NORTH CAROLINA GENERAL ASSEMBLY
1975 SESSION

CHAPTER 747
HOUSE BILL 915

AN ACT TO REGULATE INDIVIDUALS AND ORGANIZATIONS ENGAGED IN CHARITABLE PUBLIC SOLICITATIONS.

The General Assembly of North Carolina enacts:

Section 1.  Part 1 of Article 3 of Chapter 108 of the General Statutes is hereby rewritten as follows:
"ARTICLE 3.
"Inspection and Licensing Authority.
"Part 1. Licensing of Public Solicitation.
"§ 108-75.1.  Short title. — This act shall be known and may be cited as the 'Solicitation of Charitable Funds Act.'
"§ 108-75.2.  Purpose. — It is the purpose of this Part to protect the general public and public charity in the State of North Carolina; to require full public disclosure of facts relating to persons and organizations who solicit funds from the public for charitable purposes, the purposes for which such funds are solicited, and their actual uses; and to prevent deceptive and dishonest statements and conduct in the solicitations of funds for or in the name of charity.
"§ 108-75.3.  Definitions. — Unless a different meaning is required by the context, the following terms as used in this Part shall have the meanings hereinafter respectively ascribed to them:
(a)	'Charitable organization' shall mean any person which is or holds itself out to be organized or operated for any charitable purpose or any person which solicits or obtains contributions solicited from the public for charitable purposes after the effective date of this Part. A chapter, branch, area, office or similiar affiliate or any person soliciting contributions within the State for a charitable organization which has its principal place of business outside the State shall be a charitable organization for the purposes of this Part.
(b)	'Charitable purpose' shall mean any charitable, benevolent, religious, philanthropic, environmental, public or social advocacy or eleemosynary purpose for religion, health, education, social welfare, art and humanities, civic and public interest.
(c)	'Commission' shall mean the North Carolina Social Services Commission.
(d)	'Committee' shall mean the Committee on Charitable Organizations.
(e)	'Contribution' shall mean any promise, gift, bequest, devise or other grant for consideration or otherwise, of any money or property of any kind or value, including the promise to pay, which contribution is wholly or partly induced by a solicitation. The term 'contribution' shall not include payments by members of an organization for membership fees, dues, fines or assessments, or for services rendered to individual members, if membership in such organization confers a bona fide right, privilege, professional standing, honor or other direct benefit, other than the right to vote, elect officers, or hold offices; nor any money, credit, financial assistance or property received from any governmental authority; nor any donation of blood or any gift made pursuant to the Uniform Anatomical Gift Act. Reference to dollar amounts of 'contributions' or 'solicitations' in this Part means, in the case of payments or promises to pay for merchandise or rights of any description, the value of the total amount paid or promised to be paid for such merchandise or rights, and not merely that portion of the purchase price to be applied to a charitable purpose.
(f)	'Compensation' shall mean salaries, wages, fees, commissions, or any other remuneration or valuable consideration.
(g)	The words 'corporation', 'association' and 'institution' shall mean any aggregation of individuals, whether two or more, working for a common purpose in their community or their State in the interest of religious societies, fraternal organizations, local councils of boy and girl organizations, and clubs, hospitals. Community Chest, Red Cross and all other charitable enterprises.
(h)	'Department' shall mean the North Carolina Department of Human Resources.
(i)	'Direct gift' shall mean and include an outright contribution of food, clothing, money, credit, property, financial assistance or other thing of value to be used for a charitable or religious purpose and for which the donor receives no consideration or thing of value in return.
(j)	'Federated fund-raising organization' shall mean a federation of independent charitable organizations which have voluntarily joined together, including but not limited to a United Fund, United Way or Community Chest, for purposes of raising and distributing money for and among themselves and where membership does not confer operating authority and control of the individual agencies upon the federated group organization.
(k)	'Fund-raising expenses' shall mean the expenses of all activities that constitute or are an integral and inseparable part of a solicitation.
(l)	'Membership' shall mean a status applied upon condition of the payment of fees, dues, assessments, etc., in an organization which provides services and confers a bona fide right, privilege, professional standing, honor or other direct benefit, in addition to the right to vote, elect officers, or hold offices. The term 'membership' shall not include those persons who are granted a membership upon making a contribution as the result of solicitation.
(m)	'Parent organization' shall mean that part of a charitable organization which coordinates, supervises or exercises control over policy, fund raising, and expenditures, or assists or advises one or more chapters, branches or affiliates in the State.
(n)	'Person' shall mean any individual, organization, trust, foundation, group, association, partnership, corporation, society, or any other group or combination acting as a unit. This definition shall not be deemed to include any authorized individual who solicits solely on behalf of a licensed or exempt charitable organization.
(o)	'Professional fund-raising counsel' shall mean any person who for a flat fixed fee under a written agreement plans, conducts, manages, carries on, advises or acts as a consultant, whether directly or indirectly, in connection with soliciting contributions for, or on behalf of any charitable organization but who actually solicits no contributions as a part of such services. A bona fide salaried officer or employee of a charitable organization maintaining a permanent establishment within the State, or the bona fide salaried officer or employee of a parent organization certified as tax exempt shall not be deemed to be a professional fund-raising counsel.
(p)	'Professional solicitor' shall mean any person who, for a financial or other consideration, solicits contributions for or on behalf of a charitable organization, whether such solicitation is performed personally or through its agents, servants or employees specially employed by or for a charitable organization, who are engaged in the solicitation of contributions under the direction of such person; or a person who plans, conducts, manages, carries on, advises or acts as a consultant, whether directly or indirectly, to a charitable organization in connection with the solicitation of contributions but does not qualify as 'professional fund-raising counsel' within the meaning of this Part. A bona fide full-time salaried officer or employee of a charitable organization maintaining a permanent establishment within the State or the bona fide salaried officer or employee of a parent organization certified as tax exempt shall not be deemed to be a professional solicitor.
