Attorney General’s
California Department of Justice
Charitable Trusts Section
Protecting Charitable Assets and
Donations for the People of California
Guide for Online
Charitable Giving
| 1
IN THIS GUIDE
Introduction: How and Where Can You Give to Support Charities Online?
Research Before Donating
Duties and Best Practices for Charitable Fundraising Platforms
Conclusion and Legal Notice
INTRODUCTION: HOW AND WHERE CAN YOU GIVE TO
SUPPORT CHARITIES ONLINE?
Charitable giving on the Internet is no longer limited to giving directly to a
charity through its website. Many companies encourage donors to use
their own websites and other Internet-based platforms to give to charities
listed on the platform. For instance, many companies unaffiliated with a
charity may let you perform the following on their platforms:
Select a charity to receive a donation from a list or database of
charities;
Fundraise for charities, sometimes called crowdfunding
campaigns or peer-to-peer fundraising, encouraging you to use
your personal social media contacts to solicit donations for your
favorite charity or cause (e.g., the platform may let you solicit and
match donations to celebrate your birthday or another event); or
Support charities when you make purchases by, for instance,
adding a small amount to a transaction that serves as a donation,
or a donation is made by the platform or another corporation
based on how much you spend online.
These websites and platforms, what we call charitable fundraising
platforms, may have a business purpose independent of charitable giving,
but have evolved to encourage charitable giving as part of their service
offered to the public. Examples of such charitable fundraising platforms
include Amazon, Benevity, Charity Navigator, CrowdRise, eBay,
Facebook, GoFundMe, Google, GuideStar (Candid), Lyft, Overstock, and
PayPal. And more are emerging and continue to innovate charitable
giving online.
Several charitable fundraising platforms partner with a charity whose
charitable purpose is to enable online giving. For instance, all donations
made on a charitable fundraising platform, like PayPal, may be made to
its partnering platform charity PayPal Giving Fund, which is then
responsible for distributing the donation intended for a specific charity
(among other duties). A platform charity like Pay Pal Giving Fund may
even use what are called “donor advised funds” to receive and distribute
donations, but this is not required.
Many companies
encourage
donors to use
their own
websites and
other Internet
-
based platforms
to give to
charities listed on
the
platform…what
we call
charitable
fundraising
platforms
.
Attorney General’s Guide for Online Charitable Giving | 2
RESEARCH BEFORE DONATING
Although it may be more convenient to donate to or support your favorite
charities through charitable fundraising platforms, you should be fully
informed as to how the donation process works for these indirect methods
of charitable giving. These online donations are not refundable. Also, you
may prefer to give directly to charities through their own websites (e.g., to
increase the value of your donation as platforms may charge extra fees or
for other reasons discussed below). So when you seek to support
charities on charitable fundraising platforms, research before donating:
1. Who are you giving the donation to?
On most charitable fundraising platforms, donors make donations not to
the charity they select, but instead to the charitable fundraising platform
or its partnering platform charity. In doing so, donors are merely
recommending a donation to the charity the donor selects from a list or
database of charities.
On a few platforms that permit crowdfunding or peer-to-peer fundraising
campaigns for personal and charitable causes, there is an additional
scenario. If an individual creates a campaign that benefits him or her
personally, but disguises that campaign as one that benefits a charity
(e.g., the campaign’s content mentions a specific charity and the platform
did not categorize this campaign as a charity campaign), you would be
donating to the individual who created the campaign. When this occurs,
there is a risk the individual may not give the donation to the charity
mentioned in the solicitation pitch. Before you donate using a platform
that permits crowdfunding or peer-to-peer fundraising campaigns for both
individuals and charities, make sure it is clear the campaign will benefit a
specific charity before you donate (e.g., look for a reference by the
platform that the campaign will benefit a “certified charity,” or inquire with
the platform about who specifically receives a campaign’s proceeds).
Also, to minimize the risk of inadvertently giving funds intended for a
charity to an individual who created a personal crowdfunding campaign,
it’s a good idea to only give to fundraising campaigns created by
individuals personally known to you.
If it’s unclear who you are donating to, find another way to support the
charity, such as contacting the charity directly or using another charitable
fundraising platform that makes this clear.
