Statute Governing Non-Profits
ARTICLE 22
CHARITABLE SOLICITATIONS
Section
57-22-1. Short Title.
57-22-2. Purpose.
57-22-3. Definitions.
57-22-4. Application of act.
57-22-5. Attorney general to maintain register of charitable organizations
as public record.
57-22-.6. Filing of required documents.
57-22-6.1 Professional fundraisers; registration.
57-22.6.2. Professional fundraisers; bond.
57-22-6.3. General provisions; charitable organizations; professional
fundraisers; prohibited practices.
57-2-6.4. Professional fundraiser; records and reports.
57-22-7. Restriction on use of fact of filing in solicitation.
57-22-8. Disclosure of fundraising costs.
57-22-9. Authority of the attorney general.
57-22-9.1. Investigative demand; civil penalty.
57-22-9.2. Exchange of information with other states.
57-22-.10. Standard of care.
57-22-.11. Exemptions from state and local taxation.
57-22-1. Short title.
Chapter 57, Article 22 NMSA 1978 may be cited as the "Charitable Solicitations
Act".
History: Laws 1983, ch. 140, | 1; 1999, ch. 124, | 1.
The 1999 amendment, effective July 1, 1999, deleted "Organizations and"
preceding "Solicitations Act", and updated the statutory reference.
Am. Jur. 2d, A.L.R. and C.J.S. references. - 60 Am. Jur. 2d Peddlers,
Solicitors, and Transient Dealers ¤¤ 21, 23, 26 et seq.
Validity, as for a charitable purpose, of trust for publication or distribution
of particular books or writings, 34 A.L.R.4th 419.
Lack of consideration as barring enforcement of promise to make charitable contribution
or subscription-modern cases, 86 A.L.R.4th 241.
57-22-2. Purpose.
The purpose of the Charitable Solicitations Act [this article] is to authorize the
attorney general to monitor, supervise and enforce the charitable purposes of charitable
organizations and regulate professional fundraisers operating in this state.
History: Laws 1983, ch. 140, | 2; 1999, ch. 124, | 2.
The 1999 amendment, effective July 1, 1999, deleted the introductory language which
read "Whereas charitable organizations which have been granted tax exempt status
are required to serve the public interest", deleted "Organizations and"
preceding "Solicitations Act", deleted "those" following "purposes
of", and inserted "and regulate professional fundraisers".
57-22-3. Definitions.
As used in the Charitable Solicitations Act [this article]:
A. "charitable organization" means any entity that has been granted exemption
from the federal income tax by the United States commissioner of internal revenue
as an organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, or identifies itself to the public as having a charitable purpose;
B. "charitable purpose" means a benevolent, social welfare, scientific,
educational, environmental, philanthropic, humane, patriotic, public health, civic
or other eleemosynary objective or an activity conducted in support of or in the
name of law enforcement officers, firefighters or other persons who protect public
safety;
C. "contribution" means the promise, grant or pledge of any money, credit
or property of any kind or value provided to a charitable organization in response
to a solicitation, but does not include program service revenue or bona fide membership
fees, dues or assessments; provided that bona fide membership fees, dues or assessments
do not include contributions made in exchange for membership in a charitable organization
unless membership confers rights and benefits in addition to receiving literature
of the charitable organization;
D. "educational institution" means' (1) an entity organized and operated
primarily as a school, college or other instructional institution with a defined
curriculum, student body and faculty, conducting classes on a regular basis; and
(2) auxiliary entities, including parent-teacher organizations, booster and support
clubs that support, encourage or promote a school, college or other instructional
institution and its defined curriculum, student body, faculty, facilities or activities;
E. "professional fundraiser" means a person that solicits or employs or
directs others to solicit contributions from the public on behalf of a charitable
organization in exchange for compensation and has custody or control of the contributions;
provided that "professional fundraiser" does not include a director, officer,
bona fide employee or salaried officer, volunteer, attorney, accountant or investment
counselor of a charitable organization;
F. "professional fundraising counsel" means a person that provides services
or employs or directs others to provide services for compensation to a charitable
organization in the solicitation of contributions, including managing or preparing
materials to be used in conjunction with any solicitation; provided that the person
does not:
(1) directly solicit contributions; or
(2) receive, have access to or control any contribution received in response to
the solicitation; provided further that "professional fundraising counsel does
not include a director, officer, bona fide employee or salaried officer, volunteer,
attorney, accountant or investment counselor of a charitable organization;
G. "religious organization" means a church, organization or group organized
for the purpose of divine worship or religious teaching or other specific religious
activity or any other organization that is formed in association with or to primarily
encourage, support or promote the work, worship, fellowship or teaching of the church,
organization or group; and
H. "solicit" or "solicitation" means any communication requesting
a contribution or offering an opportunity to participate in a game of chance, raffle
or similar event with the representation that the contribution or participation
will support a charitable purpose, and includes;
(1) any verbal request made in person or by telephone, radio, television, electronic
communication or other media;
(2) any written or published request mailed, sent, delivered, circulated, distributed,
posted in a public place, advertised or communicated through any medium to the public;
(3) any sale or attempt to sell a good or service; and
(4) any invitation to attend an assembly, event, exhibition, performance or social
gathering of any kind.
