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Attorney General Bonta and Assemblymember Irwin’s Legislation to Provide Oversight of Online Charitable Fundraising Platforms Signed into Law

California Attorney General Rob Bonta and Assemblymember Jacqui Irwin today applauded Governor Gavin Newsom for signing legislation that will provide critical oversight of charitable fundraising on internet platforms. The bill, sponsored by Attorney General Bonta and authored by Assemblymember Irwin, authorizes the California Department of Justice to exercise supervision over charitable fundraising occurring on internet platforms to protect donors and charities from deceptive or misleading solicitations. The bill will go into effect on January 1, 2023, with additional regulatory rulemaking beginning January 1, 2022. 

“In the midst of a record-breaking wildfire season and a global pandemic, Californians have opened their hearts and their wallets to charities across the state, the nation, and the world,” said Attorney General Rob Bonta.“As charitable fundraising moves increasingly online, AB 488 will provide my office with the ability to properly supervise third-party internet platforms and safeguard the proper treatment of Californians’ donations. I’m proud to have worked with Assemblymember Irwin to get this important legislation signed into law.” 

“After years of effort I am elated to have Governor Newsom’s signature on AB 488. Online charitable giving is the present and the future of fundraising for California non-profits. Ensuring the donations of Californians are received quickly and by the correct charities is common sense, and with this new law the Attorney General will be able to crack down on fraudulent actors that prey on people’s best intentions” said Assemblymember Irwin. “I would like to thank the dozens of stakeholders who contributed to this legislation over the past several years. The world of online fundraising is rich with various methods and models to encourage giving. Without the insight of these charitable fundraising platforms during the legislative process we would not have the effective and efficient law we achieved today.” 

“This new law will increase donor confidence in online charitable giving and help ensure that nonprofits receive online donations in a timely way,” said Jan Masaoka, CEO of the California Association of Nonprofits. “We thank the Attorney General for sponsoring AB 488, Assemblymember Irwin for championing it, and Governor Newsom for signing it.” 

The California Department of Justice is responsible for regulatory supervision of charities, trustees, commercial fundraisers, and other legal entities that hold or solicit donations for charitable purposes. In recent years, charitable fundraising on internet platforms has grown exponentially, altering the landscape of charitable giving beyond what current law contemplated. Internet companies have developed methods for individuals to donate to charities through websites and phone applications that serve as “charitable fundraising platforms.” As currently written, California’s solicitation laws do not specifically reach these online platforms, resulting in instances of deceit and mistreatment of charitable donations that the Attorney General’s Office is not able to address through enforcement of existing charity oversight laws. 

AB 488 will: 

  • Create a level playing field for all charitable giving platforms, regardless of business model, by defining two new groups of entities, “charitable fundraising platforms” and “platform charities” that are subject to the Attorney General’s supervision;
  • Require covered entities to provide meaningful and transparent disclosures on their internet platforms, promptly distribute donations, and prohibit solicitations for charities not in good standing with the Attorney General’s Registry of Charitable Trusts;
  • Permit some instances of soliciting for a charity without prior consent if certain criteria that safeguard against harm to charities and the public are met; and
  • Authorize the Attorney General’s Office to implement regulations, beginning January 1, 2022, on the registration and reporting of charitable fundraising platforms and platform charities, the timeframe for distributing donations, and donor notifications, among other requirements.
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Hawai‘i Supreme Court Affirms Attorney General’s Authority to Investigate Tax-Exempt Compliance of Non-Profit Organizations

