The South Carolina Solicitation of Charitable Funds Act, enacted in 1994 and codified at S.C. Code §§ 33-56-10 et seq., establishes a regulatory framework to oversee the solicitation of charitable funds within the state. This legislation ensures transparency, accountability, and compliance in how organizations solicit and manage contributions. Below, we provide an overview of the key provisions and requirements under the Act.

The Act defines a charitable organization as one of the following:

1. 501(c)(3) Tax-Exempt Organizations: Entities recognized by the IRS as tax-exempt under Section 501(c)(3) of the Internal Revenue Code, including organizations focused on charitable, religious, educational, scientific, and other similar purposes. (S.C. Code § 33-56-20)
2. Other Benevolent Organizations: Entities established for purposes such as social welfare, public health, civic improvement, or supporting law enforcement or firefighters.
3. Soliciting Entities: Any organization employing a charitable appeal as the basis for solicitation or obtaining contributions from the public for charitable purposes.

The definition explicitly excludes religious congregations (churches, synagogues, mosques) and political candidates or parties filing with the Federal Election Commission or State Election Commission.

A charitable organization intending to solicit contributions in South Carolina must register with the Secretary of State’s Division of Public Charities prior to solicitation. This includes organizations that allow solicitation on their behalf.

Key requirements:

• Initial Registration: A $50 fee is required, and registration must be renewed annually. Renewal is due 4.5 months after the end of the organization’s fiscal year. (S.C. Code § 33-56-30)
• Annual Financial Reports: Organizations must file financial reports annually, using IRS Forms 990, 990-EZ, or 990-PF. Extensions of up to six months may be requested. No fee is associated with this filing.

Certain organizations may qualify for annual exemptions, including:

1. Educational institutions.
2. Groups soliciting for a named individual with proceeds directed to that individual.
3. Small organizations intending to raise less than $20,000 annually and using unpaid or minimally compensated personnel.
4. Organizations soliciting exclusively from members.
5. Veterans’ organizations with congressional charters.
6. State entities subject to Freedom of Information Act (FOIA) requirements.

Note: Exemptions require an annual application and renewal.

The Act also regulates professional fundraisers, defining three distinct categories:

1. Professional Solicitors: Individuals compensated for soliciting contributions for a charitable organization. Paid employees or directors of a charitable organization may be classified as professional solicitors if their compensation is commission-based.
2. Professional Fundraising Counsel: Consultants compensated for planning, managing, or advising charitable solicitation campaigns but who do not directly solicit contributions.
3. Commercial Co-Venturers: Businesses promoting goods or services for profit while pledging a portion of proceeds to a charitable organization.

Professional fundraisers must register annually with the Secretary of State, paying a $50 fee. Contracts between fundraisers and charitable organizations must be filed with the Secretary of State before solicitation begins.

Professional solicitors and commercial co-venturers must file joint financial reports within 90 days after completing a campaign or annually for campaigns lasting longer than one year. (S.C. Code § 33-56-70)

Professional solicitors are required to disclose:

• Their status as a professional or paid solicitor.
• The true name of the fundraiser and the charitable organization.
• Upon request, provide the most recent financial report and registration of the organization within 15 days. (S.C. Code § 33-56-90)

Misrepresentation or misleading practices during solicitations are strictly prohibited, with fines of up to $2,000 per violation. (S.C. Code § 33-56-120)

The Secretary of State’s Office has the authority to investigate any charitable organization or fundraiser for violations of the Act. This includes issuing subpoenas, conducting audits, and requiring the production of documents. (S.C. Code § 33-56-140)

Penalties for noncompliance include:

• Administrative fines of up to $2,000 for late filings or non-disclosure.
• Suspension of registration.
• Injunctions sought through the Administrative Law Court.

Organizations or fundraisers may appeal fines and sanctions through the Administrative Law Court.

The Solicitation of Charitable Funds Act underscores the importance of ethical practices, transparency, and accountability in charitable solicitations. Nonprofits, professional fundraisers, and commercial co-venturers operating in South Carolina must navigate these regulations carefully to maintain compliance.

For legal guidance on charitable registration, compliance, or fundraising practices, Twisdale Law, PC offers comprehensive services tailored to nonprofits and fundraising professionals. Contact us today to ensure your organization or fundraising campaign meets South Carolina’s legal requirements.