17A-29b(1).

New N.J.A.C. 13:48-9.3 is proposed to be added, which provides reporting requirements for contracts and agreements between fund raising counsel or independent paid fund raisers and other fund raising counsel or independent paid fund raisers. This rule applies to fund raising counsel and independent paid fund raisers who contract with other entities to perform some of their responsibilities.

Finally, N.J.A.C. 13:48-15.1 imposes reporting requirements on organizations engaged in charitable activity that limit membership to former law enforcement officers. These organizations must file notices of intent to solicit funds with the Attorney General and the county prosecutor in counties where solicitations occur.

Subchapter 10 addresses recordkeeping requirements. N.J.A.C. 13:48-10.1 requires each registered charitable organization, as well as every fund raising counsel, independent paid fund raiser and commercial co-venturer to keep accurate and complete records of its activities in this State as required by the Act. N.J.A.C. 13:48-10.2 requires fund raising counsel and independent paid fund raisers who have custody, control, or access to a charitable organization's monies to maintain records for at least three years after the completion of the campaign. N.J.A.C. 13:48-10.2(a)3 is proposed to be amended to impose additional recordkeeping requirements in the case of donations of vehicles. It is proposed to be amended to add new N.J.A.C. 13:48-10.2(a)6 (pursuant to N.J.S.A. 45:17A-29b(3)) mandating that every fund raising counsel and independent paid fund raiser maintain copies of each advertisement, publication, solicitation or other material used as part of the charitable sales promotion to directly or indirectly induce a contribution. New N.J.A.C. 13:48-10.2(b) is proposed to require that an independent paid fund raiser or fund raising counsel who does not have custody, control, possession or access to a charitable organization's funds maintain for a period of three years the report it receives or obtains from the charity in accordance with N.J.A.C. 13:48-9.1(f).

With respect to compliance requirements, N.J.A.C. 13:48-3.1 requires prospective registrants to file an applicable registration statement. N.J.A.C. 13:48-3.4 requires each petitioner seeking an extension of time for filing its annual renewal statement and financial report to detail the facts which constitute "good cause" and provide the Attorney General with any supporting documents. N.J.A.C. 13:48-4.1 specifies the information to be reported on short form registration statements. To comply with N.J.A.C. 13:48-5.1, long form registrants must submit the information required by the rule on their registration statements. To comply with N.J.A.C. 13:48-5.3, each long form registrant required to submit an audited financial statement by the Attorney General must do so within 120 days of the Attorney General's notification. Those receiving more than $ 500,000 in gross revenue must submit an audited financial statement with their registration. The audit, which is required by N.J.S.A. 45:17A-24(d)2, imposes costs to be borne by the charitable organization. Such costs are necessary to fulfill the underlying purpose of the Act, including providing relevant information to the donating public.

Audited financial statements require the professional services of a certified public accountant.

To comply with N.J.A.C. 13:48-7.2, any fund raising counsel or independent paid fund raiser who has or intends to have custody, control, possession or access to a charitable organization's money or other thing of value must file with the Attorney General a bond in the sum of $ 20,000.

N.J.A.C. 13:48-11.1 requires a fund raising counsel or independent paid fund raiser to deposit each contribution into an account in the name of the charitable organization within five business days of its receipt. N.J.A.C. 13:48-11.2 and 11.3 contain the disclosures that must be made to the public as part of a charitable campaign.

As stated in the Economic Impact statement above, proposed amendments to the rules proposed for readoption do not increase the amount of the fees provided for in N.J.A.C. 13:48-2.1. There are however various fees for filing documents. These have been set at the lowest possible level consistent with costs for processing and review. There may be professional auditing services that will be needed to comply with the rules proposed for readoption with amendments and proposed new rule. However, the Division does not believe that there will be any significant, [page=1680] additional economic impact upon charitable organizations as a result of the rules, other than that discussed in the Economic Impact above.

The Division believes that because the amendments proposed to N.J.A.C. 13:48-5.3(c) and (d) affect charitable organizations differently according to the amount of contributions, some accommodation has been made for smaller charities. The Division believes that any adverse economic impact on small businesses is minimized, and must be weighed against the protective benefits accruing to the public, as well as to charitable organizations.

Smart Growth Impact

The rules proposed for readoption and the proposed amendments and new rule will have no impact on smart growth or implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The rules proposed for readoption with amendments and proposed new rule will have an insignificant impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rules would evoke a change in the average costs associated with housing because the rules proposed for readoption with amendments and proposed new rule concern charitable contributions.

Smart Growth Development Impact

The rules proposed for readoption with amendments and proposed new rule will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rules would evoke a change in housing production in Planning Areas 1 or 2 within designated centers under the State Development and Redevelopment Plan in New Jersey because the rules concern charitable contributions.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 13:48.

Full text of the proposed amendment and new rule follows (additions indicated in boldface thus ; deletions indicated in brackets [thus]):

SUBCHAPTER 1. GENERAL PROVISIONS

13:48-1.1 Director

[(a)] The Director of the Division of Consumer Affairs shall be the person charged with the administration and enforcement of the Charitable Registration and Investigation Act, [P.L. 1994, c.16] N.J.S.A. 45:17A-18 et seq .

13:48-1.2 Applicability

(a) These rules shall govern the registration and charitable fund raising activities of charitable organizations, federated fund raising organizations, professional fund raisers, solicitors[,] and commercial co-venturers, pursuant to the [Charitable Registration and Investigation] Act [of 1994].

(b) (No change.)

