Chapter 17 - § 17.2 • COLORADO CHARITABLE SOLICITATION LAWS

• Jurisdiction: Colorado

§ 17.2 • COLORADO CHARITABLE SOLICITATION LAWS

§ 17.2.1—Typical State Laws

Almost every state regulates charitable solicitation in some fashion. This regulation may be in the form of registration requirements for charities, professional solicitors, and/or professional fundraisers. Or, it may take the form of civil, criminal, and deceptive practice sanctions. Charities operating in more than one state face difficulties in trying to comply with the charitable solicitation laws of each applicable state. This is due largely to the lack of uniformity among the states in the technical registration rules, exemptions from registration, disclosure requirements, and use of the same or similar terminology to mean different things. For example, terms such as "charitable organization," "charitable solicitation," "professional solicitor," and "professional fundraiser" may have different meanings from state to state.

In many cases, the state requires a charity to file an initial registration and renew it annually. The state usually has a specific form for this purpose. The charity may need to include a copy of its Federal Form 990, articles of incorporation, bylaws, determination letter, fundraiser contract(s), if any, and annual financial reports.

§ 17.2.2—Movement Toward Uniformity

Although much of the information provided to the states is similar, there is no method of registration that is universally accepted at this time by every state that requires registration. However, many states now accept the Unified Registration Statement, which is part of the "standardized reporting project" undertaken by the National Association of Attorneys General and the National Association of State Charities Officials. National Council of Nonprofit Associations, see generally www.councilofnonprofits.org; see also www.multistatefiling.org, published by the National Association of State Charities Officials. According to this website, 37 jurisdictions (36 states and the District of Columbia) now accept this common form (Colorado is not one of the 36 states). Go to www.multistatefiling.org to learn how to obtain a copy of a Unified Registration Statement. Currently, Colorado is one of only three states requiring registration that do not accept the Unified Registration Statement.

§ 17.2.3—Entities Covered

In General

Colorado law regulating charitable solicitation, the Colorado Charitable Solicitations Act, may be found in Title 6, Article 16 of the Colorado Revised Statutes (C.R.S.) and companion regulations promulgated by the Colorado Secretary of State. These statutes and regulations govern a "charitable organization that solicits" contributions, and its dealings with professional "fundraisers" and "fundraising counsel." In general, a charitable organization must be registered with the Colorado Secretary of State before it solicits (or has contributions solicited on its behalf) within the State of Colorado. C.R.S. § 6-16-104(1); see § 17.2.4 of this chapter. (Unless otherwise indicated, all references in this chapter to the Colorado Revised Statutes are current as of January 1, 2018.)

Charitable Organizations That Solicit Contributions

Definition of "Charitable Organization"

State law broadly defines a "charitable organization" to include "any person . . . who in any manner employs a charitable appeal or an appeal which suggests that there is a charitable purpose as the basis for any solicitation." C.R.S. § 6-16-103(1). For these purposes, a "charitable purpose" is any

benevolent, educational, philanthropic, humane, scientific, patriotic, social welfare or advocacy, public health, environmental conservation, civic, or other eleemosynary purpose, any objective of law enforcement officers, firefighters, other persons who protect the public safety, or veterans, or any objective of sponsoring the free or subsidized attendance of persons at any event.

C.R.S. § 6-16-103(2).

Activities Constituting Solicitation

In General. A solicitation is a direct or indirect request for a contribution, coupled with a representation that the contribution will be used for some charitable purpose or will benefit a charitable organization. C.R.S. § 6-16-103(10). A contribution includes a grant or promise of money, credit, property, financial assistance, or other thing of value in response to a solicitation. C.R.S. § 6-16-103(5).

Representation That Proceeds Will Be Used for Charitable Purposes or to Benefit Charitable Organizations. The focus here is on what is actually said when the solicitor asks someone to give money or buy an item. For example, if a solicitor says merely, "Please contribute to the Boulder Flat Iron Society," there has been no charitable solicitation, because the solicitor has not stated or implied that the donation will be used for any civic purpose, such as for the poor, for education, or for other charitable causes. If, however, the solicitor says, "Please contribute to the Boulder Flat Iron Society and help us save endangered hawks from extinction," the solicitor has made a charitable solicitation by stating a charitable purpose for the donation. The preservation of endangered animals has educational, scientific, and other benefits for the community.

Sometimes an organization's name alone, because of the organization's nature or public awareness of its charitable purpose, is enough to indicate that a solicitation is charitable. Some examples of such solicitations are "Please contribute to the Denver Health Foundation," or "Please contribute to The Children's Museum of Denver." In addition, solicitations that mention no charitable purpose but do state that contributions will benefit a charitable organization are considered charitable solicitations. C.R.S. § 6-16-103(10)(b).

Nonprofit Organizations That Solicit

None of Colorado's charitable solicitation provisions apply to a nonprofit organization unless the organization solicits contributions. C.R.S. § 6-16-104(1). HB 17-1158, which was signed by Governor Hickenlooper on April 28, 2017, amends several sections of the Colorado Charitable Solicitations Act, including C.R.S. § 6-16-104. The amendments will be effective October 1, 2018.

However, even organizations that do not regard themselves as "charities" will subject themselves to state regulation, and the requirement to register, if they ask the public for contributions for a charitable purpose, sell goods accompanied with a representation that part of the proceeds will be used for a charitable purpose, or say that the contribution or payment will benefit some charitable organization. An organization that is not primarily charitable but that decides to devote some of its effort to asking for contributions for some charitable purpose must also register.

Exemptions

There are several exemptions to the Colorado statute's registration requirements. C.R.S. § 6-16-104(6). Exemptions are made for the following:

• Religious organizations that have been exempted from filing federal tax returns under 26 U.S.C. § 6033(a)(3)(A)(i) or (a)(3)(C)(i);
• Political parties, candidates for federal or state office, and political action committees required to file financial information with federal or state elections commissions;
• Charitable organizations not intending to raise or receive more than $25,000 in a year or receive contributions from more than 10 people during a fiscal year, excluding grants from entities or organizations exempt from federal taxation under § 501(c)(3), provided that they use unpaid

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