No attorney, investment counselor or banker, who advises any person to make a contribution to a charitable organization, shall be deemed, as the result of such advice, to be a professional fund-raising counsel or a professional solicitor.
(q)	'Religious purposes' shall mean maintaining or propagating religion or supporting public religious services, according to the rites of a particular denomination.
(r)	'Sale and benefit affair' shall mean and include, but not be limited to, athletic or sports event, bazaar, benefit, campaign, circus, contest, dance, drive, entertainment, exhibition, exposition, party, performance, picnic, sale, social gathering, theater, or variety show which the public is requested to patronize or attend or to which the public is requested to make a contribution for any charitable or religious purpose connected therewith.
(s)	The words 'sale', 'sell' and 'sold' shall mean the transfer of any property or the rendition of any service to any person in exchange for consideration, including any purported contribution without which such property would not have been transferred or such services would not have been rendered.
(t)	'Secretary' shall mean the Secretary of the North Carolina Department of Human Resources.
(u)	'Secular' shall mean relating to the affairs of the present world, including but not limited to providing food, clothing, counseling, education, disaster relief, medical assistance, training and shelter.
(v)	The words 'solicit' and 'solicitation' shall mean the request or appeal, directly or indirectly, for any contribution on the plea or representation that such contribution will be used for a charitable purpose, including without limitation, the following methods of requesting such contribution:
(1)	Any oral or written request;
(2)	Any announcement to the press, over the radio or television or by telephone or telegraph concerning an appeal or campaign to which the public is requested to make a contribution for any charitable purpose connected therewith;
(3)	The distribution, circulation, posting or publishing of any handbill, written advertisement or other publication which directly or by implication seeks to obtain public support;
(4)	The sale of, offer or attempt to sell, any advertisement, advertising space, subscription, ticket, or any service or tangible item in connection with which any appeal is made for any charitable purpose; or where the name of any charitable organization is used or referred to in any such appeal as an inducement or reason for making any such sale; or when or where in connection with any such sale, any statement is made that the whole or any part of the proceeds from any such sale will be donated to any charitable purpose.
Solicitation as defined herein, shall be deemed to occur when the request is made, at the place the request is received, whether or not the person making the same actually receives any contribution.
"§ 108-75.4.  Authority to license. — (a) The department is hereby authorized and directed to issue licenses to charitable organizations, professional fund- raising counsel and professional solicitors for soliciting in accordance with the provisions of this Part and the standards, rules and regulations promulgated by the commission under the authority of this Part and under the authority of G.S. 143B-153.
(b)	Each license shall be valid throughout the State for a period of one year or less from the date of issue and may be renewed for additional one-year periods or less upon written application to the department under oath or affirmation in the form prescribed by the commission and the payment of the fee prescribed herein.
"§ 108-75.5.  Committee on Charitable Organizations; creation; members; terms; selection; powers and duties; hearings; removal; compensation. — (a) There is hereby created a Committee on Charitable Organizations which shall consist of the secretary and seven citizens of the State, none of whom shall be a State employee, and who shall be appointed by the Governor. Four appointees shall be representative of the public solicited and the various categories of charitable persons for whom solicitations are made, and shall be selected from no more than 20 names submitted to the Governor by the following organizations:
(1)	The Managing Heads of the Better Business Bureaus in the State;
(2)	The North Carolina Association of C.P.A.'s;
(3)	The North Carolina League of Municipalities; and
(4)	The North Carolina Bar Association.
Three appointees shall represent licensed charitable organizations, shall be either a full-time staff member or an unpaid volunteer or officer of a licensed charitable organization, and shall be selected from no more than 15 names submitted to the Governor by the following organizations:
(5)	The local and State United Way Organizations of North Carolina;
(6)	The North Carolina Child Care Association; and
(7)	The North Carolina National Health Agencies Committee.
None of these organizations shall nominate more than five names and no more than one nominee shall be selected from the names submitted by any one organization.
(b)	The Governor shall designate one citizen member as chairman. Each citizen member shall serve a four-year term, except that the initial appointments of citizen members shall be as follows: three for two years, two for three years, and two for four years. In making the initial appointments for the two-year term, the Governor shall select two members from the names submitted pursuant to G.S. 108-75.5(a)(l) through (4) and one member from the names submitted pursuant to G.S. 108-75. 5(a)(5) through (7); the Governor shall select the initial appointees for the three and four-year terms so as to respectively provide for one appointee from the names submitted pursuant to G.S. 108-75.5(a)(l) through (4) and one appointee from the names submitted pursuant to G.S. 108-75. 5(a)(5) through (7). At the expiration of their respective terms, citizen members shall be replaced or reappointed in the same manner as provided for in the original appointments for terms of four years. Any vacancy occurring before the expiration of a term shall be filled in the same manner as provided for in the original appointment and the appointee shall serve the balance of the unexpired term.
(c)	The committee shall have the power and the duty to recommend to the commission rules, regulations and procedures for the licensing and regulation of charitable organizations, professional fund-raising counsel and professional solicitors. The rules and regulations shall take into consideration the existence of an adequate, responsible and functioning governing board of the charitable organization, professional fund-raising counsel or professional solicitor; its chartered responsibility; its need to conduct public solicitation; the proposed uses of solicited funds; the percentage of solicited funds used for management and fund-raising expenses, fund-raising activities, including but not limited to sale and benefit affairs and program services; the accountability of the charitable organization, professional fund-raising counsel or professional solicitor and disclosure of information and financial reports to the general public; and other matters proper for the protection of the public interest with respect to public solicitation. The committee shall also recommend to the commission the forms for license application and other forms required by this Part. After due notice, a hearing shall be arranged by the committee with representatives of charitable organizations, professional fund-raising counsel and professional solicitors, and an opportunity for all such to be heard to make effective such recommendations of standards, rules, regulations, forms and procedures by the committee to the commission.