(c) Upon initial request by a potential registrant, or as the result of independent information received by the Attorney General, a determination form, to determine the applicability of the Act, will be supplied. There is no fee for this form, which may be requested by telephone, facsimile, [or] letter sent to the address set forth in N.J.A.C. 13:48-1.4 or by e-mail sent to AskConsumerAffairs@dca.lps.state.nj.us.

13:48-1.3 Definitions

The following words and terms, when used in this chapter, shall have the following meanings:

"Act" means the Charitable Registration and Investigation Act [of 1994, P.L. 1994, c.16] N.J.S.A. 45:17A-18 et seq .

. . .

"Caging agent" means the person, firm or company responsible for retrieving responses to solicitations from a return post office box, [depositing any monies received] processing contributions and reporting the amount of contributions and non-contributions from the responses.

. . .

"Commercial co-venturer" means any person, including, but not limited to, any assignee, subcontractor, independent contractor or successor in interest who , for profit or other consideration, is regularly and primarily engaged in trade or commerce other than in connection with the raising of funds or any other thing of value for a charitable organization, and who advertises that the purchase or use of his or her goods, services, entertainment or any other thing of value will benefit a charitable organization.

. . .

"Custody, control , possession or access" means that a person has responsibility for the collection, distribution, protection[,] or preservation of a charitable organization's money or other thing of value ; or that a person has the power or authority to manage, direct, restrict, administer or oversee a charitable organization's money or other thing of value ; or that a person has the power, authority, opportunity or right to make use of a charitable organization's money or other thing of value . By way of example, but not by limitation, the following demonstrate custody [or] , control or possession of, or access to, a charitable organization's money or other thing of value :

1. A fund raising counsel or independent paid fund raiser has an agreement with an escrow, lock box or caging agent concerning a charitable organization's money or other thing of value ;

2. A fund raising counsel or independent paid fund raiser has access to or the right to direct the use of a charitable organization's money in any financial or bank account; [or]

3. A fund raising counsel or independent paid fund raiser has the authority or the opportunity to direct the manner in which collected contributions are handled, disbursed, transferred or deposited[.] ;

4. A fund raising counsel or independent paid fund raiser receives or retrieves responses to a solicitation from a post office box;

5. A fund raising counsel or independent paid fund raiser has access to debit or credit card information in response to a solicitation; or

6. A fund raising counsel or independent paid fund raiser accepts donations of goods and in kind, including vehicles, on behalf of the charity.

. . .

"Department of Education" means the Department of Education of the State of New Jersey .

. . .

"Escrow agent" means the person, firm or company responsible for operating any escrow or other account into which [all] monies are deposited and for distributing those monies.

. . .

"Fund raising counsel" means any person, including any assignee, subcontractor , independent contractor or any other successor in interest, who is retained by a charitable organization for a fixed fee or rate to plan, manage, advise, consult or prepare material for or with respect to the solicitation in this State of contributions for a charitable organization, but who does not solicit contributions or employ, procure or engage any compensated person to solicit contributions. "Fund raising counsel" does not include a bona fide salaried officer, employee[,] or volunteer of a charitable organization or an attorney, accountant or banker who renders professional services to a charitable organization or advises a person to make a charitable contribution during the course of rendering professional services to that person.

. . .

"Independent paid fund raiser" means any person, including any assignee, subcontractor , independent contractor or any successor in interest, who for compensation performs for , or on behalf of, a charitable organization any service in connection with which contributions are, or will be solicited in this State by that compensated person or by any compensated person he or she employs, procures[,] or engages, directly or indirectly , to solicit contributions. "Independent paid fund raiser" does not include a bona fide salaried officer, employee[,] or volunteer of a charitable organization or an attorney, accountant or banker who advises a person to make a charitable contribution during the course of rendering professional services to that person.

"Local unit" means a charitable organization that is affiliated with a parent organization under terms specified in the parent organization's charter, articles of organization, agreement of association, instrument of trust, constitution or other organizational instrument or by[-]laws.

. . .

[page=1681] ["Secretary of State" means the Secretary of State of the State of New Jersey .]

"Solicitation" or "solicit" means the request, directly or indirectly, for money, credit, property, financial assistance[,] or other thing of any kind or value , which will be used for a charitable purpose or to benefit a charitable organization. A solicitation takes place whether or not the person making the solicitation receives any contribution, except that a charitable organization's use of its own name in any communication is not alone sufficient to constitute a solicitation. "Solicitation" includes, but is not limited to, the following methods of requesting or securing money, credit, property, financial assistance or other thing of value:

1.-5. (No change.)

"Solicitor" means any individual who attempts to solicit or solicits contributions, for compensation . [, and who is subject to the control of an independent paid fund raiser. The term "control" means the direct management, direction and supervision of performance of a solicitor's activities in connection with the solicitation of contributions by the independent paid fund raiser.] A bona fide salaried officer, employee or volunteer of a charitable organization shall not be deemed a solicitor.

SUBCHAPTER 2. FEES

13:48-2.1 Fee schedule

(a) The following fees shall be charged by the Division [of Consumer Affairs] for registration of charitable organizations (which [shall be read to include,] includes for [the] purposes of this subchapter, federated fund raising organizations), fund raising counsel, independent paid fund raisers[,] and solicitors, and for filing of contracts and other documents [shall be the following]:

1. A charitable organization, that is exempt from the registration requirements of the Act , [and] but pursuant to N.J.A.C. 13:48-3.3(a)7 [may nevertheless] elects to register by filing a short form registration statement [and paying] shall pay an annual registration fee of $ 30.00. A late fee of $ 25.00 shall be incurred by any organization that elects to file a registration statement but fails to submit the complete annual registration filing within 30 days of the annual filing deadline.