A contribution is not required for a solicitation to have occurred, and "solicit"
or "solicitation" does not include direct grants or allocation of funds
received or solicited from any affiliated fundraising organization by a member agency
or unsolicited contributions received from any individual donor, foundation, trust,
governmental agency or other source, unless such contributions are received in conjunction
with a solicitation drive.
History: Laws 1983, ch. 140, | 3; 1999, ch. 124, | 3.
The 1999 amendment, effective July 1, 1999, rewrote Subsections A and B; Inserted
Subsection C; redesignated former Subsection C as Subsection D, and rewrote it;
inserted Subsections E and F; redesignated former Subsection D as Subsection G,
and rewrote it; and redesignated former Subsection E as Subsection H, and rewrote
it.
Internal Revenue Code. - For the United States Internal Revenue
Code, see 26 U.S.C. | 1 et seq. Section 501(c)(3) of the code, referred to in Subsection
A(1), appears as 26 U.S.C. | 501(c)(3).
57-22-4. Application of Act.
A. The Charitable Solicitations Act [this article] shall not apply to a religious
organization, even if it is a charitable organization.
B. Exempt from the registration and reporting requirements of the Charitable Solicitations
Act are:
(1) educational institutions and organizations defined in Section 6-5A-1 NMSA 1978;
and
(2) persons soliciting for an individual or group that has suffered a medical or
other catastrophe and;
(a) the individual or group is identified by name at the time of the solicitation;
(b) the purpose for the solicited contribution is clearly stated; and
(c) the gross contributions collected, without any deductions for or by the solicitor
or any other person, are deposited directly to an account in the name of the individual
or group in a local federally insured financial institution established for that
sole purpose and solely used for the direct benefit of the named individual or group
as beneficiary.
C. The Charitable Solicitations Act shall apply to charitable organizations and
professional fundraisers.
History: Laws 1983, ch. 140, | 4; 1999, ch. 124, | 4.
The 1999 amendment, effective July 1, 1999, rewrote this section to the extent that
a detailed comparison is impracticable.
57-22-5. Attorney general to maintain register of charitable organizations
as public record.
The attorney general shall establish and maintain a register of all documents filed
by charitable organizations in accordance with the Charitable Solicitations Act
[this article]. The register shall be open to public inspection except that the
attorney general may withhold from public inspection documents or information obtained
in the course of an investigation undertaken pursuant to the provisions of that
act or that otherwise may be withheld from public inspection by law.
History: Laws 1983, ch. | 140, | 5; 1999, ch. 124, | 5.
The 1999 amendment, effective July 1, 1999, in the first sentence, deleted "Organizations
and" preceding "Solicitations Act" and, in the second sentence, substituted
"that" for "which" preceding "otherwise may be withheld".
57-22-6. Filing of required documents.
A. A charitable organization existing, operating or soliciting in the state, unless
exempted by Section 57-22-4 NMSA 1978, shall register with the attorney general
on a form provided by the attorney general; correct any deficiencies in its registration
upon notice of deficiencies provided by the attorney general and provide a copy
of its IRS Form 1023 Form 1024 application for exempt status with its registration.
