The purpose of the chapter is "to provide citizens of the state of Washington with information relating to persons and organizations who solicit funds from the public for charitable purposes in order to prevent (1) deceptive and dishonest practices in the conduct of soliciting funds for or in the name of charity; and (2) improper use of contributions intended for charitable purposes." (19.09.010) Consistent with this purpose, a major emphasis of the Act is on disclosure of pertinent information by participants in fund raising efforts. The law also provides safeguards, including the posting of sureties and other devices, that limit the exposure of charitable organizations to various sorts of misbehavior on the part of commercial firms who offer to assist in fund raising efforts. It forbids telephone solicitations between 9 pm and 8 am and all forms of telephone harassment. It bars from conducting any solicitation anyone who has been found at fault for actions connected to charitable solicitations within ten years by a public body anywhere in the United States. Finally, the law forbids deceptive representations -- in general, and of tax-deductible status, of a relationship with veterans, law enforcement or fire-fighting organizations when soliciting support for such causes, and of the status -- volunteer, contractor or employee -- of the person making the solicitation.
Disclosure is facilitated by several requirements:
The Secretary of State's office operates a "charities hotline" -- 800/332-GIVE -- which may be called by members of the public to determine whether or not a given charity or campiagn is registered with the state, obtain the address of the relevant principal office when a registration is on file, and certain financial information, including the "percent of total revenue applied to charitable purpose" as defined in the financial report required as part 12 of the Secretary of State's Application to Register as a Charitable Organization.
Washington's law exempts charitable organizations that receive less than $25,000 per year in revenues and operate entirely through the efforts of volunteers. Such organizations are not required to register or report under the Act. (Note that retaining a commercial fundraiser, even when the organization itself is entirely staffed by volunteers, makes registration necessary.)
Safeguards for charitable organizations contracting with commercial fund raisers are provided, as mentioned, by the requirement that such fund raisers obtain surety bonds prior to engaging in fund raising work in the state. The Act also requires that contracts between commercial fund raisers and their clients contain certain terms and conditions, such as:
The law defines charitable solicitation inclusively. A charitable solicitation is any request for a contribution for a charitable cause or purpose. An offer or appeal which uses the name of a charitable organization is a solicitation. An offer of anything for sale which includes a suggestion that completing the transaction will benefit any charitable organization or further any charitable cause is also a charitable solicitation. It does not matter whether the suggestion is true or not. And it does not matter whether the offer is accepted or not; the provisions of the Act apply even when the prospective donor declines. Significantly, however, transactions which are regulated by the Gambling Commission -- raffles, casino nights and bingo, for examples -- are excluded from the provisions and requirements of the Charitable Solicitations Act. Special rules apply to campaigns which include offering to donate event tickets to third parties.
Similarly, contributions are defined inclusively. For the purposes of the Act, a contribution is a transfer of something of value which is wholly or partly induced by a solicitation. Transfers to religious organizations, though, are not regulated by the act and payments in support of political activities as regulated by the Public Disclosure Commission are also excluded. Purchases of items which are directly related to an organization's charitable purpose -- tickets to theatrical performances, for example -- are not considered contributions, nor are membership dues which convey an exclusive right to services or other privileges, professional standing or honors.
The United States Supreme Court ruled, in "Riley v. National Federation of the Blind of North Carolina (1988)", that a state cannot set an upper limit on the percentage of administrative expenses or fund raising costs incurred by a charity; doing so constitutes an infringement on freedom of speech and other protected rights. Donors and state officials nonetheless remain concerned that "excessive costs" may be incurred in fund raising campaigns. Washington and several other states accordingly require disclosure by charitable organizations of a ratio calculated on standardized terms between amounts "devoted to charitable purposes" and other expenditures. Washington has recently revised the procedure for calculation of this ratio to conform more closely to the accounting principles required by the Internal Revenue Service for the preparation of the annual informational return filed by most charitable organizations (Form 990).
Procedures for filing information concerning charitable trusts have also been streamlined, and another recent change allows combining renewal of registration under the Act with filing of corporate annual reports with a reduced fee for doing both together.
The initial focus of any Washington based organization will naturally be on the requirements of the Washington Charitable Solicitations Act. If and when programs expand to include significant activities in other states, the provisions of those states' laws and regulations pertaining to charitable solicitations will appropriately be of concern. Most states require, as does Washington, registration and reporting by any charitable organization seeking charitable contributions within their boundaries; some states require registratration and reporting by fund raising consultants and contractors as well. There are, in addition, similar requirements in many municipalities, most notably in California where over 400 separate municipal charitable solicitation codes may be relevant to certain kinds of campaigns.
Several national organizations which raise money by direct mail and telephone solicitations have recently begun to map a strategy to challenge arguably burdensome features of state and local charitable solicitations laws and regulations. (See "Chronicle of Philanthropy": 'Charities May Sue Over Rules' (September 21) and 'New Public Interest Law Firm to Challenge Regulations' (October 5, 1995).) The initial focus of this group's interest is reported to be the requirements that fund raising advisors and consultants register in jurisdictions where the outcome of their advice or assistance may be employed in connection with campaigns even when neither party to the contract has any other presence in that jurisdiction. Judging from the comments quoted in the press, there is little good will to be found in the relations between the representatives of these national organizations and the leaders of the Association of State Charities Officials and other associations of regulators.
Washington's Secretary of State, Ralph Munro, has recently met with representatives of nonprofit organizations to explore the potential for improving regulation of charitable solicitations. He has invited comments and suggestions on present policies and procedures and proposals for amendments and improvements. Further information about the present law and regulations may be obtained from the Charities Division of the Secretary of State's office, at 505 E Union Avenue, PO Box 40234, Olympia, WA 98504-0234. The address for Secretary of State Ralph Munro is PO Box 40220. Olympia, WA 98504-0220.