2. A charitable organization that is required under the Act to file a short form registration statement shall pay an annual registration fee of $ 30.00 [a year] with the annual filing , unless a filing extension was granted pursuant to N.J.A.C. 13:48-3.4. A late fee of $ 25.00 shall be incurred by any organization that fails to submit a complete annual registration filing along with the applicable annual registration fee within 30 days of the annual filing deadline.

3. A charitable organization that is required under the Act to file a long form registration statement and [that] received gross contributions of not more than $ 100,000 during the most recently filed fiscal year of the organization, shall pay an annual registration fee of $ 60.00 [a year] with the annual filing unless a filing extension was granted pursuant to N.J.A.C. 13:48-3.4. A late fee of $ 25.00 shall be incurred by any organization that fails to submit a complete annual registration filing along with the applicable annual registration fee within 30 days of the annual filing deadline.

4. A charitable organization that is required under the Act to file a long form registration statement and [that] received gross contributions of more than $ 100,000 but not more than $ 500,000 during the most recently filed fiscal year of the organization shall pay an annual registration fee of $ 150.00 [a year] with the annual filing unless a filing extension was granted pursuant to N.J.A.C. 13:48-3.4. A late fee of $ 25.00 shall be incurred by any organization that fails to submit a complete annual registration filing along with the applicable annual registration fee within 30 days of the annual filing deadline.

5. A charitable organization that is required under the Act to file a long form registration statement and [that] received gross contributions of more than $ 500,000 during the most recently filed fiscal year of the organization, shall pay an annual registration fee of $ 250.00 [a year] with the annual filing unless a filing extension was granted pursuant to N.J.A.C. 13:48-3.4. A late fee of $ 25.00 shall be incurred by any organization that fails to submit a complete annual registration filing along with the applicable annual registration fee within 30 days of the annual filing deadline.

6. (No change.)

7. All fund raising counsel and independent paid fund raisers shall pay an annual registration fee of $ 250.00, payable upon initial registration and on July 1 of each renewal year thereafter. A partnership or corporation [which] that offers either fund raising counsel or independent paid fund raiser services, or both types of services, shall pay a single annual registration fee, payable upon initial registration and on July 1 of each renewal year thereafter. [Upon renewal of registration, failure to submit a complete annual registration filing along with the applicable fee within 30 calendar days of July 1 shall result in a late fee of $ 25.00.] Any fund raising counsel or independent paid fund raiser that fails to submit a complete annual registration filing along with the applicable annual registration fee within 30 days of July 1 shall pay a late fee of $ 25.00.

8. In addition to the registration fee paid by independent paid fund raisers[, a solicitor] under (a)7 above, an independent paid fund raiser shall pay a registration fee of $ 15.00[, payable] for each solicitor it registers pursuant to N.J.A.C. 13:48-8.1 upon initial registration and on July 1 of each renewal year thereafter. Upon renewal of registration, failure to submit a complete annual registration filing along with the applicable fee within 30 calendar days of July 1 shall result in a late fee of $ 25.00.

9. (No change.)

10. The fee for filing a contract, or for the renewal or the extension thereof, defined for purposes of this paragraph as any written agreement between fund raising counsel or independent paid fund raiser and any other fund raising counsel or independent paid fund raiser shall be $ 30.00 and shall be paid at least 10 days prior to the commencement of any solicitation activity in the State as set forth in that contract.

[10.] 11. The fee for filing a final report, required to be filed by the charitable organization under [Section 12b of the Act] N.J.S.A. 45:17A-29b at the conclusion of a charitable sales promotion conducted by a commercial co-venturer on behalf of a charitable organization, shall be $ 10.00.

[11.] 12. The fee for filing a financial report required to be filed by a fund raising counsel or independent paid fund raiser under [Section 10g(3) of the Act] N.J.S.A. 45:17A-27g(3) for a solicitation campaign, shall be $ 10.00.

[12.] 13. The fee for filing a written commitment, required to be filed by a fund raising counsel or independent paid fund raiser under [Section 15e(1) of the Act] N.J.S.A. 45:17A-32e(1) , confirming a charitable organization's acceptance of donated tickets to an event, shall be $ 10.00.

[13.] 14. The fee for filing a 10 - day notice, required to be filed [by Section 13d(1) of the Act] under N.J.S.A. 45:17A-30d(1) by a law officers' organization to provide notice of any campaign involving multiple solicitations, shall be $ 10.00.

[14.] 15. (No change in text.)

(b)-(d) (No change.)

SUBCHAPTER 3. GENERAL REQUIREMENTS

13:48-3.2 When registration deemed accepted; failure to satisfy registration requirements; notice and hearing

(a)-(c) (No change.)

(d) Acceptance of a registration [statement] shall not foreclose the Attorney General from denying an application, enforcing the registration or contract requirements of the Act or [later] taking other appropriate action [based on information that may be subsequently discovered].

13:48-3.3 Organizations exempt from registration

(a) The registration requirements of these rules shall not apply to:

1.-2. (No change)

3. Any educational institution, the curricula of which in whole or in part are registered or approved by the [State] Department of Education or the New Jersey Commission on Higher Education, either directly or by acceptance of accreditation by an accrediting body recognized by these agencies;

4. (No change.)

[page=1682] 5. A library registered [with] by the [Secretary of State] Department of Education , provided that the annual financial report of that library shall be filed with the [Secretary of State] Department of Education , where it shall be open for public inspection;

6.-7. (No change.)

(b) Nothing in this section shall preclude the Attorney General from requiring an entity or organization claiming an exemption from registration to demonstrate that it meets the requirements of (a) above or from taking other appropriate action [based on information which may be subsequently discovered].

13:48-3.4 Extensions of time for annual filing of the renewal statement and financial report

(a) (No change.)

