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One Day You’re In…The Next Day You’re Out!

The Attorney General of California has issued new regulations regarding charities, fundraisers, the solicitation process and registration requirements. The new regulations go far beyond the statutes passed by the state legislature and arguably far beyond what is permitted under the United States Constitution.

First some background. This is the same Attorney General who recently settled litigation where she described the process of following the American Institute of Certified Public Accountants Statement of Position 98-2 (an audit guideline recognized by all U.S. auditors as well as by the Internal Revenue Service) as a scheme to mislead the public. Clearly she has her own strongly held views and does not seem to have much regard for the views of others including most charities, our associations, the IRS, the AICPA, or others who have spent decades working to make the charitable sector stronger.

Now she has promulgated proposed new regulations which arguably not only violate the Commerce Clause and Due Process Clause of the 14th Amendment but also violate the First Amendment guarantees of free speech by engaging in a prior restraint thereof. The new regulations, amongst other things, provide that: A charity or fundraiser that agrees to a small fine or administrative settlement in another jurisdiction of a complaint must report that outcome within 30 days to California and in doing so can have their California registration immediately revoked because they were found to have violated registration rules in another state. So, for example, if a $250 fine is imposed by Columbus, Ohio for a late filing with the city, it is grounds for revocation in the state of California.

It is rumored that the Attorney General is seeking higher office either in the United States Senate or the California Governor’s mansion. One wonders whether her punitive and ill-conceived ideas of how to help the charitable sector and protect the public interest will be part of her campaign or will become the basis upon which to judge her candidacy. One can only hope.