2. Will the charity receive the donation?
When donations are made to the charitable fundraising platform or its
partnering platform charity, custody and control over the donation remains
with them and they may retain the right and discretion not to give the
donation to the charity you recommended. Some of the reasons for not
honoring a donor’s recommendation can include finding that the charity is
Be fully informed
as to how the
donation process
works.
Attorney General’s Guide for Online Charitable Giving | 3
not in compliance with a particular law or donation policy established by
the platform, or that the charity has not agreed to the terms the platform
requires to accept donated funds.
3. If the charity can’t receive your donation, can you choose
another charity to receive it (as donations are not
refundable)?
When a charitable fundraising platform or its partnering platform charity
chooses to exercise its discretion not to give a donation to your
recommended charity, it may choose an alternate charity with a similar
charitable purpose to receive your donated funds, instead of contacting
you to select another recommended charity. It is also possible the
platform or platform charity may decide to keep the donation for itself. If
you would like to recommend another charity, confirm whether the
platform will let you do this at the time of your initial donation.
4. If the charity can receive your donation, how long does it
take for the charity to get it? Can you be notified of this?
You may believe a charitable fundraising platform or the platform’s
partnering charity may promptly send your donated funds to your
designated charity. For instance, you may have designated a donation for
a specific charity that is helping victims of a recent natural disaster, and
you would like your funds to be used by that charity as quickly as
possible. However, this may be an unrealistic expectation for donations
made through charitable fundraising platforms. For example, the platform
or its partnering platform charity may seek to aggregate donations from
multiple donors who designated the same charity to receive the
donations, and may grant the donations in the form of one lump sum
payment to the designated charity on a predetermined schedule (e.g.,
monthly, bi-monthly, annually). It may also wait to grant donations to a
charity until a certain minimum amount (e.g., $100) is received from
multiple donors. Platforms or platform charities also need time to confirm
whether the designated charity is eligible to receive the grants, and
account for any fees taken from donations, as discussed below
. Check to
see if the platform has a disbursement policy that clearly explains how
long they retain donations before granting them to the charities chosen by
donors. Yet, if you would like a charity to receive your donation as quickly
as possible, consider donating directly to the charity (e.g., through the
charity’s own website).
Even if you are less concerned with how long it takes for donations to be
distributed, you may want to know whether the charity you designated a
donation for actually received your donated funds (particularly for large
donations). However, many charitable fundraising platforms do not
currently notify or inform donors when they actually distribute donated
funds to designated charities. Before donating, you should confirm with a
Attorney General’s Guide for Online Charitable Giving | 4
platform whether it will notify you when your donation is disbursed to the
charity of your choice.
5. How much of your donation does the charity receive?
Fees may automatically be taken out of your donation, such as credit card
processing fees or other transaction fees (like a platform fee). Some
charitable fundraising platforms may ask donors to pay more than their
intended donation to cover the fees. These types of fees should be clearly
disclosed, but if they are not, do not assume there are no fees—and you
may want to research another way to give to your charity.
When platforms ask you to pay additional fees on top of your donation, do
not feel pressured to cover that fee or pay a certain percentage of a
donation (as there is no custom as to what is an appropriate platform fee).
Such a platform should also make it straightforward for you to decline to
pay any optional fee.
6. Is your donation tax deductible?
Many donors want to know whether their donations are tax deductible not
only because they may be able to deduct the donations from their federal
and state income taxes, but also because this indicates the donation is
made to charity, as opposed to an individual, a for-profit company, or a
nonprofit that isn’t a charity (like a political action committee). Hence, it’s
important to know who your donation is going to, as discussed above
.
If your donation is made to the charitable fundraising platform itself, most
likely your donation was to a for-profit company, so that the donation is
not tax deductible. If the donation is made to the platform charity, then it
should be tax deductible as platform charities should be tax-exempt under
section 501(c)(3) of the Internal Revenue Code. In fact, this may be one
reason why platforms partner with platform charities to receive and
distribute donated funds to other designated charities, as the platform
charity can offer donors tax deductible donations.
When you make purchases online that cause a platform or another
corporation to make a donation, such donations would not be tax
deductible by you (as you did not actually donate any funds to a charity).
When you give money to individuals in response to their personal
crowdfunding campaigns on a platform (even if they state they will give
donations to a charity), your donation is not tax deductible.
You may want to consult with a tax professional to discuss or confirm
your understanding of when donations are tax deductible.
Fees may
automatically be
taken out of your
donation, such
as credit card
processing fees
or other
transaction fees
(like a platform
fee)
.