(b) For good cause shown, the Attorney General , in his or her discretion , may extend the time for the annual filing of the renewal statement and financial report[,] for a period not to exceed 180 days, during which time the previous registration shall remain in effect.

(c)-(d) (No change.)

(e) The request shall be signed by an officer of the charitable organization who shall certify that the organization has filed the previous year's report; that the charitable organization has paid all fees and penalties due and owing to the Division [of Consumer Affairs], if any[,] ; and that the request for an extension contains complete and accurate information.

(f)-(h) (No change.)

13:48-3.5 Forms

Forms for filing information required by the Act are available upon request from the Division [of Consumer Affairs] at the address set forth in N.J.A.C. 13:48-1.4 or on the Division's website at www.njconsumeraffairs.gov/ocp/charities.htm.

13:48-3.6 Notification of change of address; service of process

(a) A registrant shall notify the Attorney General in writing of any change of address currently filed with the Attorney General. Such notice shall be mailed to the Attorney General at the address set forth in N.J.A.C. 13:48-1.4 by certified mail, return receipt requested, not later than 10 days following the change of address.

(b)-(c) (No change.)

SUBCHAPTER 4. REGISTRATION OF CHARITABLE ORGANIZATIONS--SHORT FORM REGISTRATION

13:48-4.1 Short form registration

(a) Prior to operating or commencing solicitation activities in this State, the following charitable organizations, except those exempt from registration pursuant to N.J.A.C. 13:48-3.3, or those required to file a long form registration pursuant to N.J.A.C. 13:48-5, shall file a short form registration statement with the Attorney General:

1.-3. (No change.)

4. Any local post, camp, chapter or similarly designated element, or a county unit of that element, of a bona fide veterans' organization , which issues charters to the local elements throughout this State, or to any veterans' organization chartered under Federal law or to any service foundation of such an organization recognized in its by[-]laws.

(b) Information required for the initial and renewal short form registration statement shall include the following:

1. (No change.)

2. The name of any independent paid fund raiser, fund raising counsel or commercial co-venturer the charitable organization engaged during the most recent fiscal year;

3. The purpose for which the charitable organization is organized , as stated in the charitable organization's charter, articles of organization, agreement of association, instrument of trust, constitution or any other organizational instrument or bylaws ;

4. (No change.)

[5. The tax status of the charitable organization;]

5. A copy of the organization's Internal Revenue Service Form 1023 filed by the charity and the Internal Revenue Service Determination Letter;

6. The reason the charitable organization is eligible to file a short form registration;

7. A complete copy of the charitable organization's most recent Internal Revenue Service filing(s), including, but not limited to , Form 990, Form 990EZ , [and Schedule (A) 990] Form 990PF and Form 990T (with schedule A) if the organization filed any one or more of these forms during the most recent fiscal year being reported. All schedules and statements shall be included ;

8. (No change.)

9. A statement whether the charitable organization has ever been denied registration or had its registration revoked in this or any other jurisdiction along with a list of those jurisdictions;

10. (No change.)

11. A statement whether:

i. The charitable organization is authorized by any other state to solicit contributions and, if so, a listing of the states in which authorization has been obtained;

ii. The charitable organization is or has ever been enjoined or ordered to cease and desist in any jurisdiction from soliciting contributions or has been found to have engaged in unlawful practices in the solicitation of contributions or the administration of charitable assets together with a listing of all such jurisdictions;

iii. (No change.)

iv. The organization has voluntarily entered into an assurance of voluntary compliance agreement or any similar order or legal agreement with any jurisdiction or [federal] Federal agency or officer together with an identification of the jurisdiction [of federal] or Federal agency or officer;

12.-13. (No change.)

(c)-(e) (No change.)

(f) A short form registration shall be signed by two authorized officers, including the chief fiscal officer of the organization, who shall certify that all information contained in the registration statement is correct. [If an organization does not have two officers of the corporation or organization, the sole authorized officer shall file a certification attesting to the fact that the organization is solely controlled and operated by only one officer.]

13:48-4.2 Short form renewal

(a) [An] A charitable organization [which] that has filed an initial short form registration shall file a short form for renewal of its registration within six months after the close of its fiscal year provided the organization continues to meet the requirements of N.J.A.C. 13:48-4.1(a).

(b) (No change.)

13:48-4.3 Financial reports

(a) A charitable organization filing a short form registration or a short form renewal shall file an accompanying annual financial report on a form prescribed by the Attorney General. The financial report form shall include the following:

1. The name, address , [and] telephone number , e-mail and web address, if available , of the charitable organization and the New Jersey charitable registration number;

2.-6. (No change.)

7. Whether the charitable organization has engaged the services of an independent paid fund raiser, [fundraising] fund raising counsel or commercial co-venturer; the identity of any independent paid fund raiser or fund raising counsel; and the dates of any solicitation campaign or charitable sales promotion conducted in whole or in part on its behalf during the fiscal year ;

8. A complete copy of the charitable organization's most [recently filed] recent Internal Revenue Service filings including, but not limited to , Form 990 , Form 990EZ, Form 990PF, and [Schedule (A) 990] Form 990T (with schedule A), if [required to be filed by the Internal Revenue Service must be submitted with the financial report;] the organization filed any one or more of these forms during the most recent fiscal year. All schedules and statements shall be included; and

[page=1683] 9. (No change.)

SUBCHAPTER 5. REGISTRATION OF CHARITABLE ORGANIZATIONS--LONG FORM REGISTRATION

13:48-5.1 Long form registration

(a) (No change.)

