SB1048 SD1

SECTION 1. The legislature finds that Act 205, Session Laws of Hawaii 2024 (Act 205), was intended to regulate charitable fundraising platforms to ensure proper and transparent fundraising activities in the State.

The legislature further finds that Act 205's well-intended language creates undue burdens on charitable fundraising platforms and, more importantly, potentially hampers and inhibits the ability of charitable organizations to respond and fundraise, especially in times of emergency and need.

The legislature additionally finds that it would be prudent to amend Act 205 before its scheduled effective date of January 1, 2026, in a manner that would still achieve the important purposes of public protection, donor security, and transparency, but not overburden charitable fundraising platforms, charitable organizations, and the department of the attorney general, who oversees these activities.

Accordingly, the purpose of this Act is to amend the language in Act 205 to clarify existing standards and safeguards in online crowdfunding.

SECTION 2. Section 467B-2.3, Hawaii Revised Statutes, is amended as follows:

1. By amending its title and subsections (a) and (b) to read:

"[[]§467B-2.3[]] Charitable fundraising platforms; platform charities. (a) Each charitable fundraising platform shall be subject to the department's supervision for activities regulated by this section. Before soliciting, permitting, or otherwise enabling any solicitations for purported charitable purposes, a charitable fundraising platform shall register with the department on a form or in a manner as provided by the department. Registrations under this section shall be subject to an annual report and an annual renewal fee imposed by the department. Fee revenues from this section shall be deposited into the solicitation of funds for charitable purposes special fund.

(b) A platform charity shall be subject to the department's supervision. The platform charity shall register with the department as a platform charity before conducting activities regulated by this section[.] and shall only solicit donations through a registered charitable fundraising platform."

2. By amending subsections (d) and (e) to read:

"(d) No platform charity shall facilitate acts of solicitation on a charitable fundraising platform unless the platform charity is in good standing. If the department notifies a charitable organization that it is prohibited from soliciting or operating in the State, the department shall indicate whether the basis for the prohibition is due to a ministerial deficiency.

(e) A charitable fundraising platform or platform charity shall only solicit, permit, or otherwise enable solicitations, or receive, control, or distribute funds from donations for purported charitable purposes for recipient charitable organizations or other charitable organizations in good standing. To determine good standing of a recipient charitable organization or other charitable organization, a charitable fundraising platform [~~or platform charity~~] may rely on [~~electronic lists periodically published by the Internal Revenue Service, department of taxation, or department.~~] the department's registry."

3. By amending subsection (i) to read:

"(i) The charitable fundraising platform or platform charity shall not divert or otherwise misuse any donations made for purported charitable purposes that the charitable fundraising platform or platform charity receives through solicitation on the charitable fundraising platform, and shall hold the donations in a separate account or accounts from other funds belonging to the charitable fundraising platform or platform charity. The charitable fundraising platform or platform charity shall promptly ensure that donations and grants of recommended donations are sent to the recipient charitable organizations with an accounting of any fees assessed for processing the funds, and in accordance with any rules adopted by the department pursuant to chapter 91. A platform charity shall be [~~vicariously~~] liable for [~~a charitable fundraising platform's~~] its misuse of funds[~~, and vice versa~~]. A charitable fundraising platform shall maintain and operate a process for complaints about any fundraising activity regulated by this chapter and shall investigate and make findings on complaints, and, at the request of the department, shall report its findings to the department along with its actions for resolution, including any full refunds of contributions."

SECTION 3. Section 467B-2.5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) A professional solicitor, charitable fundraising platform, or platform charity shall maintain during each solicitation campaign and for not less than three years after the completion of that campaign the following records, which shall be available for inspection upon demand by the attorney general:

(1) The date and amount of each contribution received and the name and address of each contributor; provided that an electronic mail address and internet protocol address shall be sufficient for any contribution received over the Internet;

(2) The name and residence of each employee, agent, or other person involved in the solicitation;

(3) Records of all revenue received and expenses incurred in the course of the solicitation campaign; and

(4) The location and account number of each bank or other financial institution account in which the professional solicitor, charitable fundraising platform, or platform charity has deposited revenue from the solicitation campaign."

SECTION 4. Section 467B-9, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) No professional solicitor, charitable fundraising platform, or platform charity, and no agent, employee, independent contractor, or other person acting on behalf of the professional solicitor, charitable fundraising platform, or platform charity, shall solicit in the name of or on behalf of any charitable organization unless[:] the charitable fundraising platform or platform charity has obtained written consent pursuant to section 467B-2.3(a) or:

(1) The professional solicitor[~~, charitable fundraising platform, or platform charity~~] has obtained the written authorization of two officers of the organization, which authorization shall bear the signature of the professional solicitor[~~, charitable fundraising platform, or platform charity~~] and the officers of the charitable organization and shall expressly state on its face the period for which it is valid, which shall not exceed one year from the date of issuance, and has filed a copy of the written authorization with the attorney general prior to the solicitation; and

(2) The professional solicitor[~~, charitable fundraising platform, or platform charity~~] and any person who, for compensation, acts as an agent, employee, independent contractor, or otherwise on behalf of the professional solicitor, [~~charitable fundraising platform, or platform charity,~~] carries a copy of the authorization while conducting solicitations, and exhibits it on request to persons solicited or police officers or agents of the department."

