STAND. COM. REP. NO. 735

Honolulu, Hawaii

RE: S.B. No. 1048

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 1048, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO SOLICITATION OF FUNDS FROM THE PUBLIC,"

begs leave to report as follows:

The purpose and intent of this measure is to amend Act 205, Session Laws of Hawaii 2024, to clarify standards and safeguards in online crowdfunding.

Your Committee received testimony in support of this measure from GoFundMe.

Your Committee received testimony in opposition to this measure from the Department of the Attorney General.

Your Committee finds that although Act 205, Session Laws of 2024 (Act 205), was intended to regulate charitable fundraising platforms to ensure proper and transparent fundraising activities in the State, Act 205 poses significant risks to charitable fundraising in the State by potentially slowing down donations, imposing administrative burdens on charities and platforms, and reducing support for the State's residents in times of crisis. This measure will provide necessary fixes to preserve trust in online fundraising while ensuring the State's residents continue to receive vital charitable support, especially in times of disaster.

Your Committee notes that this measure requires the Department of the Attorney General to indicate whether a charitable organization is prohibited from soliciting or operating in the State due to "ministerial deficiency". However, this term is not defined in chapter 467B, Hawaii Revised Statutes, making its fair and uniform application challenging, and the purpose unclear. Your Committee also notes that this measure proposes to exempt a copy of the written contract between a platform charity and a charitable organization from being filed with the Attorney General when a platform charity uses a third-party disbursement intermediary to facilitate the transfer of funds. This exemption may undermine the Department of the Attorney General's oversight and enforcement of charitable fundraising activity because the filing requirement for written contracts allows the Department to track charitable fundraising in the State. Therefore, amendments to this measure are necessary.

Accordingly, your Committee has amended this measure by:

(1) Deleting language that would have required the Department of the Attorney General, upon notifying a charitable organization that it is prohibited from soliciting or operating in the State, to indicate whether the basis for the prohibition is due to a ministerial deficiency;

(2) Deleting language that would have exempt a copy of the written contract between a platform charity and a charitable organization from being filed with the Attorney General when a platform charity uses a third-party disbursement intermediary to facilitate the transfer of funds; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1048, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1048, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Judiciary,

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KARL RHOADS, Chair