B. The attorney general shall notify each charitable organization required to register
within ten business days of his receipt of the registration form of any deficiencies
in the registration and may make rules in accordance with the State Rules Act [Chapter
14, Article 4 NMSA 1978], as are necessary for the proper administration of this
section, including;
(1) requirements for filing additional information, including disclosure of professional
fundraising counsel retained by the charitable organization; and
(2) provisions for suspending the filing of reports or granting an exemption from
the registration and reporting requirements of this section for a charitable organization
subject to audit, registration, charter or other requirements of a statewide, regional
or national association and if it is determined that such reports or registration
is not necessary for the protection of the public interest.
C. In addition to any other reporting requirements pursuant to the Charitable Solicitations
Act [this article], every charitable organization that has received tax-exempt status
pursuant to Section 501(c)(3) of the federal Internal Revenue Code of 1986, as amended,
and is required to file a form 990, 990EZ or 990PF pursuant to the Internal Revenue
Code of 1986, as amended, shall file that form and the accompanying schedule A annually
with the office of the attorney general up to six months following the close of
the charitable organization's fiscal year. Extensions of time for filing may be
allowed at the discretion of the attorney general for good cause shown. Such forms
shall be public records and available for public inspection. Organizations that
do not file a form 990, 990EZ or 990PF pursuant to the Internal Revenue Code of
1986, as amended, shall file an annual report, under oath, on the form provided
by the attorney general for that purpose. A charitable organization that received
total revenue in excess of five hundred thousand dollars ($500,000) shall be audited
by an independent certified public accountant. Audits shall be performed in accordance
with generally acceptable accounting principles. A charitable organization shall
correct any deficiencies in an annual report upon notice of deficiencies provided
by the attorney general.
D. A charitable organization that fails to register before a solicitation is made
or fails to timely file its tax filings with the attorney general pursuant to Subsection
C of this section may be assessed a late filing fee of one hundred dollars ($100).
E. The attorney general may accept information filed by a charitable organization
with another state or the federal government in lieu of the registration and reporting
requirements of the Charitable Solicitations Act if such information is determined
by the attorney general to be in substantial compliance with the registration and
reporting requirements of that act.
History: Laws 1983, ch. 140, | 6; 1993, ch. 73, | 1; 1999, ch.
124, | 6.
The 1993 amendment, effective July 1, 1993, rewrote this section to the extent that
a detailed comparison is impracticable.
Internal Revenue Code. - Section 501(c)(3) of the federal Internal
Revenue Code of 1986, referred to in Subsection C, is codified at 26 U.S.C. | 501.
57-22-6.1. Professional fundraisers; registration.
A. Professional fundraisers shall, before entering into a contract with any charitable
organization, except a religious organization, to solicit for or on its behalf;
(1) register with the attorney general on a form provided by the attorney general;
(2) file with the attorney general a surety bond pursuant to the Charitable Solicitations
Act [this article]; and
(3) file with the attorney general a copy of the intended written contract between
the professional fundraiser and the charitable organization on whose behalf the
professional fundraiser intends to conduct a solicitation campaign.
B. The contract between the professional fundraiser and the charitable organization
shall clearly describe the:
(1) compensation and authority of the professional fundraiser.
(2) solicitation campaign;
(3) location and telephone numbers from where solicitations are intended to be conducted;
(4) list of names and addresses of all employees, agents or other persons who are
to solicit during the campaign; and
(5) copies of the solicitation literature, including scripts of any written or verbal
solicitation.
C. The charitable organization on whose behalf the professional fundraiser is acting
shall certify that the contract and solicitation materials filed with the attorney
general are true and complete.
D. Within ten business days after receiving a registration pursuant to this section,
the attorney general shall notify the professional fundraiser of any deficiencies
in the registration, contract or bond; otherwise the filing is deemed approved as
filed.
E. A professional fundraiser who fails to register with the attorney general may
be assessed a late registration fee of five hundred dollars ($500).
History: Laws 1999, ch. 124, | 12.
Effective dates. - Laws 1999, ch. 124, | 18, makes the act effective
on July 1, 1999.