In a unanimous 5-0 decision, the Hawai‘i Supreme Court ruled that the
Hawai‘i Attorney General was fully authorized to issue a subpoena to obtain the bank
records of the non-profit organization KAHEA: The Hawaiian-Environmental Alliance, to
determine whether KAHEA’s solicitation and use of funds to support direct actions to
prevent construction on Mauna Kea violated laws and regulations governing nonprofit
organizations.
“The Attorney General takes seriously its important duty under the law to ensure that
non-profit organizations, which obtain financial benefits from tax exemptions and
solicitation of tax-deductible donations, comply with the law,” Attorney General Clare E.
Connors said. “It is the obligation of the Attorney General to investigate when it appears
organizations may be using their ‘taxpayer-funded subsidy’ in contravention of
longstanding federal and state law regulating activities that are supposed to serve the
public interest.”
In the case of In re Investigation of: KAHEA, the Supreme Court ruled that the Hawai‘i
Attorney General has a duty to “represent the public interest in the protection of
charitable assets,” and that a determination of whether an investigation into non-profit
organizations is in the public interest rests solely with the Attorney General. The
Supreme Court refused to quash the subpoena and rejected arguments that the
subpoena violated KAHEA’s First Amendment rights. In its opinion, the Court held that
the Attorney General’s ability to issue subpoenas in the public interest “rests squarely
with the Attorney General. Not with KAHEA. And not with this court.”
The Supreme Court’s decision affirms the well-established understanding that, in
exchange for considerable tax-benefits subsidized by all taxpayers, non-profits are
subject to the broad investigatory oversight of the Attorney General and to the many
investigatory tools available to ensure compliance with the law

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Attorney General John M. Formella announces that the Director of Charitable Trusts has filed a civil action seeking an injunction to prevent the Fab Family Fund and members of its board of directors from operating a charitable organization and from engaging in charitable solicitations.

The Fab Family Fund, a New Hampshire nonprofit corporation, purports to be a charitable organization, but its board members have failed to comply with their obligations under New Hampshire law to register with the New Hampshire Attorney General, Director of Charitable Trusts, and to respond to repeated requests for information and administrative subpoenas issued by the Director. The Complaint, filed in Rockingham County Superior Court, names as defendants Shanna Pinet a/k/a Dr. Fabianna Marie, currently the chief executive officer of the Fab Family Fund, David Pinet, treasurer of the Fab Family Fund, and Michelle Tolson, president of the Fab Family Fund.

Since at least February 2020, the Fab Family Fund has held numerous fundraisers and solicited donations through its Facebook page and its website “to educate, facilitate and grant Breast Cancer Thrivers and their families an all expense paid trip for solace and healing.” The Fab Family Fund claimed on its Facebook page and website that it was “an established 501(c)(3) organization” or a “501(c)(3) nonprofit,” but according to the Internal Revenue Service website, it has not received recognition by the Internal Revenue Service as exempt under 501(c)(3) of the Internal Revenue Code.

The Director of Charitable Trusts has alleged that the Fab Family Fund, Shanna Pinet, David Pinet, and Michelle Tolson have violated four separate New Hampshire charitable trust laws and is seeking from Shanna Pinet, David Pinet, and Michelle Tolson restitution to the donors, attorneys’ fees and costs of the investigation, and $10,000 in civil penalties for each violation of state law. The Director is also seeking dissolution of the Fab Family Fund as a charitable organization and an injunction, preventing Shanna Pinet, David Pinet, and Michelle Tolson from engaging in charitable solicitations on behalf of the Fab Family Fund and from serving as an officer or director of any charitable organization in New Hampshire for a period of ten years.

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Register Now for the 2021 NAAG/NASCO Annual Charities Conference

This year’s NAAG/NASCO Charities Conference will be held virtually on the afternoons of October 13 and 14, 2021.

The conference is the only annual event at which charity regulators and nonprofit organizations and their attorneys, accountants, fundraisers, and advisers have the opportunity to meet, hear about, and discuss issues of interest to the charitable sector.

The sessions on Wednesday, Oct. 13 are open to the public and provide an opportunity to hear from regulators and others in the nonprofit sector on issues of current relevance, including sessions on Fundraising and Governance: The Impact of COVID and A Brave New World of Working Together: State Law Questions Surrounding Arrangements Between Charities and Non-Charities. There will also be the opportunity for attendees to have discussions in small groups. Finally, there will be a panel of elected officials tasked with the regulation of charitable entities and assets. The agenda is subject to change; we plan to keep the website updated as the agenda is further developed.   View Draft Public Day Agenda  

The sessions on Thursday, Oct. 14 are open to attorney general staff, other NASCO members, and other government regulators only. Click here for a skeleton agenda for the government staff only day.    