Attorney General’s Guide for Online Charitable Giving | 5
7. Will the charity receive your contact information?
Some donors want to give anonymously, while others want to be
acknowledged by a charity for donations made through charitable
fundraising platforms (especially for large donations). Even if you didn’t
donate, you may want to be thanked for your efforts (e.g., for your
fundraising or purchasing activity on a platform), or you may want the
designated charity to contact you to learn more about its charitable
programs, volunteer activities, and other events. Research how a
charitable fundraising platform or its partnering platform charity may or
may not share your name, e-mail address, and other optional contact
information with charities you designate to receive your donation.
Some charitable fundraising platforms or platform charities may or may
not share your information, while others may let you choose to remain
anonymous. Charitable fundraising platforms should conspicuously
disclose when and under what conditions your information may be
disclosed to your designated charity. They should also disclose how they
will use your information when you make donations or otherwise support
charities on their platforms.
8. Will your donation be used by a charity for the specific
purposes described on a charitable fundraising platform?
Some charitable fundraising platforms let donors instruct or recommend
how their donations may be used by the designated charity. Other
platforms reflect or let individuals soliciting donations specify how funds
will be used (e.g., “A $5 donation means one child [the charity serves] will
be fed three meals in a day”). This may be the case even though the
benefiting charity may not be aware of or have authorized the solicitation
on its behalf (as discussed below
). In spite of these claims, charitable
fundraising platforms or their partnering platform charities may let
charities that receive donations from them to use the funds for any
purpose. Hence, if you want your donation to be used for a specific
(restricted) purpose, you may want to contact the platform to confirm
whether and how such a request will be honored, or contact the charity to
learn whether it will accept donations made directly to them subject to
your restriction on use.
9. Has the charity given permission to the charitable
fundraising platform to receive donations through the
platform?
Some chartable fundraising platforms limit the charities you can support
to those charities that have previously consented to receive donations
through the platform. Other platforms let you choose any charity, even if
the charity has no knowledge of and has not chosen to participate with a
platform.
Some charitable
fundraising
platforms or
platform charities
may
or may not
share your
information,
while others may
let you choose to
remain
anonymous
.
Attorney General’s Guide for Online Charitable Giving | 6
When a charity gives consent, it is aware of and has authorized
solicitations on the platform on its behalf. A charity’s consent also
minimizes the chance of fraud, and provides a greater likelihood it will
actually receive and accept donations made through the platform—and
receive them faster. For instance, before listing a consenting charity on a
platform, the platform or platform charity typically vets the consenting
charity for compliance with the platform’s donation policies and applicable
laws, which increases the likelihood donations will be given to those
charities. Consenting charities also would have agreed to the platform’s
terms for receiving donations, so there wouldn’t be issues with a charity
rejecting donations (e.g., charities may object to unauthorized fees taken
from donations, they may not have access to donor information, or they
may view accepting the funds as part of a scam). Consenting charities
are also likely to set up methods to receive donated funds electronically,
which is faster than receiving donated funds by check (and can easily get
lost in the mail for a non-consenting charity when its current mailing
address is unknown). Research whether the charities listed on a platform
as intended recipients of your donation have given their consent.
The answers to these questions should be clearly provided to
you
The best charitable fundraising platforms should be able to clearly and
easily provide all of the above information to you. If it’s not clear or the
information is not provided, consider giving to the charity of your choice
through the charity’s website. In addition, submit a complaint
to the
Attorney General when a platform does not adequately and clearly
disclose the details on how donations are made and processed.
DUTIES AND BEST PRACTICES FOR CHARITABLE
FUNDRAISING PLATFORMS
When charitable fundraising platforms solicit donations in California, or
otherwise enable donations to charities on their platforms, they must
ensure compliance with all applicable laws, including California’s
charitable solicitation laws. Similarly, platforms (and their partnering
platform charities) should implement policies and procedures that instill
confidence in donors and the public that they can trust these platforms to
receive, process, and/or distribute donations to their favorite charities.