57-22-6.2. Professional fundraisers; bond.
A professional fundraiser shall file a surety bond at the time of the registration
with the attorney general in an amount and on a form provided by the attorney general.
The professional fundraiser shall maintain the surety bond, or alternative financial
assurances approved by the attorney general, as long as the professional fundraiser
solicits in the state.
History: Laws 1999, ch. 124 | 13.
Effective dates. - Laws 1999, ch. 124 | 18, makes the act effective
on July 1, 1999.
57-22-6.3. General provisions; charitable organizations; professional
fundraisers; prohibited practices.
A charitable organization or a professional fundraiser shall not:
A. engage in deceptive fundraising practices, meaning any false or misleading verbal
or written statement, description or representation of any kind knowingly made in
connection with a solicitation and that may, tends to or does deceive or mislead
any person and includes:
(1) using the name or likeness of any person in solicitation literature without
the express written consent of the person; provided that publication of previous
contributors' names to acknowledge their contributions shall not require their express
written consent;
(2) using a name, symbol or statement that is so closely related or similar to that
used by another charitable organization or governmental agency that the use would
tend to confuse or mislead the public; and
(3) misrepresenting, confusing or misleading any person to reasonably believe incorrectly
that the contributions being solicited are or will be used for purposes, persons
or programs in the state;
B. collect or attempt to collect a contribution in person or by courier unless;
(1) the solicitation and collection or attempt to collect occur contemporaneously;
or
(2) the solicitation includes the sale of goods or items and the collection or attempt
to collect occurs contemporaneously with the delivery of the goods or items agreed
to be purchased by the contributor.
History: = Laws 1999, ch. 124, | 18, makes the act effective on
July 1, 1999.
57-22-6.4. Professional fundraiser; records and reports.
A. At least every six months, the professional fundraiser shall account in writing
to the charitable organization for all contributions received and all expenses incurred
under their contract. The charitable organization shall maintain a copy of the accounting
of contributions and expenses for three years and make it available to the attorney
general upon request.
B. All contributions of money received by the professional fundraiser shall be deposited
in an account at a federally insured financial institution within two days after
receipt. The account shall be established and maintained in the name of the charitable
organization. Disbursements from the account shall be made upon warrants signed
by an authorized representative of the charitable organization and may also be signed
by the professional fundraiser.
C. The professional fundraiser shall include the following information in its accounting
required by Subsection A of this section to the charitable organization;
(1) the name and address of each person contributing to the charitable organization
and the date and amount of the contribution. This information shall not be publicly
disclosed and shall be used only for law enforcement purposes;
(2) the name and resident address of each employee, agent or other person involved
in the solicitation;
(3) the script or other instructional information provided by the charitable organization
or professional fundraiser to employees, agents or other persons conducting solicitations;
(4) a record of expenses incurred by the professional fundraiser that the charitable
organization paid; and
(5) the name and address of each financial institution and the account number of
each account in which the professional fundraiser deposited contributions received
from the solicitation.
D. The professional fundraiser and the employees of the professional fundraiser
shall disclose the following in solicitations;
(1) the name of the charitable organization; and
(2) the fact that the solicitation is made by or through a professional fundraiser.
E. Every professional fundraiser and charitable organization shall have either a
registered agent in the state or shall file a consent to service of process with
the attorney general. The consent to service shall be in the form prescribed by
the attorney general and shall be irrevocable.
History: Laws 1999, ch. 124 | 15.
Effective dates. - Laws 1999, ch. 124, | 18, makes the act effective
on July 1, 1999.
57-22-7. Restriction on use of fact of filing in solicitation.
No solicitation for charitable purposes shall use the fact or requirement of registration
or of the filing of any report with the attorney general pursuant to the Charitable
Solicitations Act [this article] with the intent to cause or in a manner tending
to cause any person to believe that the solicitation, the manner in which it is
conducted, its purposes, any use to which the proceeds will be applied or the person
or organization conducting it has been or will be in any way endorsed, sanctioned
or approved by the attorney general or any governmental agency or office.
History: Laws 1983, ch. 140 | 7; 1999, ch. 124 | 7.