(b) Information required for the initial and renewal long form registration statement shall include the following:

1. The name of the charitable organization and any other name or names under which it intends to solicit contributions in this State;

2. The purposes for which the charitable organization has been organized as stated in the charitable organization's charter, articles of organization, agreement of association, instrument of trust, constitution or other organizational instrument or bylaws ;

3.-4. (No change.)

5. A complete copy of the charitable organization's most [recently filed] recent Internal Revenue Service filings including, but not limited to, Form 990 , Form 990EZ, Form 990PF, and [Schedule (A) 990 for every registrant] Form 990T (with schedule A) if the organization filed any one or more of these forms during the most recent fiscal year being reported. All schedules and statements shall be included ;

6. (No change.)

7. A statement disclosing whether, and giving pertinent information about, any of the charitable organization's above-listed officers, directors, trustees[,] or principal salaried executive staff employees who:

i. Are related by blood, marriage or adoption to each other or to any officers, agents[,] or employees of any fund raising counsel or independent paid fund raiser under contract to the charitable organization; are related by blood, marriage or adoption to any chief executive, employee; to any other employee of the charitable organization with a direct financial interest in the transaction; to any partner, proprietor, director, officer[,] or trustee of the charitable organization; or to any shareholder of the charitable organization with more than a two percent interest in any supplier or vendor providing goods or services to the charitable organization and, if so, the name and business and home address and telephone number of each related party; or

ii. Have a financial interest in any activity engaged in by a fund raising counsel or independent paid fund raiser under contract to the charitable organization or any supplier or vendor providing goods or services to the charitable organization and, if so, the name and business address and telephone number of each interested party;

8. (No change.)

9. A statement setting forth the place where and the date when the charitable organization was legally established and the form of the organization;

10.-11. (No change.)

12. The date when the charitable organization's fiscal year ends;

13. A statement whether:

i. The charitable organization is authorized by any other state to solicit contributions and, if so, a listing of the states in which authorization has been obtained;

ii. The charitable organization is or has ever been enjoined or ordered to cease and desist in any jurisdiction from soliciting contributions or has been found to have engaged in unlawful practices in the solicitation of contributions or the administration of charitable assets together with a listing of all such jurisdictions;

iii. (No change.)

iv. The organization has voluntarily entered into an assurance of voluntary compliance agreement or any similar order or legal agreement with any jurisdiction or [federal] Federal agency or officer with an identification of the jurisdiction or [federal] Federal agency or officer;

14. Whether the organization intends to solicit contributions from the general public and the dates of any solicitation campaign or charitable sales promotion conducted in whole or in part on its behalf during the fiscal year ;

15. A statement setting forth the charitable organization's tax exempt status along with copies of Federal or State tax exemption determination or exemption ruling letters and a copy of the Internal Revenue Form 1023 filed by the charitable organization and the Internal Revenue Service Determination Letter;

Recodify existing 15. and 16. as 16. and 17. (No change in text.)

(c) A charitable organization may incorporate by reference any information reported by the organization on Internal Revenue Service Form 990 , Form 990EZ, Form 990PF, and [Schedule (A) 990] Form 990T (with Schedule A) .

(d) Upon initial registration only, every charitable organization required to file a long form registration shall include [the following additional information which shall not be required upon renewal: 1. A] a copy of the charitable organization's charter, articles of organization, agreement of association, instrument of trust, constitution or other organizational instrument and by[-]laws[;] .

[2. A statement setting forth the organization's tax exempt status along with copies of Federal or State tax exemption determination or exemption ruling letters;

3. Photocopies of any and all written documentation (such as a court order, administrative order, judgment, formal notice, or written assurance) supporting an affirmative response to (b)4 and 13i, ii and iii above; and

4. A statement whether the organization intends to solicit contributions from the general public.]

(e) All long form registrations shall be signed by two authorized officers, including the chief fiscal officer of the organization, who shall certify that all information contained in the registration statement is correct. [If an organization does not have two officers of the corporation or organization, the sole authorized officer shall file a certification attesting to the fact that the organization is solely controlled and operated by only one officer.]

(f) (No change.)

13:48-5.2 Long form renewal

(a) [An] A charitable organization , which has filed an initial long form registration shall file a renewal of its registration within six months after the close of its fiscal year.

(b) (No change.)

13:48-5.3 Financial reports; audits

(a)-(b) (No change.)

(c) The annual financial report of every charitable organization [which] that received more than [$ 250,000] $ 500,000 in gross revenue during its most recently completed fiscal year shall be accompanied by [a] :

1. A financial statement prepared in accordance with generally accepted accounting principles or other comprehensive basis of accounting principles consisting of the modified cash basis or regulatory basis , which has been audited in accordance with generally accepted auditing standards by an independent certified public accountant licensed by the jurisdiction in which he or she practices ; and [any]

2. All management letters prepared by the auditor in connection with the audit commenting on the internal accounting controls or management practices of the charitable organization.

(d) The annual financial reports of all charitable organizations [which] that receive more than $ 25,000 but less than [$ 250,000] $ 500,000 , shall be certified by the charitable organization's president or other authorized officer of the organization's governing board. If the Attorney General requests an audit, the charitable organization shall be notified in writing. In response, the charitable organization shall, within 120 days of the Attorney General's notification, submit [a] :

1. A financial statement prepared in accordance with generally accepted accounting principles or other comprehensive basis of accounting principles consisting of the modified cash basis or regulatory basis , which has been audited in accordance with generally accepted auditing standards by an independent certified public accountant licensed by the jurisdiction in which he or she practices ; and [any]

2. All management letters prepared by the auditor in connection with the audit commenting on the internal accounting controls or management practices of the charitable organization.

(e)-(g) (No change.)

