California AB 488 Compliance Explained

This guide offers a high-level overview of California AB 488, a new compliance law for charitable fundraising platforms.

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You may have heard of California AB 488 – but what is it exactly? Who does it apply to, what actions should you take (if any), and what are its ramifications for businesses seeking to give back? Well, look no further. In this guide, we’ll answer all of these questions and provide helpful resources so you can understand how to comply with this new piece of legislation, ensuring a seamless and efficient donation processing experience.

By expanding the regulatory scope to include online charitable giving platforms and their associated entities, California AB 488 aims to ensure transparency, accountability, and compliance within the rapidly growing realm of digital philanthropy.

What is California AB 488?

California AB 488, also known as the Charitable Solicitation Registration Act, establishes requirements for organizations engaged in charitable solicitation activities within the state. It requires certain entities to register with and to file certain items like registration forms and written reports with the California Attorney General’s Registry of Charitable Trusts. The provisions of this legislation came into effect on January 1, 2023, in order to establish a regulatory framework for these entities operating in California. The majority of companies that solicit charitable activities do business in California, so it's quite likely your company is included in this group.

The passing of California AB 488 marks an important expansion of the regulatory framework to include online charitable giving platforms and the recipient charities they support. These platforms enable users to make donations to listed charities based on their recommendations or through purchases and other activities on the platform.

→ Read the full text of the bill here

What is the purpose of California AB 488? 

The purpose of California AB 488 is to regulate and provide oversight for online charitable fundraising platforms and recipient charitable organizations, ensuring transparency, compliance, and accountability within the realm of digital philanthropy. This legislation aims to protect donors and ensure transparency and accountability in the nonprofit sector. 

Who does California AB 488 apply to?

California AB 488 applies to charitable fundraising platforms as well as platform charities operating within the state of California. In other words, this applies to all charitable corporations, unincorporated associations, trustees, and other legal entities holding property for charitable purposes, commercial fundraisers for charitable purposes, fundraising counsel for charitable purposes, and commercial coventurers. 

Below are key distinctions between charitable fundraising platforms and platform charities:

  • Charitable fundraising platform – Certain legal entities that use the internet to provide a website, service, or other platform to persons in this state, and perform, permit, or otherwise enable certain acts of solicitation to occur. These platforms enable individuals in California to make donations to charities listed on their websites.
  • Platform charity – A trustee or charitable corporation that facilitates acts of solicitation on a charitable fundraising platform.

It's worth noting that certain entities are excluded from the definition of charitable fundraising platforms. This includes a charitable organization's own platform that solely solicits donations for itself, vendors that provide technical or supportive services to these platforms, sponsoring organizations of donor-advised funds, and certain trustee or charitable corporations facilitating acts of solicitation.

What are some examples of charitable fundraising platforms?

Charitable fundraising platforms provide accessible and user-friendly ways for individuals, nonprofits, and causes to raise funds and generate support from a broad community of donors. These are some notable examples of charitable fundraising platforms that have emerged in recent years:

  1. GoFundMe: GoFundMe is a popular crowdfunding platform that allows people to create personal fundraising campaigns for various causes, including medical expenses, disaster relief, education, and more.
  2. DonorsChoose: DonorsChoose is an online platform that connects teachers with donors who want to support classroom projects and educational initiatives in public schools across the United States.
  3. Kickstarter: While primarily known for crowdfunding creative projects and business ventures, Kickstarter has also been used as a platform for charitable fundraising. 
  4. GlobalGiving: GlobalGiving is a global crowdfunding platform that supports nonprofit organizations and social entrepreneurs around the world. It allows donors to contribute to a wide range of projects addressing diverse social and environmental issues.
  5. Classy: Classy is a fundraising platform designed for nonprofit organizations. It offers various tools and features to help nonprofits create and manage their fundraising campaigns, engage donors, and track their impact.

This is certainly not an exhaustive list. It's very possible that your company may also qualify as a charitable giving platform. Check out the essential California AB 488 checklist today.

See essential checklist

Are there new legal compliance requirements businesses should know about?

Charitable fundraising platforms now face new requirements, including annual registration and reporting, mandatory disclosures, written consent from charity beneficiaries, limited solicitation for reputable organizations, fund segregation, prompt distribution of donations, and transparent accounting of fees. These measures aim to ensure responsible and ethical practices, build donor trust, and enhance transparency in the charitable fundraising sector. 

→ Read more about 7 cause marketing compliance considerations companies need to keep an eye on

How does California AB 488 affect cause marketing? 

California AB 488 has significant implications for cause marketing initiatives. It introduces new regulations to enhance transparency, accountability, and responsible practices in charitable fundraising platforms. These changes include annual registration and reporting, required disclosures about fees and fund utilization, obtaining written consent from charity beneficiaries, restricting solicitation to reputable organizations, fund segregation, prompt distribution of donations, and transparent accounting of fees. These requirements aim to build trust among donors and beneficiaries by establishing a framework that promotes transparency and ethical practices in cause marketing campaigns.

The legislation ensures that cause marketing platforms operate with integrity, provide clear information to donors, and prioritize the impact of their efforts. By complying with these regulations, cause marketing campaigns can foster trust with donors, demonstrate their commitment to responsible practices, and contribute to a more trustworthy and accountable charitable fundraising environment. These changes protect donors from fraud or mismanagement of funds, empower charities to control their reputation, promote timely action and impact, and uphold financial transparency. California AB 488 serves as a guide for cause marketing initiatives, providing a roadmap to navigate the new requirements and build a robust and ethical charitable ecosystem.

What should companies do today to maintain compliance with California AB 488?

To ensure compliance with the new requirements, companies engaging in online charitable campaigns should take the following steps:

  1. Determine which online campaigns and donation activations fall under the scope of the new regulations. This might include round-ups at checkout, percent-of-sale donations, or online sweepstakes.
  2. Establish clear communication with partners (i.e. nonprofits) before launching cause marketing campaigns to discuss the implications of the new law and ensure alignment on compliance requirements.
  3. Review sample campaign pages to verify that the necessary disclosures are correctly displayed on the website or within the mobile app.
  4. If the campaign is facilitated by a third-party platform, ensure that the platform is fully informed about the new requirements and capable of fulfilling all aspects of the law. This includes displaying required disclosures, confirming that the platform charity is in good standing, and facilitating timely donation and grant disbursements.
  5. Speak with legal counsel to ensure your company is fully compliant with this new law.

By proactively addressing these considerations, companies can better navigate the regulatory landscape and ensure compliance with new requirements for online charitable campaigns.

How Change can help you with compliance today

Change is a valuable resource for companies seeking compliance with California AB 488 and navigating the complexities of cause marketing regulations. Our comprehensive platform provides the tools and guidance necessary to ensure adherence to the new requirements. With Change, companies can easily meet the annual registration and reporting obligations, maintain transparent communication by disclosing fee details and fund utilization, and obtain the necessary written consent from charity beneficiaries. We facilitate restricted solicitation, ensuring that donations go to reputable organizations, and enables fund segregation to maintain transparency and accountability. Change also prioritizes prompt distribution of donations and grants, aligning with the urgency of charitable needs. With their robust accounting features, companies can effortlessly track and report on fees, promoting financial transparency and building trust among donors.

Change empowers companies to comply with California AB 488, fostering a responsible and ethical cause marketing environment. Book a demo with us today to learn more.

Compliance checklist

Curious to see where you stand today with regards to cause marketing compliance? Check out the compliance checklist.
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