The 1999 amendment, effective July 1, 1999, deleted "of funds" following
"No solicitation", deleted "Organizations and" preceding "Solicitations
Act", and made two stylistic changes.
57-22-8. Disclosure of fundraising costs.
A. All charitable organizations subject to the Charitable Solicitations Act [this
article] shall disclose upon request the percentage of the funds solicited that
are spent on the costs of fundraising. For purposes of this section, costs of fundraising
shall include all money directly expended on fundraising and that portion of all
administrative expenses and salaries of the charitable organization attributable
to fundraising activities.
B. Whenever a solicitation on behalf of a charitable organization subject to the
Charitable Solicitations Act is undertaken by a professional fundraiser, the professional
fundraiser shall disclose that fact to prospective contributors.
History: Laws 1983, ch. 140 | 8; 1999, ch. 124, | 8.
The 1999 amendment, effective July 1, 1999, deleted "Organizations and"
preceding "Solicitations Act" in Subsections A and B; in Subsection B,
deleted the final sentence, which read "For purposes of this section, a professional
fundraiser shall mean any individual, corporation, association or other entity employed
or retained or otherwise compensated by or on behalf of a charitable organization
to solicit funds"; and made stylistic changes throughout the section.
57-22-9. Authority of the Attorney General.
A. The attorney general may, on behalf of the sate, examine and investigate any
charitable organization subject to the Charitable Solicitations Act [this article]
to ascertain the conditions of its affairs and to what extent, if at all, it fails
to comply with the trusts that it has assumed or if it has departed from the purposes
for which it was formed. In the case of failure or departure, the attorney general
may institute, in the name of the state, a proceeding necessary to correct the noncompliance
or departure by any remedy available under the common law.
B. The attorney general may, in the name of the state, seek injunctive relief, civil
penalties, financial accounting or restitution from any person who has failed to
comply with the registration, filing or disclosure provisions of the Charitable
Solicitations Act or who has otherwise violated the provisions of that act.
C. The attorney general, in the name of the state, may initiate appropriate proceedings
to seek compliance with the provisions of the Charitable Solicitations Act and with
any rules promulgated by the attorney general pursuant to that act. The attorney
general may promulgate rules for the proper administration of that act.
D. Nothing in this section shall be constructed to preclude a person or group of
persons from asserting a private cause of action against a charitable organization
or professional fundraiser.
History: Laws 1983, ch. 140, | 9; 1999, ch. 124, | 9.
The 1999 amendment, effective July 1, 1999, rewrote Subsection B; in Subsection
C, deleted "and regulations duly" preceding "promulgated", substituted
"pursuant to that act" for thereunder", and added the final sentence;
In Subsection D, deleted "they might have" following "cause of action",
and added "or professional fundraiser"; and throughout the section, substituted
"may" for "is authorized", deleted "Organizations and"
following "Charitable", and made stylistic changes.
57-22-9.1. Investigative demand; civil penalty.
A. Whenever the attorney general has reason to believe that any person may be in
possession, custody of control of information or documentary material, including
an original or copy of any book, record, report, memorandum, paper, communication,
tabulation, chart, photograph, mechanical transcription or other tangible document
or recording, that the attorney general believes to be relevant to the subject matter
of an investigation of a probable violation of the Charitable Solicitations Act
[this article], the attorney general may, prior to the institution of a civil proceeding,
execute in writing and cause to be served upon the person a civil investigative
demand. The demand shall require the person to answer interrogatories or to produce
documentary material and permit the inspection and copying of the material. The
demand of the attorney general shall not be a matter of public record and shall
not be published by him except by order of the court.
B. Each demand shall:
(1) state the general subject matter of the investigation;
(2) describe with reasonable certainty the information or documentary material to
be provided;
(3) identify the time period within which the information or documentary material
is to be provided, which in no case shall be less than ten days after the date of
service of the demand; and provided, which in no case shall be less than ten days
after the date of service of the demand; and
(4) state the date on which any documentary material shall be available for inspection
and copying.