(d)	The committee shall meet semiannually and at such other times as called by the chairman of the committee.
(e)	The Governor shall have the power to remove any citizen member from the committee for misfeasance, malfeasance or nonfeasance in accordance with G.S. 143B-13.
(f)	The citizen members of the committee shall receive per diem and necessary travel and subsistence expenses in accordance with the provisions of G.S. 138-5.
(g)	All clerical and other services required by the committee shall be supplied by the secretary. The committee shall give to the public full information from time to time about its activities and shall publish an annual report analyzing the effectiveness of its recommendations and the activities of persons subject to this Part.
"§ 108-75.6.  Application for licensing. — (a) Every charitable organization, except as otherwise provided in this Part, which intends to solicit contributions within the State or have funds solicited on its behalf, shall, prior to any solicitation, file an application with the department upon forms prescribed by the commission for a license to solicit. It shall be the duty of the president, chairman, or principal officer of the charitable organization to make such application and file such reports as are required by this Part. Such statements shall contain the following information:
(1)	The name of the organization and the purpose for which it was organized.
(2)	The principal street address and the mailing address, if different, of the organization, and the addresses of any offices maintained by the organization in this State. If the organization does not maintain an office, the name and address of the person having custody of its financial records within the State.
(3)	The names and addresses of any chapters, branches or affiliates in this State and organizations elsewhere that share in contributions raised in this State.
(4)	The place where and the date when the organization was legally established, the form of its organization, and a reference to any determination of its tax-exempt status under the Internal Revenue Code. In the initial application it is required that true copies be submitted of either the Articles of Incorporation or Constitution plus all amendments; a proposed program of activities for the applicant's current fiscal year; the bylaws and all approved changes; a copy of the tax- exempt status letter from the Internal Revenue Service including the Letter of Determination Status and the Agreements of Affiliation, if applicable. Future applications require only notice of any changes in or revocations of these documents.
(5)	The names, addresses and occupations of the officers, directors, trustees and key personnel. The term 'key personnel' means: Any officers, employees, or other personnel who are directly in charge of any of the fund-raising activities of the charitable organization; any officers or individuals maintaining custody of the organization's financial records; and any officers or individuals who will have custody of the contributions.
(6)	A copy of the balance sheet and income and expense statement audited by an independent certified public accountant for the organization's immediately preceding fiscal year, or a copy of a financial statement audited by an independent certified public accountant covering, in a consolidated report, complete information as to all of the preceding year's fund-raising activities of the charitable organization, showing the balance sheet, kind and amounts of funds raised, costs and expenses incidental thereto, allocation or disbursement of funds raised, changes in fund balances, notes to the audit and the opinion as to the fairness of the presentation by the accountant. This report shall conform to the accounting and reporting procedures set forth in the 'Audit Guides' published by the American Institute of Certified Public Accountants, and as may be modified from time to time by said Institute or its successor: Provided that the commission shall adopt rules and regulations for simplified reporting by organizations that do not raise or receive contributions totalling more than fifteen thousand dollars ($15,000) in gross receipts for said preceding fiscal year.
(7)	A statement indicating whether the organization is authorized by any other governmental authority to solicit contributions and whether it, or any officer, professional fund-raising counsel or professional solicitor thereof, is or has ever been enjoined by any court or otherwise prohibited from soliciting contributions in any jurisdiction.
(8)	A statement indicating whether the organization intends to solicit contributions from the public directly or have such done on its behalf by others.
(9)	The location of the organization's financial records in the State.
(10)	Methods by which solicitation will be made, including a statement as to whether such solicitation is to be conducted by voluntary unpaid solicitors, by professional solicitors, or both; and a narrative description of the promotional plan together with copies of all advertising material which has been prepared for public distribution by any means of communication and the location of all telephone solicitation facilities.
(11)	The names and addresses of any professional fund-raising counsel and professional solicitors who are acting or who have agreed to act on behalf of the organization together with a statement setting forth the terms of the arrangements for salaries, bonuses, commissions, or other remuneration to be paid the professional fund-raising counsel and professional solicitors.
(12)	The period of time during which the solicitations will be made and if less than statewide, the area or areas in which such solicitation will generally take place.
(13)	The purposes for which contributions to be solicited will be used, the total amount of funds proposed to be raised thereby, and the use or disposition to be made of any receipts therefrom.
(14)	The name or names under which the organization intends to solicit contributions.
(15)	The names of the individuals or officers of the organization who will have final responsibility for the custody of the contributions.
(16)	The names of the individuals or officers of the organization responsible for the final distribution of the contributions.
(17)	A sample copy of the authorization issued by the organization to individuals soliciting by means of personal contact in its behalf. Each individual solicitor shall receive instructions that said authorization is to be shown at the request of any person, law enforcement officer or agent of the department.
(18)	Such other information as may be reasonably required by the commission for the public interest or for the protection of contributors.
(b)	If there is any change in fact, policy or procedure that would alter the information given in any license application, the applicant or licensee shall notify the secretary in writing thereof within five days, excluding Saturdays, Sundays and legal holidays after such change.
(c)	The secretary or his designee shall examine each initial application of a charitable organization for the right to solicit funds and each renewal application of a charitable organization for the right to solicit funds, and if found to be in conformity with the requirements of this Part and all relevant rules and regulations promulgated by the commission, it shall be approved for licensing.
(d)	The license application forms and any other documents prescribed by the commission shall be signed by an authorized officer or by an independent certified public accountant, and by the chief fiscal officer of the charitable organization and shall be verified under oath.
(e)	Each chapter, branch or affiliate, except an independent member agency of a federated fund-raising organization, shall separately report the information required by this section or report the information to its parent organization, which shall then furnish such information as to itself and all of its State chapters, branches or affiliates in a consolidated form. All affiliated organizations included in a consolidated license application shall be considered as one charitable organization for all purposes of this Part. If a consolidated license application is filed, all applications thereafter filed shall be upon the same basis unless permission to change is granted by the secretary.
