Doing good just got a little more complicated for companies that run charitable campaigns in California.
In January 2023, we posted that California had passed a new law governing certain types of charitable campaigns. Although the law partially went into effect last year, the state delayed enforcing several provisions until the California Registry of Charities and Fundraisers could issue regulations. After more than a year of waiting (and maybe hoping this would go away), companies now have the regulations.
The most notable requirement is that companies will now be required to register as a "Charitable Fundraising Platform" with the state agency before running certain types of charitable campaigns if they are offered online and directed towards individuals in California. These include:
- Commercial Co-Ventures: Companies that advertise that the purchase of a product will benefit a charity will need to register as a Charitable Fundraising Platform if the donations benefit six or more charitable organizations per calendar year. If you stay under that number, the requirement won't apply.
- Donation at Checkout: Companies that allow consumers to make a donation online – such as by rounding up the amount of purchase – will also be required to register. This applies regardless of the number of charitable organizations that will benefit from the donations in a calendar year. (Notably, this will not affect round-up programs that are common in supermarkets offline.)
- Free Action Programs: Although the term "free action" is not defined, companies that make donations based on "other activit[ies] performed by platform users" online will have to register. Presumably this includes campaigns in which, for example, companies promise to make donations if people like a social media post or share content. This requirement also applies, regardless of the number of charitable organizations that will benefit from the donations in a calendar year (which oddly results in more stringent requirements for free programs than for some that require a purchase).
The registration requirements become effective on June 12, 2024 and companies will be required to renew their registrations every year. The California Registry of Charities and Fundraisers advises that it will launch an Online Filing Service before that date. In addition to the registration requirements, companies that fall under the scope of the statute will have additional obligations, such as disclosing material terms in ads, delivering funds to charities within specific timeframes, and filing annual reports with the state.
While you think about these new regulations, keep in mind that laws in various other states may also apply to certain types of charitable campaigns. Check out this podcast for more details.
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