C. No demand shall:
(1) contain any requirement that would be unreasonable or improper if contained
in a subpoena duces tecum issued by a court of the state;
(2) require the disclosure of any documentary material that would be privileged
or that for any other reason would not be required by a subpoena duces tecum by
a court of the state; or
(3) require the removal of any documentary material from the custody of the person
upon which the demand is served except in accordance with the provisions of Subsection
E of this section.
D. Service the demand may be made by:
(1) delivering a duly executed copy of the demand to the person to be served or,
if the person is not a natural person, to the registered or statutory agent for
the person to be served;
(2) delivering a duly executed copy of the demand to the principal place of business
in New Mexico of the person to be served; or
(3) mailing by registered mail or certified mail a duly executed copy of the demand
addressed to the person to be served at his principal place of business in the state
or, if the person has no place of business in the state, to his principal place
of business.
E. Documentary material demanded pursuant to Subsection A of this section shall
be produced for inspection and copying during normal business hours at the principal
place of business of the person served or may be inspected and copied at such other
times and places as may be agreed upon by the person served and the attorney general.
F. Documentary material and its contents produced pursuant to a demand or answers
to interrogatories shall not be produced for inspection or copying by anyone other
than an authorized employee of the attorney general. The district court in the county
in which the person resides or has his principal place of business or is about to
perform or is performing the practice that is alleged to be unlawful under the Charitable
Solicitations Act may order documentary material, its contents or answers to interrogatories
to be produced for inspection or copying by someone other than an authorized employee
of the attorney general.
G. At any time before the return date of the demand, a petition to set aside the
demand, modify the demand or extend the return date on the demand may be filed in
the district court in the county in which the person resides or has his principal
place of business or is about to perform or is performing the practice that is alleged
to be unlawful under the Charitable Solicitations Act, and the court upon showing
of good cause may set aside the demand, modify it or extend the return date on the
demand.
H. If after service of the demand the person neglects or refuses to comply with
the demand, the attorney general may invoke the aid of the court in the enforcement
of the demand.
I. This section shall not be applicable to criminal prosecutions.
J. In an action brought pursuant to the Charitable Solicitations Act, if the court
finds that a person has violated a provision of that act or rules promulgated pursuant
to that act, the attorney general may recover, on behalf of the state, a maximum
civil penalty of five thousand dollars ($5,000) per violation.
History: Laws 1999, ch. 124, | 16.
Effective dates. - Laws 1999, ch. 124, | 18, makes the act effective
on July 1, 1999.
57-22-9.2. Exchange of information with other states.
The attorney general may exchange information obtained by the civil investigative
demand with comparable authorities of other states or the federal government regarding
charitable organizations, professional fundraisers and professional fundraising
counsel. Information acquired by exchange with other states or the federal government
shall be exempt from inspection pursuant to the Inspection of Public Records Act
[Chapter 14, Article 2 NMSA 1978]. Information shall not be exchanged with comparable
authorities of other states or the federal government unless the information is
similarly exempt from inspection pursuant to applicable laws of such other states
or the federal government.
History: Laws 1999, ch. 124, | 17,
Effective dates. - Laws 1999, ch. 124, | 18 makes the act effective
on July 1, 1999.
57-22-10. Standard of care.
All officers, directors, managers, trustees, professional fundraisers, professional
fundraising counsel or other persons having access to the money of a charitable
organization intended for use for charitable purposes shall be held to the standard
of care defined for fiduciary trustees under common law.
History: Laws 1983, ch. 140, | 10; 1999, ch. 124, | 10.
The 1999 amendment, effective July 1, 1999, inserted "professional fundraisers,
professional fundraising counsel", and substituted "money" for "funds".
57-22-11. Exemptions from state and local taxation.
Every officer, agency, board or commission of this state, or political subdivision
of this state receiving applications for exemption from taxation shall provide to
the attorney general copies of all the applications, supporting documents and official
responses.
History: Laws 1983, ch. 140, | 11; 1999, ch. 124, | 11.
The 1999 amendment, effective July 1, 1999, substituted "of this state"
for "thereof" and substituted "the" for "such" preceding
"applications".
Am. Jur. 2d, A.L.R. and C.J.S. references. - Validity, as for a charitable purpose,
of trust for publication or distribution of particular books or writings, 34 A.L.R.
4th 419.