(f)	Each federated fund-raising organization shall report the information required by this section in a consolidated form. Any federated fund-raising organization may elect to exclude from its consolidated application information relating to the separate fund-raising activities of any of its independent member agencies. No member agency of a federated fund-raising organization shall be required to report separately any information contained in such a consolidated application: Provided, however, that any separate solicitations campaign conducted by, or on behalf of, any such member agency shall nevertheless be subject to all other provisions of this Part and the rules and regulations promulgated by the commission.
(g)	Both the chapter, branch or affiliate soliciting in this State as well as the parent organization which has its principal place of business outside of the State 1017 shall be subject to all of the provisions of this Part and the rules and regulations adopted by the commission.
(h)	Upon receipt of a request from the secretary or upon its own initiative, the commission shall make or cause to be made such investigation of any applicant as it may deem necessary. As a result of its investigation and action, the commission shall certify to the secretary its recommendation for approval or disapproval of the application. No applicant shall be approved if one or more of the following facts is found to exist:
(1)	That one or more of the statements in the application are not true.
(2)	That the applicant is or has engaged in a fraudulent transaction or enterprise.
(3)	That a solicitation would be a fraud upon the public.
(4)	That solicitation and fund-raising expenses (including not only payments to professional solicitors, but also payments to professional fund-raising counsel, and internal fund-raising and solicitation salaries and expenses) during the year immediately preceding the date of application have exceeded, or, for the specific year in which the application is submitted will exceed, thirty-five percent (35%) of the total moneys, pledges, or other property raised or received or to be raised or received by reason of any solicitation and/or fund-raising activities or campaigns. As used in this subsection and in G.S. 108-75.23, the term 'internal fund-raising and solicitation salaries and expenses' shall include, but not be limited to, such portions of the charitable organization's salary and overhead expenses as is fairly allocable (on a time or other appropriate basis) to its solicitation and/or fund-raising expense. In the event special facts or circumstances are presented showing that expenses higher than thirty-five percent (35%) were not or will not be unreasonable, the commission has the discretion to allow such higher expense.
(i)	A charitable organization which plans no solicitation of contributions in the State upon the expiration of its current license shall file a financial report within 90 days of the expiration date of the current license period.
(j)	Newly created charitable organizations with no financial history may be granted a license if, in the judgement of the secretary, all requirements for licensing except that of the financial report are satisfied.
"§ 108-75.7.  Exemptions from licensing. — (a) The following persons shall be exempt from the licensing provisions of this Part:
(1)	A corporation sole or other religious corporation, trust, or organization incorporated or established for religious purposes, or other religious organizations which serve religion by the preservation of religious rights and freedom from persecution or prejudice or by the fostering of religion, including the moral and ethical aspects of a particular religious faith: Provided, however, that such corporation sole or other religious corporation, trust or organization established for religious purposes shall not be exempt from filing a license application with respect to secular activities: Provided further, however, that no part of the net income of which inures to the benefit of any individual and that the organization had received a declaration of current tax-exempt status as a religious organization from the government of the United States.
(2)	Educational institutions, the curricula of which in whole or part are registered, approved or accredited by either the State Department of Public Education, the University of North Carolina Board of Governors, the Southern Association of Colleges and Schools or an equivalent regional accrediting body; any foundation or department having an established identity with any of the aforementioned educational institutions; and any other educational institution confining its solicitation to its student body, alumni, faculty, staff and trustees, and their families; or a library established under the laws of this State.
(3)	Charitable organizations which do not intend to solicit and receive during a calendar year, and have not actually raised or received during any of the next preceding calendar years, contributions from the public in excess of two thousand dollars ($2,000) or which do not receive contributions from more than 10 persons during a calendar year: Provided that all of their functions, including fund-raising activities, must be carried on by persons who are unpaid for their services and no part of their assets or income shall inure to the benefit of or be paid to any officer or member: Provided further, that if the contributions raised from the public, whether all of such is or is not received by the charitable organization during any calendar year, shall be in excess of two thousand dollars ($2,000), it shall, within 30 days after the date the contributions reach two thousand dollars ($2,000), file an application for licensing by and report to the department as required by this Part.
(4)	Persons requesting contributions for the relief of any individual specified by name at the time of the solicitation when:
a.	The solicitation is managed and conducted solely by persons who are unpaid for such services;
b.	The contributions collected do not exceed two thousand dollars ($2,000) in any six-month period; and
c.	All of the contributions collected, without any deductions whatsoever except for the actual cost of a sale and benefit affair are turned over to the named individual beneficiary for his use.
(5)	Organizations which solicit only within the membership of the organization by the members thereof.
(6)	Any organization established solely to operate a hospital licensed pursuant to Article 13A of Chapter 131 of the General Statutes by the North Carolina Division of Facility Services: Provided, however, that the governing board of the hospital authorizes the solicitation and receives an accounting of funds collected and expended.
(7)	A local post, camp, chapter, or similarly designated element, or a county unit of such elements, of a bona fide veteran's organization which issues charters to such local elements throughout this State; a bona fide organization of volunteer firemen; a bona fide ambulance or rescue squad association; fraternal beneficiary societies, orders or associations operating under the lodge system; or bona fide auxiliaries or affiliates of such organizations: Provided that all of the fund-raising activities are carried on by members of such organizations or of auxiliaries or affiliates thereof, and such members receive no compensation directly or indirectly therefor.
(8)	Any nonprofit community club, civic club, garden club, or other similar civic group organized and in existence for more than two years, with no capital stock or salaried executive employees, officers, members or agents; with at least ten members with annual dues collected of not less than five dollars ($5.00) per member; in which all of the funds collected, less reasonable expenses, are disbursed pursuant to the directions of the membership or the board of directors; and with the membership being furnished at least one written report each year by the directors as to its charitable activities.