With this in mind, these legal duties and best business practices generally
include but are not limited to:
Attorney General’s Guide for Online Charitable Giving | 7
1. Fundraising must be conducted without fraud and
deception
Do not engage in or permit fraudulent and deceptive conduct. For
instance, platforms should not make statements that create a likelihood of
confusion or misunderstanding to a potential donor. (E.g., Gov. Code, §
12599.6, subd. (f)(2).) Such conduct includes failure to provide material
information a potential donor would find helpful in deciding whether to
donate or not, and failure to prohibit individuals that fundraise for charity
on their platforms from making deceptive statements. Platforms also may
not represent or imply a charity will receive an amount greater than the
actual net proceeds reasonably estimated to be retained by the charity for
its use. (Gov. Code, § 12599.6, subd. (f)(8).) For material information that
should be accurately, clearly, and conspicuously disclosed before donors
can donate, see the Research Before Donating section above
.
Other material information that should be disclosed (and not only in fine
print) include: information on refunds, the process for vetting charities
before listing them on platforms or granting them donated funds, and the
use of donor advised funds. For instance, if donor advised funds are used
to accept donations, platforms should clarify what that means, why and
how donor advised funds are used, and whether a donor advised fund is
created for each donor.
2. Abide by fiduciary duties
A fiduciary relationship exists between any person soliciting on behalf of a
charity and the donor who is solicited. Hence, when a platform or its
partnering platform charity solicits and accepts donations on behalf of a
charity, a charitable trust is created. This requires the platform or platform
charity, and the charity that ultimately receives the donated funds, to use
these restricted donations for the declared charitable purposes for which
they were sought. (Bus. & Prof. Code, § 17510.8.) This further
underscores the importance of disclosing material information accurately,
clearly, and conspicuously on charitable fundraising platforms as this
informs donors as to the declared charitable purposes for donations that
are given through the platforms.
3. Only list on platforms charities in good standing
Do not list charities as potential donation recipients, or distribute donated
funds or provide your services to charities unless they are in good
standing with the IRS, the California Franchise Tax Board, and the
Attorney General (specifically the Attorney General’s Registry of
Charitable Trusts), when applicable. For the IRS and Franchise Tax
Board, this means the charity’s tax-exempt status has not been revoked.
For the Attorney General, this means the charity is registered and in
compliance with the Attorney General’s annual reporting requirements.
For instance, unregistered charities that have been ordered to register
Do not engage in
or permit
f
raudulent and
deceptive
conduct. For
instance,
platforms should
not make
statements that
create a
likelihood of
c
onfusion or
misunderstanding
to
a potential
donor....
Such
conduct includes
failure to provide
material
information a
potential donor
would find helpful
in determining
whether to
donate or not.
Attorney General’s Guide for Online Charitable Giving | 8
with the Attorney General and charities that have had their registration
suspended or revoked are not in good standing with the Attorney
General, and cannot operate or solicit donations in California. (Cal. Code
Regs., tit. 11, § 999.9.4.) It is also inappropriate to facilitate solicitations
for and donations to charities not in good standing, and to mislead donors
into believing they can support and give to such charities. (Gov. Code, §§
12596, subd. (c), 12599.6, subd. (d), (f)(2).)
4. Let donors choose how their information is shared and
responsibly handle their information
Ensure that donors have a clear opportunity to choose whether their
contact information will be given to the charities they have designated to
receive donations. This also applies to consumers who make purchases
on platforms that cause donations to be made as a part of their
purchases. In addition to honoring these requests, only use donor or
consumer information to process a donation, or for future solicitations by
the applicable charitable fundraising platform or its partnering platform
charity (unless the donor or consumer requests to not receive such
solicitations). Furthermore, ensure compliance with all consumer privacy
and protection laws when handling donor or consumer information.
5. Make the donation process transparent
Provide transparency to donors as to what happens with recommended
donations made to charitable fundraising platforms or their partnering
platform charities. Donors should be informed when their donated funds
are sent to their recommended charities, and should be contacted for
alternate charities when the original charity can’t receive the funds.
Similarly, ask consumers who designate charities to receive donations
from the platform or another corporation whether they would like to be
informed when donations are sent to their charities, and notify them
accordingly (also ask consumers to provide alternate charities when their
designated charity can not receive donations).
Also, publish reports for the public that provide transparency, and show
the absence of fraud in receiving, handling, and processing donations
designated for charity. For instance, specify the donation amounts
received before fees were deducted, how much each charity received,
when they received such funds, and whether the charities were originally
designated by donors to receive the funds or not. Such reporting
substantially informs donors and encourages future charitable giving on
platforms.