[page=1684] SUBCHAPTER 6. [REGISTRATION OF CHARITABLE ORGANIZATIONS--]REGISTRATION OF LOCAL UNITS BY PARENT ORGANIZATIONS

13:48-6.1 Registration of local units by parent organizations

(a)-(c) (No change.)

(d) The parent organization also shall provide all of the following information:

1. Upon initial registration, a copy of the parent organization's charter, articles of organization, agreement of association, instrument of trust, constitution or other organizational instrument and by[-]laws.

2. Upon initial registration and annual renewal, a separate statement that provides the following:

i. The name, street address[,] and phone number of all local units within this State that it is registering;

ii.-iii. (No change.)

SUBCHAPTER 7. REGISTRATION OF FUND RAISING COUNSEL AND INDEPENDENT PAID FUND RAISER

13:48-7.1 General requirements

(a) (No change.)

(b) The registration statement shall be on a form prescribed by the Attorney General, which shall contain the following information:

1.-2. (No change.)

3. A statement whether the fund raising counsel or independent paid fund raiser has or intends to have custody, control, possession or access to any charitable organization's money or other thing of value ;

4. A statement whether:

i.-ii. (No change.)

iii. The fund raising counsel or independent paid fund raiser has been enjoined or ordered to cease and desist in any jurisdiction from soliciting contributions or have been found to have engaged in unlawful practices in the solicitation of contributions or the administration of charitable assets and a listing of those jurisdictions.

iv.-v. (No change.)

5. (No change.)

6. A list of all the charitable organizations [which] that have engaged or retained the services of the fund raising counsel or independent paid fund raiser within the [last] past five years to plan or conduct solicitation activities in the State of New Jersey; and on renewal, a list of all campaigns it conducted in whole or in part during the fiscal year for or on behalf of the charitable organization; and

7. (No change.)

(c) (No change.)

(d) The registration statement shall be accompanied by the fee specified in N.J.A.C. 13:48-2.1. [A fund raising counsel or independent paid fund raiser which is a partnership or corporation shall pay a single fee.]

(e)-(f) (No change.)

13:48-7.2 Bond requirements for fund raising counsel and independent paid fund raisers

(a) A fund raising counsel or independent paid fund raiser who has or intends to have custody, control, possession or access to a charitable organization's money or other thing of value shall, at the time of making application for registration, file with the Attorney General a bond in which it shall be the principal obligor for the sum of $ 20,000 for the initial registration.

(b)-(c) (No change.)

(d) The bond shall be payable to the Attorney General for the benefit of any person who may have a cause of action against the principal obligor of the bond for any violation of the Act or for the purpose of satisfying any assessment against the principal obligor of the bond for any such violations .

(e)-(g) (No change.)

13:48-7.3 Requirements for effective registration of fund raising counsel and independent paid fund raisers; failure to comply

(a) (No change.)

(b) It shall be a violation of the Act for any fund raising counsel or independent paid fund raiser to take custody , [or] control or possession of, or to have access to, a charitable organization's money or other thing of value prior to filing a bond with the Attorney General and accomplishing registration in accordance with the Act and [these regulations] this chapter .

SUBCHAPTER 8. REGISTRATION OF SOLICITORS

13:48-8.1 General requirements

(a) (No change.)

(b) The registration shall be signed by both the solicitor and the independent paid fund raiser on a form prescribed by the Attorney General, which shall contain the following information:

1. The name and street address of the solicitor;

2. The name, address, registration number[,] and telephone number of the independent paid fund raiser[s] who employ s the solicitor; and

3. (No change.)

(c)-(e) (No change.)

SUBCHAPTER 9. CONTRACTS; CHARITABLE SALES PROMOTIONS REPORTS

13:48-9.1 Contract, service agreement[,] and report requirements for fund raising counsel and independent paid fund raiser

(a) [A] All fund raising counsel [or] and independent paid fund raiser s shall file with the Attorney General a copy of any contract with a charitable organization , [with the Attorney General] together with a contract filing form supplied by the Division, at least 10 days prior to the performance of any service within this State. An additional copy of the contract shall be filed by the charitable organization, which obligation cannot be delegated to the fund raising counsel or independent paid fund raiser.

(b) [The] Every contract shall contain a description of the relationship between the charitable organization and the fund raising counsel or the independent paid fund raiser and shall include the following information:

1. A statement of the respective obligations of the [professional] fund raising counsel or independent paid fund raiser and the charitable organization;

2. A clear statement of the fees or rate [which] that will be paid to the fund raising counsel or independent paid fund raiser;

3. (No change.)

4. A statement as to whether the fund raising counsel or independent paid fund raiser will have or intends to have custody, control, possession or access to contributions;

5. A statement as to the guaranteed minimum percentage of the [gross receipts] net proceeds from contributions [which] that will be [remitted to] retained by the charitable organization, if any, or if the solicitation involves the sale of goods, services or tickets to a fund raising event, the percentage of the purchase price , [which] if any, that will be [remitted to] retained by the charitable organization[, if any]. Any stated percentage shall exclude any amount [which] that the charitable organization is to pay as fund raising costs; and

6. A statement as to the percentage of the gross revenue from which the [fund-raising] fund raising counsel or independent paid fund raiser will be compensated. If the compensation of the fund raising counsel or independent paid fund raiser is a flat fee, which is not contingent upon the number of contributions or the amount of revenue received, the compensation shall be expressed as a reasonable estimate of the percentage of the anticipated gross revenue[,] and the contract shall clearly disclose the assumptions upon which the estimate is based. If the compensation of the fund raising counsel or independent paid fund raiser is calculated on the basis of a rate and time, the statement shall include a reasonable estimate of the total fee and the contract shall clearly disclose the assumptions upon which the estimate is based. The stated assumptions shall be based upon all of the relevant facts known to the fund raising counsel or independent paid fund raiser regarding the solicitation to be conducted [by the independent paid fund raiser] on behalf of the charitable organization [;] .