(b)	Any exempt charitable organization shall lose such exemption when it employs a professional fund-raising counsel or a professional solicitor.
(c)	Nothing in this Part shall require licensing of or application for licensing by radio and television stations or legal newspapers, or their employees acting within the scope of their employment, which solicit contributions from the public on behalf of a person exempt from this Part under the provisions of G.S. 108-75.7; nor shall any such station, newspaper or employee thereof be considered a charitable organization, professional fund-raising counsel or professional solicitor.
"§ 108-75.8.  Licensing of professional fund-raising counsel and professional solicitors. — (a) No person shall act as a professional fund-raising counsel or professional solicitor for any charitable organization subject to the provisions of this Part unless he has first applied for and received a license from the department. Applications for such licensing shall be in writing and verified under oath or affirmation in the form prescribed by the commission; and shall contain such reasonable information as the commission shall require about the identity and previous related activities of the applicant as may be necessary or appropriate for the public interest or for the protection of contributors. No person convicted of a felony in this or any other state shall be eligible for a license from the department or shall serve as an employee, member, officer or agent of any professional fund-raising counsel or professional solicitor until his civil rights have been restored.
(b)	An individual, partnership, unincorporated association or corporation, which is a professional fund-raising counsel or professional solicitor, may apply for a license for and pay a single fee on behalf of all of its employees, officers, members and agents. The names and addresses of all employees, officers, members and agents of all professional fund-raising counsel and professional solicitors or any other persons employed to work under the direction of a professional fund-raising counsel or professional solicitor must be listed in the application. The department shall be notified in writing within two working days of any personnel changes concerning the employees, members, officers or agents of such professional fund-raising counsel or professional solicitor.
(c)	The applicant shall, at the time of making application, file with and have approved by the department a bond in which the applicant shall be the principal obligor in the sum of five thousand dollars ($5,000) with one or more sureties, satisfactory to the department, whose liability in the aggregate as such sureties will at least equal the said sum; and the applicant shall maintain said bond in effect so long as the license is in effect. The bond shall run to the State for the use of said bond for any penalties and to any person who may have a cause of action against the obligor of the bond for any losses from malfeasance, misfeasance, or nonfeasance in the obligor's conduct of any and all activities subject to this Part or arising out of a violation of this Part or any rule or regulation of the commission. An individual, partnership, unincorporated 1020 Session Laws 1975 CHAPTER 747 association or corporation which is a professional fund-raising counsel or professional solicitor may file a consolidated bond on behalf of all of its employees, officers, members and agents.
(d)	The secretary or his designee shall examine each application, and if he finds the application to be in conformity and that the applicant has complied with the requirements of this Part and all rules and regulations of the commission, he shall approve the granting of a license.
"§ 108-75.9.  Information filed to become public records. — All license applications, reports, professional fund-raising counsel and professional solicitor contracts and all other documents and information required to be filed under this Part or the rules and regulations of the commission, shall become public records in the office of the secretary, and shall be open to the general public for inspection at such time and under such conditions as the secretary may prescribe. In addition, the department shall, within 10 days after approval or renewal, send a list of licensees under this Part to the clerk of superior court in each county who shall file but not record said lists.
"§ 108-75.10.  Written contracts. — (a) Every contract or agreement between a professional fund-raising counsel and a charitable organization shall be in writing and shall be filed with the department within 10 days after such written contract or agreement is entered into.
(b)	Every contract, or a written statement of the nature of the arrangement to prevail in the absence of a contract, between a professional solicitor and a charitable organization shall be filed with the department within 10 days after such contract or arrangement is entered into. If the secretary or his designee concludes that such a contract or arrangement does not provide for compensation on a percentage basis, the secretary shall examine the contract or arrangement to ascertain whether the compensation to be paid in such circumstances is likely to exceed fifteen percent (15%) of the total moneys, pledges or other property raised or received as a result of the contract or arrangement. If the reasonable probabilities are that the compensation will exceed fifteen percent (15%) of the total moneys, pledges or other property, the secretary shall request the parties to provide satisfactory explanation and may, if not satisfied, request renegotiation of the arrangement upon terms acceptable to him. In the event this is not done within 10 days, the secretary may disapprove the contract or arrangement.
(c)	No licensed charitable organization or professional solicitor shall carry out or execute a disapproved contract, receive or perform services, or receive or make payments pursuant to a disapproved contract.
"§ 108-75.11. Limitation on amount of payments for solicitation activities. — (a) No charitable organization shall pay or agree to pay to a professional solicitor or his agents, servants or employees in the aggregate, including reimbursement for expenses incurred, a total amount in excess of fifteen percent(15%) of the gross amount of moneys, pledges or other property raised or received by it as a result of his or their solicitation activities or campaigns.
(b)	For purposes of this section, the payments to the professional solicitor shall not include the purchase price to the charitable organization of any tangible personal property or services which are resold by the organization as a part of its fund-raising activities; but the amount so expended by the organization shall be deducted from the gross amount collected by it, or the organization's support received directly from the public, before the computation of the percentage limitation.
"§ 108-75.12.  Records to be kept by charitable organizations. — Every charitable organization subject to the provisions of this Part shall, in accordance with the rules and regulations promulgated by the commission, keep true fiscal records as to its activities in this State as may be covered by the provisions of this Part for all fiscal years beginning on and after the effective date of this Part, in conformity with the generally accepted principles set out in the 'Audit Guides' published by the American Institute of Certified Public Accountants, and as may be modified from time to time by said institute or its successor. Such records shall be retained for a period of at least three years after the end of the period of licensing to which they relate. Upon demand, such records shall be made available to the department, the commission or the Attorney General for inspection.