6. Distribute donated funds as quickly as possible
Make all reasonable efforts to ensure donations are distributed to the
recommended charities as quickly as possible. For platforms that accept
donations for a small number of charities, all donated funds should be
Provide
transparency to
donors…
donors
should be
informed
when
their donated
funds are sent to
their
recommended
charities.
Attorney General’s Guide for Online Charitable Giving | 9
distributed within 30 days of the donations. For platforms that handle a
voluminous number of donations for a large number of charities, more
time may be required, like 60 days, unless it is determined within that time
period that the designated charity is not eligible to receive the donations.
Regardless, it should never take longer than a year to distribute the funds
to alternate charities.
Furthermore, do not refuse to distribute donations for a recommended
charity until a certain dollar value is reached, such as $100. Not only does
this discourage smaller donations, which is all some donors can afford. It
also unreasonably delays the charitable impact of such donations (as the
donations are not yet received and used by charities actually helping
those in need), unlike for donors who give in larger amounts.
7. Provide compliant tax donation receipts
Ensure charitable solicitations and receipts to donors comply with
mandatory disclosures under California law. Hence, when donations
designated for a charity are made to a platform or its partnering platform
charity, clearly specify: the name and address of the designated charity,
and the platform or its partnering platform charity (depending on who the
donation is made to); the non-tax exempt status of any of these entities
under federal and state law when applicable; and the percentage of the
donation which may be deducted as a charitable contribution under
federal and state law. If no portion is tax deductible, state “This
contribution is not tax deductible.” (Bus. & Prof. Code, §§ 17510.3, subd.
(a), 17510.4.)
8. Obtain prior permission from charities to solicit and receive
donations intended for them
Do not use the name of a charity for solicitation purposes, unless the
platform has the written consent of that charity in advance. (Gov. Code,
§§ 12599.6, subds. (f)(2), (5), (11).) In addition to creating donor
confusion and deception issues, the lack of consent interferes with a
charity’s legal duty to control its fundraising and to prevent objectionable
solicitations. (Gov. Code, § 12599.6, subd. (b).)
When obtaining consent in a written agreement, platforms should also
ensure the charity is adequately informed of the agreement’s material
terms. The agreement should conspicuously identify all fees deducted
from donations, the processing time for release of the funding to the
charity, and the terms on sharing donor/consumer information.
Furthermore, should a charity wish to accept donated funds from a
platform based on previously unauthorized solicitations, the platform
should not require consent from the charity for future solicitations to
obtain those funds.
Attorney General’s Guide for Online Charitable Giving | 10
9. Registration and other requirements
Charitable fundraising platforms that permit Californians to make
donations to or otherwise support charities may need to register with the
Attorney General’s Registry of Charitable Trusts if they meet any of the
following:
The platform is paid to solicit donations for charitable purposes, to
receive or control funds as a result of charitable solicitations, or to
provide advice or prepare materials for charitable solicitations (see
Gov. Code, §§ 12599, subd. (a), 12599.1, subd. (a));
The platform is a for-profit entity that represents to the public that
the purchase of any goods or services will benefit charitable
purposes (see Gov. Code, § 12599.2, subd. (a)); or
The platform is deemed a trustee, which includes nonprofit and
for-profit entities, that hold charitable assets (see Gov. Code, §
12582).
When applicable, registration with and reporting to the Attorney General
(and other requirements) would apply. The Attorney General’s registration
and reporting requirements are intended to protect the public from fraud,
to prevent the misuse of charitable assets and other wrongdoing, and to
provide transparency for donors to make informed decisions when giving.
Indeed, many donors may be more willing to support charities on
charitable fundraising platforms that are registered and complying with
the Attorney General’s requirements. However, registration with the
Attorney General is not an endorsement of any platform. (Gov. Code, §
12599.6, subd. (f)(7).)
CONCLUSION AND LEGAL NOTICE
Thank you for reading this guide. We hope it is an invaluable resource for
the public and charitable fundraising platforms, which promotes informed
charitable giving and the protection of charitable assets as online
fundraising innovation evolves.
This publication does not constitute legal advice. Moreover, it is not
intended, does not, and may not be relied upon to create any rights,
substantive or procedural, enforceable at law by any party in any matter
civil or criminal. No limitations are hereby placed on the otherwise lawful
investigative and litigation prerogatives of the California Department of
Justice.