[7. The bank branch, address, and each account number where all monies will be deposited;

[page=1685] 8. The mailing address or addresses which will receive any contributions;

9. The name and address of any caging or escrow agent retained in connection with the performance of the contract; and

10. The names of the individuals who will be authorized signatories for the accounts where all the monies are deposited.]

(c) [The] Every contract shall be signed by two authorized [officials] officers of the charitable organization, one of whom must be a member of the organization's governing body, and the authorized contracting officer of the fund raising counsel or independent paid fund raiser.

(d) [Each] Every contract filed by the fund raising counsel or independent paid fund raiser shall be accompanied by the fee specified in N.J.A.C. 13:48-2.1(a)9.

(e) If the fund raising counsel or independent paid fund raiser at any time has or intends to have custody, control, possession or access to the charitable organization's solicited contributions, the contract shall also include:

1. A statement as to the guaranteed minimum percentage of the gross receipts from contributions that will be remitted to the charitable organization, if any, or if the solicitation involves the sale of goods, services or tickets to a fund raising event, the percentage of the purchase price, if any, that will be remitted to the charitable organization. Any stated percentage shall exclude any amount that the charitable organization is to pay as fund raising costs;

2. The bank branch, address and each account number where all monies will be deposited;

3. The mailing address or addresses that will receive any contributions;

4. The name and address of any caging agent or escrow agent retained in connection with the performance of the contract; and

5. The names of the individuals who will be authorized signatories for the accounts where all the monies are deposited.

[(e)] (f) A fund raising counsel or an independent paid fund raiser that at any time has or intends to have custody, control, possession or access to a charitable organization's solicited contributions shall file a report on forms prescribed by the Attorney General as follows:

1.-3. (No change.)

4. Any financial campaign report filed pursuant to this subchapter shall contain the following information:

i.-ii. (No change.)

iii. The mailing address or addresses to which [received] the contributions were directed ;

iv.-vii. (No change.)

5.-7. (No change.)

(g) A fund raising counsel or independent paid fund raiser that is not required to file a report pursuant to (f) above, shall file with the Division the information it receives or obtains from the charitable organization that is used to calculate the independent paid fund raiser's or fund raising counsel's compensation for the charitable campaign. The information submitted shall include the gross amount taken in by the charitable campaign and the net amount retained by the charitable organization and shall comply with the following requirements on a form prescribed by the Division:

1. The information shall be filed within 40 days after the expiration of the contract;

2. For campaign contracts lasting more than 12 months, the information must be filed within 40 days of the end of each of the charitable organization's fiscal years during which the campaign was conducted;

3. Upon the completion of a campaign contract lasting more than 12 months, the information must be filed within 40 days after the expiration of the contract or service agreement;

4. This report shall be signed by an authorized officer from the independent paid fund raiser or fund raising counsel;

5. The report shall be reviewed and signed by an authorized officer from the charitable organization; and

6. The financial campaign report shall be accompanied by the fee specified in N.J.A.C. 13:48-2.1(a).

13:48-9.2 Contracts with commercial co-venturers; sales promotion report

(a) A charitable organization [which] that permits a charitable sales promotion to be conducted on its behalf shall obtain a written contract from the commercial co-venturer and shall file a copy of the agreement with the Attorney General at least 10 business days prior to the initiation of that charitable sales promotion, solicitation[,] or venture agreement.

(b) The charitable sales promotion contract shall include, but is not limited to, the following information:

1.-2. (No change.)

3. The dollar amount or percent per unit of goods or services purchased or used that will benefit the charitable organization or purpose. If the actual dollar amount or percent cannot reasonably be determined prior to the final date of the charitable sales promotion, the commercial co-venturer shall disclose an estimated dollar amount or percent. Any such estimate shall be reasonable and shall be based upon all of the relevant facts known to the commercial co-venturer and the charitable organization regarding the charitable sales promotion; [and]

4. A requirement that the commercial co-venturer provide[s] the charitable organization with the gross amount of income received by the commercial co-venturer attributable to the charitable sales promotion, solicitation or venture undertaken[.] ; and

5. A provision clearly and conspicuously stating that the parties are subject to the Act and the rules of this chapter.

(c)-(d) (No change.)

(e) A charitable sales promotion campaign report shall contain the following information:

1. (No change.)

2. [As reported to the charitable organization by] A certification from an officer or principal of the commercial co-venturer, attesting to the gross amount of income received by the commercial co-venturer attributable to the charitable sales promotion, solicitation or venture;

3. The amount of money or other contribution remitted to the charitable organization covering each event or portion of an extended charitable sales promotion, solicitation or venture. If the contribution is other than money, a list of the donated goods or a description of the services donated , as well as their dollar value , must be attached to the report; [and]

4. A copy of each advertisement, publication, solicitation or other material used as part of the charitable sales promotion to directly or indirectly induce a contribution; and

[4.] 5. (No change in text.)

(f) (No change.)

13:48-9.3 Contract, service agreement and report requirements for contracts between fund raising counsel or independent paid fund raiser and any other fund raising counsel or independent paid fund raiser

(a) Every fund raising counsel or independent paid fund raiser shall file with the Attorney General a copy of any contract with another fund raising counsel or independent paid fund raiser, together with a contract filing form supplied by the Division at least 10 days prior to the performance of any service within this State.

(b) Every contract shall comply with the content and filing requirements of N.J.A.C. 13:48-9.1. Reports shall be filed consistent with the requirement of N.J.A.C. 13:48-9.1 and be accompanied by the fee specified in N.J.A.C. 13:48-2.1(a).