"§ 108-75.13.  Publication of warning concerning certain charitable organizations. — If the secretary shall determine that any charitable organization not licensed by the department and not exempt from licensing, irrespective of whether such organization is subject to the jurisdiction of this State, is directly or indirectly soliciting in this State by any means, including without limitation, telephone or telegraph, direct mail or advertising in national media, after 10 days' written notice mailed to the charitable organization, he may cause to be printed in one or more newspapers published in this State a notice in substantially the following form: 'WARNING — UNLICENSED CHARITABLE SOLICITATION. The organization named below has solicited contributions from North Carolina citizens for allegedly charitable purposes. It has not been licensed by the State Department of Human Resources as required by law. Contributors are cautioned that their contributions to such organization may be used for noncharitable purposes.'
"§ 108-75.14.  Computation of fund-raising expenses. — Each charitable organization shall, as a part of its license application, compute the percentage which its fund-raising expenses for its preceding fiscal year bore to the support received directly from the public during such year.
"§ 108-75.15.  Reciprocal agreements. — (a) The department may enter into reciprocal agreements with the appropriate authority of any other state or with the Internal Revenue Service for the purpose of exchanging information with respect to charitable organizations, professional fund-raising counsel and professional solicitors. Pursuant to such agreements, the department may accept information filed by a charitable organization, professional fund-raising counsel or professional solicitor with the appropriate authority of another state or with the Internal Revenue Service in lieu of the information required to be filed in accordance with the provisions of this Part and the rules and regulations of the commission, if such information is substantially similar to the information required under this Part and the rules and regulations of the commission.
(b)	The department may also grant exemption from the requirement of filing an annual license application to charitable organizations organized under the laws of another state, having their principal place of business in such other state, having funds derived principally from sources outside this State, and having been granted exemption from the filing of license applications or registration statements by such other state, if such state has a statute similar in substance to the provisions of this Part and participates in a reciprocal agreement pursuant to this section.
"§ 108-75.16.  Out-of-State enforcement proceedings. — Any state of the United States shall have the right to sue in the courts of this State to enforce the civil provisions of any statute thereof, general in application, regulating charitable solicitations, when the like right is accorded this State by such state, whether such right is granted by statutory authority or as a matter of comity.
"§ 108-75.17.  Designation of Secretary of State as agent for service of process by nonresident charitable organizations, professional fund-raising counsel and professional solicitors; notice of such service by Secretary of State. — (a) Any charitable organization, professional fund-raising counsel or professional solicitor having his or its principal place of business without the State, or which is organized under and by virtue of the laws of a foreign state, and which solicits contributions from people in this State, shall be subject to the provisions of this Part and shall be deemed to have irrevocably appointed the Secretary of State as an agent upon whom may be served any summons, subpoena, subpoena duces tecum or other process directed to such charitable organization, professional fund-raising counsel or professional solicitor or any partner, principal officer or director thereof in any action or proceeding.
(b)	Service of such process upon the Secretary of State shall be made by personally delivering to and leaving with him a copy thereof at the office of the Secretary of State, and such service shall be sufficient service: Provided, that notice of such service and a copy of such process are sent by the Secretary of State to such charitable organization, professional fund-raising counsel or professional solicitor by registered or certified mail with return receipt requested, at the address set forth in the application form required to be filed with the department pursuant to this Part or, in default of the filing of such form at the last address known to the Secretary of State. Service of such process shall be complete 10 days after the receipt by the Secretary of State of a return receipt purporting to be signed by the addressee or a person qualified to receive such registered or certified mail, in accordance with the rules and customs of the United States Postal Service, or after the return to the Secretary of State of the original envelope bearing a notation by the postal authorities that receipt thereof was refused.
"§ 108-75.18.  Denial, suspension or revocation of license. — The secretary shall revoke, suspend or deny issuance of a license to a charitable organization, professional fund-raising counsel or professional solicitor at any time upon a finding that:
(1)	An unreasonable percentage of the contributions solicited, or to be solicited, is not applied, or will not be applied to a charitable purpose.
(2)	The contributions solicited, or to be solicited, are not applied, or will not be applied to the purpose or purposes as represented in the license application.
(3)	The applicant or licensee has failed to comply with any of the provisions of this Part, or with any rules and regulations adopted by the commission pursuant to this Part.
"§ 108-75.19.  Secretary to inform of decision to deny, suspend or revoke license; applicant's or licensee's right to hearing and judicial review. — (a) The secretary shall inform the applicant or licensee of the decision to deny, suspend or revoke the license by registered or certified mail with return receipt requested and directed to the address shown in the license application. The notification shall contain a statement of the reason or reasons for the action being taken citing appropriate statutes, rules or regulations. The notice shall also advise the applicant or licensee of his right to appeal the decision and furnish the name and address of the chairman of the commission, to whom the request for a hearing shall be sent.
(b)	Any applicant or licensee who shall be aggrieved by any denial, suspension or revocation of a license by order of the secretary may, within 20 days from the date of such order, denial, suspension or revocation, request a hearing before the commission, which hearing shall be held within 20 days of the date of the request, unless the applicant or licensee requests a longer period in writing. The commission shall, within 15 days of the termination of such hearing, render a final decision which it deems to be just and equitable and shall inform the applicant or licensee in writing of said final decision by registered or certified mail with return receipt requested.
(c)	The commission shall have the power to subpoena witnesses, administer oaths and compel the production of necessary records and documents.
(d)	Any person who is aggrieved by a final decision of the commission in a contested case is entitled to judicial review of such final decision. In order to obtain judicial review the person seeking review must file a petition in the Superior Court of Wake County, which petition may be filed at any time after final decision but no later than 30 days after a written copy of the decision is received by the person seeking the review. Failure to file such petition within the time stated shall operate as a waiver of the right of such person to review under this Part, except that for good cause shown, the judge of the superior court may issue an order permitting a review of the commission's decision under this Part notwithstanding such waiver.