Early registration is recommended as space is limited. The program will be held on Zoom.   There is no cost for attorney general staff or other NASCO members to attend this conference. Attorney general staff must be logged into their NAAG account to receive free registration. Other NASCO members will need a code to register for free (please email Carter McCoy at cmccoy@naag.org for the code). Other government employees and the public will be charged a $25.00 registration fee.   The registration deadline is Friday, October 8, 2021.   *If you have created your NAAG account and do not see the correct pricing listed, please make sure you have entered your organization under your profile. Attorney general staff will need to wait until after your account is verified by your office before being able to register for this event.    
Register Today
  The 2021 NAAG/NASCO Annual Charities Conference is coordinated by the National Association of State Charity Officials and the the NAGTRI Center for Consumer Protection, whose mission is to assist and enable state and territory attorneys general in protecting the public in the areas of consumer protection and charitable asset and entity oversight by providing information, technical assistance, and support; facilitating cooperation among attorney general staff through open dialogue and advanced communication systems; planning, organizing, and conducting training and seminars for the exchange of ideas and information on relevant matters; and promoting the development of effective programs and education for the protection of the public. Please check out the Center’s consumer-facing website at ConsumerResources.org.  
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Attorney General Ellison wins $954,966 judgment and permanent ban against company Contributing 2 Combatants and its owner for bilking charitable donations intended for the military

State’s lawsuit alleged that Jacob Choinski used his for-profit company, Contributing 2 Combatants, to solicit donations from Minnesotans door to door while posing as a charity and kept the donations to line his own pockets.

Minnesota Attorney General Keith Ellison today announced that his Office has obtained a judgment of $954,966 against a Minnesota company that calls itself Contributing 2 Combatants and Coast 2 Coast Marketing, and its owner, Jacob Choinski, for violating charitable solicitation and consumer protection laws by defrauding Minnesota donors. Formally named PNW C2C Marketing, LLC (“C2C”), the company went door to door in Minnesota neighborhoods and misrepresented that C2C was a nonprofit soliciting donations to send care packages to servicemembers overseas. Choinski then spent the funds collected for his personal use and did not spend a single dollar on care packages since C2C’s inception in July 2018. The default judgment obtained by the State also permanently bans C2C from doing business in Minnesota and Choinski from any involvement in Minnesota’s nonprofit sector.

“Choinski’s conduct in this case was reprehensible. He used C2C to take advantage of Minnesotans who wanted to help our military servicemembers who are actively defending our country,” Attorney General Ellison said. “Our servicemembers overseas are making sacrifices for us every day and we will not stand by and allow their sacrifices to be exploited. This judgment ensures that Choinski and C2C can never engage in this conduct again.” 

C2C is a for-profit Minnesota limited liability company that advertised the cost of shipping a care package to service members overseas through door-to-door solicitation. While soliciting, however, C2C deceptively represented itself as a nonprofit by asking Minnesotans for donations and telling Minnesotans that their donations were tax deductible. C2C also claimed to partner with a charity to which it provided funds from its sales, but the State discovered that it never provided any funds to that nonprofit. Instead, Choinski diverted all the funds solicited for his personal use. The AGO’s judgment of $954,966 includes $70,966 in restitution for Minnesotans who were successfully solicited by C2C since its inception in 2018. The remaining $884,000 are civil penalties that must be paid to the State.

C2C solicited throughout the Twin Cities metro area, greater Minnesota, and other states. The lawsuit was filed in Ramsey County District Court and asserted that C2C and Choinski violated Minnesota’s Charitable Solicitation Act, the Uniform Deceptive Trade Practices Act, and the Consumer Fraud Act.