On November 21, 2022, the California Department of Justice (the "Department") published a notice delaying implementation of highly anticipated fundraising regulations applicable to nonprofits and businesses. The notice of modifications signals that California needs additional time to revise regulations in response to public comments received on the initial notice of proposed rulemaking issued earlier this year.
The regulations will implement Assembly Bill (AB) 488, which amends The Supervision of Trustees and Fundraisers for Charitable Purposes Act to regulate online charitable fundraising platforms and platform charities that operate in the state. Companies and charitable organizations that fundraise online have been awaiting final regulations to clarify whether their organizations will be subject to the law and how regulated platforms and charities can satisfy their obligations. Final regulations and forms initially were expected to be published this fall.
Overall, the text of the modified proposed regulations proposes substantial revisions to the initial proposal. Notable changes include amendments to the definitions of the types of charitable fundraising platforms that will be regulated, the time frame for remitting donated funds to recipient charitable organizations, and the information required to be provided to recipient charitable organizations with the donated funds. The Department has also proposed changes to the registration and notification forms incorporated into the regulations by reference.
Although the operative provisions of AB 488 are set to take effect on January 1, 2023, the Department has proposed delaying the effective date of the regulations to January 1, 2024. The modified regulations do not explicitly state that the Department will refrain from enforcing compliance with the law in this interim period before final regulations are issued. However, considering the significant proposed changes to the regulations and the lack of clarity about the scope and application of the law, it may practically be difficult for the Department to enforce the law while the regulations remain in draft form. The period for submitting written comments on the proposed changes is open until 5 pm PT on December 7, 2022. More information on the status of the modified proposed regulations and forms, as well as how to submit comments, is available here. Our Nonprofit Organizations Practice Group will actively monitor the status of these regulations and continue to provide guidance as developments arise.