"§ 108-75.20.  Prohibited acts. — (a) No charitable organization, professional fund-raising counsel or professional solicitor shall use or exploit the fact of licensing so as to lead the public to believe that such licensing in any manner constitutes an endorsement or approval by the State: Provided, however, that the use of the following statement shall not be deemed a prohibited exploitation, 'Licensed to solicit in North Carolina by the Department of Human Resources as required by law. Licensing does not imply endorsement of a public solicitation for contributions.'
(b)	No person shall, in connection with the solicitation of contributions for or the sale of tangible personal property or services of a person other than a charitable organization, misrepresent to or mislead anyone by any manner, means, practice or device whatsoever to believe that the person on whose behalf such solicitation or sale is being conducted is a charitable organization or that the proceeds of such solicitation or sale will be used for charitable purposes, if he has reason to believe such is not the fact.
(c)	No person shall, in connection with the solicitation of contributions or the sale of tangible personal property or services for charitable purposes, misrepresent to or lead anyone by any manner, means, practice or device whatsoever to believe that any other person sponsors or endorses such solicitation of contributions, sale of tangible personal property or services for charitable purposes or approves of such charitable purposes or a charitable organization connected therewith, unless such other person has given written consent to the use of his name for these purposes: Provided that any member of the board of directors or trustees of a charitable organization, any officer or employee thereof or any other person who has agreed either to serve or to participate in any voluntary capacity in the campaign shall be deemed thereby to have given his consent to the use of his name in the campaign. Nothing contained in this section shall prevent the publication of names of contributors without their written consents, in an annual or other periodic report issued by a charitable organization for the purpose of reporting on its operations and affairs to its membership, or for the purpose of reporting contributions to contributors.
(d)	No person shall make any representation that he is soliciting contributions for or on behalf of a charitable organization or shall use or display any symbol, emblem, device or printed matter belonging to or associated with a charitable organization for the purpose of soliciting or inducing contributions from the public without first being authorized to do so by the charitable organization.
(e)	No person shall denominate any membership fee or purchase price of tangible personal property or services sold, as a contribution or as a donation or in any other manner represent or imply that the member or the purchaser of such tangible personal property or services will be entitled to an income tax deduction for his cost or any portion thereof unless (1) there shall have been first obtained a signed opinion of counsel or an Internal Revenue Service ruling or determination letter holding such cost to be deductible, or (2) the member or purchaser is informed in writing that such cost may not be deductible; nor shall any charitable organization, other than an organization exempt under G.S. 108-75-7(a)(3), represent or imply that a contributor thereto will be entitled to an income tax deduction for his contribution unless there shall have been first obtained a signed opinion of counsel or an Internal Revenue Service ruling or determination letter holding gifts to such organization to be so deductible.
(f)	No professional solicitor shall solicit in the name of or on behalf of any charitable organization unless such solicitor has:
(1)	Written authorization of two officers of such organization, a copy of which shall be filed with the secretary. Such written authorization shall bear the signature of the solicitor and shall expressly state on its face the period for which it is valid, which shall not exceed one year from the date issued.
(2)	Such authorization with him when making solicitations, which shall be exhibited on request to persons solicited, or law enforcement officers, or agents of the department.
(g)	No charitable organization shall accept any contribution exceeding five dollars ($5.00) in cash or tangible property without providing on request of the donor a written receipt acknowledging such contribution and personally signed by the person accepting such contribution.
(h)	No person, and no organization of which such person is an officer, professional fund-raising counsel or professional solicitor, shall solicit within the State if:
(1)	Such person has been convicted in any jurisdiction of any felony unless his civil rights have been restored; or
(2)	Such person has ever been enjoined by any court or otherwise prohibited from soliciting in any jurisdiction, unless the secretary shall first determine in writing that such person is entitled to solicit in such jurisdiction at the time of soliciting within this State.
(i)	No person shall solicit within this State for the benefit of any other person located without the State, if such other person refuses to supply any information which the secretary deems necessary to assure himself that the provisions of this Part and the rules and regulations of the commission are complied with. A solicitation shall be deemed to be on behalf of every person who or which receives, directly or indirectly, more than ten percent (10%) of the gross amount collected.
"§ 108-75.21.  Refiling of denied or revoked license. — (a) When a license has been denied, suspended or revoked, a charitable organization may file another license application for the purpose of soliciting contributions within the State of North Carolina for the next fiscal year, provided it submits to the secretary the following:
(1)	Written assurance that the subject matter of the denial, suspension or revocation of the license and the reasons therefor have been submitted to governing board of the charitable organization and placed on the agenda for consideration at its next meeting;
(2)	An extract of the minutes of such meeting covering this subject matter and a statement listing all corrective measures that shall be taken in order to ensure compliance with the order or decision of the secretary, which measures have been agreed to by the charitable organization's board; and
(3)	A letter signed by the principal officer of the charitable organization transmitting the extract of the minutes cited in subdivision (2) of this subsection and indicating a willingness to attend a hearing for the purpose of providing any further information regarding the charitable organization's operations or programs.
(b)	Any professional fund-raising counsel or professional solicitor whose application has been denied or whose license has been suspended or revoked may file another license application for the next fiscal year, provided he submits to the secretary the following:
(1)	A written statement listing all corrective measures that shall be taken in order to ensure compliance with the order or decision of the secretary, and
(2)	A letter signed by the professional fund-raising counsel or professional solicitor which states that he is willing to attend a hearing for the purpose of providing any further information regarding his operations or programs.
"§ 108-75.22.  Enforcement and penalties. — (a) If any charitable organization, professional fund-raising counsel or professional solicitor fails to file an application for a license, a report, document, statement or any other information required to be filed with the department, or otherwise violates the provisions of this Part or the rules and regulations of the commission, the department shall notify the delinquent or violating charitable organization, professional fund-raising counsel or professional solicitor by mailing a notice by registered or certified mail, with return receipt requested, to its last known address. If the required application, report, document, statement or other information is not filed or if the existing violation is not discontinued within 15 days after the formal notification or receipt of such notice, the department shall deny the issuance of the license or revoke or suspend the current license in effect.