SECTION 5. Section 467B-12, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each professional solicitor, [~~charitable fundraising platform, or platform charity,~~] at the time of each filing, shall file with and have approved by the attorney general a bond in which the applicant is the principal obligor in the penal sum of $25,000 issued with good and sufficient surety or sureties approved by the attorney general and which shall remain in effect for one year. The bond shall inure to the benefit of the State, conditioned that the applicant, its officers, directors, employees, agents, servants, and independent contractors shall not violate this chapter. A partnership or corporation that is a professional solicitor[~~, charitable fundraising platform, or platform charity~~] may file a consolidated bond on behalf of all its members, officers, and employees."

SECTION 6. Section 467B-12.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There shall be a written contract between a charitable organization and a professional fundraising counsel, professional solicitor, charitable fundraising platform, or platform charity that shall be filed by the professional fundraising counsel, professional solicitor, charitable fundraising platform, or platform charity with the attorney general. In the case of a professional fundraising counsel or professional solicitor, a written contract shall be filed at least ten business days [~~prior to~~] before the performance by the professional fundraising counsel[,] or professional solicitor[, ~~charitable fundraising platform, or platform charity~~] of any service. No solicitation or service pursuant to the contract shall begin before the contract is filed with the attorney general. The contract shall be signed by two authorized officials of the charitable organization, one of whom shall be a member of the organization's governing body, and the authorized contracting officer for the professional fundraising counsel[,] or professional solicitor[, ~~charitable fundraising platform, or platform charity~~]. In the case of a charitable fundraising platform or platform charity, a written contract shall be filed with the attorney general before any fundraising activity; provided that when a recipient charitable organization has a contractual relationship with the charitable fundraising platform to facilitate the transfer of funds using a third-party disbursement intermediary, a written contract between a platform charity and a recipient charitable organization shall not be required to be filed unless ordered by the department. The contract shall contain all of the following provisions:

(1) The legal name and address of the charitable organization;

(2) A statement of the charitable purpose for which the solicitation campaign is being conducted;

(3) A statement of the respective obligations of the professional fundraising counsel, professional solicitor, charitable fundraising platform, or platform charity, and the charitable organization;

(4) A statement of the guaranteed minimum percentage of the gross receipts from contributions that will be remitted to or retained by the charitable organization, if any, or, if the solicitation involves the sale of goods, services, or tickets to a fundraising event, the percentage of the purchase price that will be remitted to the charitable organization, if any. The stated percentage shall exclude any amount that the charitable organization is to pay as fundraising costs;

(5) Information concerning the compensation of the professional solicitor and professional fundraising counsel as follows:

(A) If the compensation of the professional fundraising counsel, professional solicitor, charitable fundraising platform, or platform charity is contingent upon the number of contributions or the amount of revenue received, a statement shall be included specifying the percentage of the gross revenue that is the basis for that compensation. The stated percentage shall include any amount that the professional fundraising counsel, professional solicitor, charitable fundraising platform, or platform charity is to be reimbursed for fundraising costs;

(B) If the compensation of the professional solicitor, charitable fundraising platform, or platform charity is not contingent upon the number of contributions or amount of revenue received from the solicitation campaign, the compensation shall be expressed as a reasonable estimate of the percentage of the gross revenue, and the contract shall clearly disclose the assumptions upon which the estimate is based. The stated assumptions shall be based upon all of the relevant facts known to the professional solicitor regarding the solicitation to be conducted by the professional solicitor; or

(C) If the compensation of the professional fundraising counsel, charitable fundraising platform, or platform charity is not contingent on the number of contributions or amount of revenue received from the solicitation campaign, the compensation shall be stated in a dollar amount;

(6) The effective and termination dates of the contract or, if the contract does not have a set termination date, a clause allowing either party a reasonable period to terminate the contract or notify the other party if either party chooses not to renew. The contract shall also contain the date services will commence with respect to solicitation in this State of contributions for a charitable organization;

(7) In the case of a professional fundraising counsel, charitable fundraising platform, or platform charity, a statement that the professional fundraising counsel will not at any time have custody or control of contributions, as applicable;

(8) A statement that the charitable organization exercises control and approval over the content and volume of any solicitation; and

(9) Any other information required by the rules of the attorney general."

SECTION 7. Act 205, Session Laws of Hawaii 2024, is amended by amending section 16 to read as follows:

"SECTION 16. This Act shall take effect on [~~January 1,~~] June 30, 2026."

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2050; provided that section 7 shall take effect on June 29, 2026.

THE SENATE	S.B. NO.	1048
THIRTY-THIRD LEGISLATURE, 2025		S.D. 1
STATE OF HAWAII