13:48-[9.3] 9.4 Failure to satisfy contract requirements; notice and hearing

(a)-(c) (No change.)

(d) Acceptance of a registration statement or any other required filing shall not foreclose the Attorney General from [later] taking [the] appropriate action [based on information that may be subsequently discovered].

[page=1686] SUBCHAPTER 10. RECORDKEEPING REQUIREMENTS

13:48-10.2 Records of fund raising counsel and independent paid fund raiser

(a) Every fund raising counsel and independent paid fund raiser [which] that has or intends to have custody, control, possession or access to a charitable organization's monies shall also maintain during each solicitation campaign, and for not less than three years after the completion of such campaign, the following records, which shall be available for inspection upon demand by the Attorney General:

1.-2. (No change.)

3. Records of all contributions, including the name and address of each contributor and the date and amount of the contribution, except that recordkeeping with regard to donations of goods and [personal property] services in kind shall be limited to the dollar value received by or accruing to the charitable organization[;] . In the case of vehicle donations, records shall include the vehicle identification number and model of the vehicle, the expenses related to the disposition of the vehicle and the net proceeds to the charity, unless the vehicle itself became the charitable organization's property;

4. The name, location and account number of each bank or other financial institution in which the fund raising counsel or independent paid fund raiser has deposited revenue from the solicitation campaign; [and]

5. Records of the name, address and telephone number of each contributor donating tickets and the number of tickets donated, and of the name, address and telephone number of each organization receiving donated tickets for use by others, including the number of tickets for use by others, if a fund raising counsel or an independent paid fund raiser sells tickets to an event and represents that tickets will be donated for use by another[.] ; and

6. A copy of each advertisement, publication, solicitation or other material used as part of the charitable sales promotion to directly or indirectly induce a contribution.

(b) An independent paid fund raiser or fund raising counsel who does not have custody, control, possession or access to a charitable organization's funds shall also maintain for a period of three years the report it receives or obtains from the charity in accordance with N.J.A.C. 13:48-9.1(f).

[(b)] (c) (No change in text.)

SUBCHAPTER 11. FUND RAISING PRACTICES

13:48-11.2 Disclosures to the public; solicitations; receipts and confirmations; notice

(a) Prior to soliciting any contribution (except for an in-person solicitation) either telephonically, electronically or in writing, a [fund raising counsel or] charitable organization, unless exempt from registration pursuant to N.J.A.C. 13:48-3.3 and all independent paid fund raiser s , commercial co-venturers[,] and solicitors [or charitable organization, unless exempt from registration pursuant to N.J.A.C. 13:48-3.3,] shall clearly and conspicuously disclose the following:

1.-4. (No change.)

(b)-(d) (No change.)

13:48-11.3 Disclosures to the public; canisters; honor boxes; public vending machines

(a) All canisters, honor boxes and public vending machines used to raise funds for charitable organizations required to be registered under the Act shall clearly and conspicuously disclose the following:

1. The name , [and] address and registration number of the charitable organization, as registered with the Attorney General, or the organization's name and [registration number] address, if exempt ; and

2. (No change.)

(b) (No change.)

SUBCHAPTER 12. STANDARDS AND SUPERVISION

13:48-12.1 Charitable organization's responsibility for fund-raising activities

(a) A charitable organization shall establish and exercise control over fund raising activities conducted for its benefit and assure that the fund raising activities are conducted without coercion. The fund raising activities over which the charitable organization shall establish and exercise control include, but are not limited to:

1.-3. (No change.)

4. The procedure to report to its independent paid fund raisers who do not have custody, control, possession or access to a charitable organization's contributions the gross amount received during the charitable campaign and the net amount it retains;

Recodify existing 4.-9. as 5.-10. (No change in text.)

(b)-(c) (No change.)

SUBCHAPTER 13. VIOLATIONS

13:48-13.3 Grounds for denial, suspension or revocation of any registration

(a) After notice and an opportunity for a hearing pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1, any registration may be denied, suspended or revoked upon a finding that the registrant or any officer, director, trustee or principal salaried executive staff employee of a registrant or any other person subject to the Act :

1.-5. (No change.)

6. Has been adjudged liable in an administrative or civil proceeding involving theft, fraud or deceptive business practice including, but not limited to, any finding of unlawful practice or practices related to the solicitation of contributions or the administration of charitable assets, regardless of whether that finding was made in the context of an injunction, a proceeding resulting in penalties, consented to in an assurance of voluntary compliance or any similar order or legal agreement with any state or Federal agency;

Recodify existing 6. and 7. as 7. and 8. (No change in text.)

SUBCHAPTER 14. PENALTIES

13:48-14.1 Civil penalties; alternative remedies

(a) When a finding is made of a violation of the Act or these rules, after notice and an opportunity for a hearing pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1, in addition or as an alternative to revocation or suspension of a registration, a person may be ordered to:

1. Pay civil penalties in accordance with the Act as follows:

i. Any person who has not previously been found to have violated the Act shall, in addition to any other relief authorized by the Act or any other law, be liable for a civil penalty of not more than [$ 7,500] $ 10,000 for the first violation;

ii. For a second violation, or if a person is found liable for more than one violation within a single proceeding, the liability for the second violation shall not exceed a civil penalty in the amount of [$ 15,000] $ 20,000 ;

iii. For a third violation, or if a person is found liable for more than two violations within a single proceeding, the liability for a third or any succeeding violation shall not exceed a civil penalty in the amount of [$ 15,000] $ 20,000 for each additional violation;

2.-3. (No change.)

   
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