(b)	The secretary, upon his own motion or upon the complaint of any person, may, if has reasonable ground to suspect a violation, investigate any charitable organization, professional fund-raising counsel or professional solicitor to determine whether such charitable organization, professional fund-raising counsel or professional solicitor has violated the provisions of this Part or the rules and regulations of the commission, or has filed any application or other information required under this Part which contains false or misleading statements.
(c)	The license of any charitable organization, professional fund-raising counsel or professional solicitor who knowingly makes a false or misleading statement in any application for license, statement, report or other information required to be filed with the department under this Part, shall be revoked.
(d)	In addition to the foregoing, any person who willfully and knowingly violates any provisions of this Part or the rules and regulations of the commission, or who shall willfully and knowingly give false or incorrect information to the department in filing statements or reports required by this Part or by the rules and regulations of the commission, whether or not such report or statement is verified, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced for the first offense to pay a fine of not less than one hundred dollars ($100.00) and not more than five hundred dollars ($500.00) or be imprisoned for not more than six months, or both; and for the second and any subsequent offense to pay a fine not less than five hundred dollars ($500.00) and not more than one thousand dollars ($1,000) or to be imprisoned for not more than one year, or both.
(e)	Whenever the Attorney General or any district attorney shall have reason to believe or shall be advised by the secretary or the commission (who shall have given due notice and full hearing to a charitable organization, professional fund-raising counsel or professional solicitor) that a charitable organization, professional fund-raising counsel or professional solicitor is operating in violation of the provisions of this Part or the rules and regulations of the commission; or whenever a charitable organization, professional fund-raising counsel or professional solicitor has failed to file a license application, statement, report or other information required by this Part or the rules and regulations of he commission; or whenever there is employed or is about to be employed in any solicitation or collection of contributions for a charitable organization any device, scheme, or artifice to defraud or to obtain money or property by means of any false pretense, representation or promise; or whenever the officers or representatives of any charitable organization, professional fund-raising counsel or professional solicitor have refused or failed after notice to produce any records of such organization; or whenever the funds raised by solicitation activities are not devoted or will not be devoted to the charitable purposes of the charitable organization: In addition to all other actions authorized by law, the Attorney General or district attorney may bring an action in the name of the State against such charitable organization and its officers, professional fund-raising counsel, professional solicitor or other person to enjoin such charitable organization, professional fund-raising counsel, professional solicitor or other person from continuing such violation, solicitation or collection, or engaging therein, or doing any acts in furtherance thereof or from further temporary or permanent solicitation of funds in this State, and for such other relief as to the court deems appropriate.
(f)	The secretary may exercise the authority granted in this section against any charitable organization which operates under the guise or pretense of being an organization exempted by the provisions of G.S. 108-75.7 and is not in fact an organization entitled to such an exemption.
"§ 108-75.23.  Fees. — (a) License fees shall be collected by the secretary at the time of the filing of an application for a license from the department, according to the following schedule:
SCHEDULE OF FEES.
(1)	Every charitable organization which does not engage a professional fund-raising counsel or a professional solicitor, expends less than seven percent (7%) of the contributions received for internal fund-raising and solicitation salaries and expenses, and submits a proper license application statement to the department shall pay an annual license fee of ten dollars ($10.00).
(2)	Every other charitable organization which submits a proper license application to the department shall pay an annual license fee of twenty-five dollars ($25.00) if the charitable organization solicits and receives gross contributions from the public of twenty-five thousand dollars ($25,000) or less during the immediate preceding fiscal year.
(3)	Every charitable organization which submits a proper license application to the department shall pay an annual license fee of one hundred dollars ($100.00) if the charitable organization solicits and receives gross contributions in excess of twenty-five thousand dollars ($25,000) during the immediate preceding fiscal year.
(4)	A parent organization filing on behalf of one or more chapters, branches or affiliates and a federated fund-raising organization filing on behalf of its member agencies shall pay a single annual license fee of one hundred dollars ($100.00) for itself and such chapters, branches, affiliates or member agencies included in the license application.
(5)	Every professional fund-raising counsel and professional solicitor which submits a proper license application to the department shall pay an annual license fee of fifty dollars ($50.00).
(b)	The fund created by the collection of these fees shall be set aside for the sole purpose of financing the requirements of the administration of this Part. Additional funds, if any, as may be required for the administration of this Part shall be appropriated from the General Fund of the State.
"§ 108-75.24.  Conflicting laws. — Ordinances, resolutions or regulations, now or hereafter in effect, of the governing body of a municipality or county, relating to the regulation of the solicitation of charitable funds, shall not be superseded by this Part: Provided, that such ordinances or regulations are and continue to be consistent and compatible with the provisions of this Part, as amended, and rules and regulations promulgated by the commission."
Sec. 2.  G.S. 143B-153(3)f., as the same appears in the 1974 Replacement of Volume 3C of the General Statutes, is amended by deleting the words, "public solicitor", and substituting therefor the words, "charitable organizations, professional fund-raising counsel and professional solicitors".
Sec. 3.  If any provision of this act, or the application of such provision to any person or under any circumstances shall be held invalid, the remainder of this act, or the application of such provisions to persons or under any circumstances, other than those as to which it shall have been held invalid, shall not be affected thereby.
Sec. 4.  This act shall not apply to public supported community foundations or public supported community trusts as defined in Section 501(c)(3) of the Internal Revenue Code of 1954, or corresponding provisions or any subsequent Federal Tax Laws.
Sec. 5.  This act shall become effective on October 1, 1975.
In the General Assembly read three times and ratified, this the 24th day of June, 1975.