New Year, New California Regulations? California Issues, for the Third Time, Proposed Regulations to Implement AB 488

4 min

Newly proposed regulations that would help define the parameters that charitable fundraising platforms and platform charities must observe in California were published by the California Department of Justice ("Department") on November 17, 2023. This is the state's third attempt at promulgating implementing regulations for Assembly Bill (AB) 488.[i] That law, which amends The Supervision of Trustees and Fundraisers for Charitable Purposes Act, took effect January 1, 2023. Since the start of the year, regulated entities have been required to comply with an incomplete framework, given the lack of implementing regulations, and have been waiting for guidance about how to comply with the new law.

These proposed regulations attempt to clarify the requirements of AB 488, among other changes. Just one example of the consequential nature of these proposed regulations relates to the scope and breadth of new definitions. Instead of specifically defining separate types of charitable fundraising platforms, such as a "consulting charitable fundraising platform" or a "coventuring charitable fundraising platform," as was done in prior versions of the regulations, the newly proposed regulations have introduced definitions of "solicitation types A to E" that charitable fundraising platforms might undertake. The "type" of a charitable fundraising platform's solicitation affects its corresponding compliance requirements much in the same way as was handled in prior versions of the regulations.[ii] While the proposed regulations appear to streamline certain compliance obligations, the regulated community may nonetheless find others of these proposed regulations to present logistical and technical challenges, so submitting clarifying questions and recommendations to the state may be useful.[iii]

No public hearing on this proposed regulatory action has been scheduled, though the Department will hold such a hearing if one is requested no later than Monday, December 18, 2023. In addition, the window for submitting written comments on the newly proposed regulations closes on Tuesday, January 2, 2024 at 5 p.m. PT. More information on how to submit comments is available within the state's notice.

Our Nonprofit Organizations Practice Group will actively monitor the status of these regulations and continue to provide guidance as developments arise. Please contact the authors if you have questions about how AB 488 or these proposed regulations may apply to your organization, or if you wish to submit a request for a hearing or comments on the proposed regulations.

[i] The initial notice of proposed rulemaking issued in mid-2022 was followed by modified proposed regulations in November 2022. The Department has chosen not to proceed with those 2022-era proposed regulations, so these latest proposed regulations offer the Department's third take on the matter.

[ii] Though the framework is largely the same, the proposed regulations add a significant level of additional specificity. For example, the proposed regulations also make clear that sponsoring a "free action program" (informally known to be a type of campaign in which an entity typically donates to a charitable organization based on no-cost public interactions, such as interacting in certain ways on social media) could trigger compliance obligations for the charitable fundraising platform as a "solicitation type C" or "solicitation type D" effort.

[iii] For example, recognizing that AB 488 took effect at the start of 2023 and that, within the law, those acting as charitable fundraising platforms were subject to registration requirements that they could not satisfy, the proposed regulations would obligate these persons to register and report "for the time period that registration was required." Would entities that were not able to register as charitable fundraising platforms since January 1, 2023 because no process was in place still be considered delinquent? Likewise, the proposed regulations go to great lengths to explain the interplay between the state's "May Not Operate or Solicit for Charitable Purposes List" (a static document updated periodically on the state's website) and the Registry Search Tool (generally, a more up-to-date online database of charitable organizations' registration statuses), but, nevertheless, the regulated community may face challenges when discrepancies arise between these two sources. To avoid such challenges, the state might consider having the Registry Search Tool explicitly supersede, in all instances, the May Not Operate or Solicit for Charitable Purposes List.