July 1, 2024
Tennessee’s House Bill 1707 and House Bill 1708, both signed into law in April 2024 and effective July 1, 2024, modernize the Charitable Solicitations Act.
HB 1707 (signed April 3, 2024) renames the Act and introduces key changes, including requiring charities to file agreements for charitable sales promotions, mandating signage on donation bins, and enhancing professional solicitor disclosures. It strengthens enforcement with penalties up to $5,000 per violation.
Read more about House Bill 1707
HB 1708 (signed April 8, 2024) raises the audit threshold for financial statements from $500,000 to $1,000,000 in gross revenue, reducing costs for mid-sized nonprofits, and sets registration and renewal fees at $10 through June 30, 2025, while increasing late fees to $25 monthly. Together, these bills streamline compliance and enhance transparency for nonprofits.
Read more about House Bill 1708
Key Provisions of the 2024 Updates to the Charitable Solicitations Act
Renaming the Law:
- The law was renamed from the “Solicitation of Charitable Funds” to the Charitable Solicitations Act (Tenn. Code § 48-101-501 et seq.) to reflect its updated scope.
Registration and Exemption Changes:
- Charitable organizations must register with the Tennessee Secretary of State before soliciting contributions unless exempt. The exemption threshold for organizations receiving less than $50,000 in contributions was eliminated for those involved in commercial co-venturer activities, meaning these organizations must now register.
- Registration fees were reduced to $10 for initial and renewal filings for the period of July 1, 2024, through June 30, 2025, compared to the previous range of $50–$240. This extends a temporary reduction in place since July 1, 2023.
Charitable Sales Promotion Requirements:
- A charitable sales promotion is defined as advertising or selling goods/services with a representation that the purchase benefits a charitable organization or purpose. Charitable organizations benefiting from such promotions must:
- File a copy of the written, signed agreement with the commercial co-venturer with the Secretary of State at least five business days before the promotion starts. This shifts the filing responsibility from commercial co-venturers to the charitable organization.
- Ensure the agreement is signed by an authorized representative of the commercial co-venturer and two officers of the charitable organization.
- Tennessee joins Arkansas, Connecticut, New Hampshire, and New Jersey in requiring charities to file materials for charitable sales promotions.
Collection Receptacle Regulations:
- Charitable organizations placing or maintaining collection receptacles (e.g., donation bins for clothing or household goods) in public view must display a permanent sign or label on at least two sides (including the front) with:
- The organization’s name, address, phone number, email, and a statement of its charitable purpose.
- This ensures transparency for donors using donation bins.
Audit Threshold Increase:
- The gross revenue threshold requiring charitable organizations to submit audited financial statements with their annual report was increased from $500,000 to $1,000,000. Organizations with gross revenue between $500,000 and $1,000,000 no longer need to file audited statements, reducing compliance costs.
Expanded Enforcement Authority:
- The Secretary of State’s authority was expanded to impose civil penalties up to $5,000 per violation and seek injunctions for non-compliance. Willful violations may result in a Class B misdemeanor for the first offense and a Class E felony for subsequent offenses.
- Unfair, false, misleading, or deceptive practices in solicitations are declared unlawful, with courts encouraged to reference the Tennessee Consumer Protection Act and the Federal Trade Commission Act for guidance.
Professional Solicitor and Other Requirements:
- Professional solicitors must file a solicitation campaign notice before starting a campaign, including details like the campaign description, location, and personnel involved. They must disclose their status as a “paid solicitor” at the point of solicitation and provide written confirmation to donors within five days of a verbal pledge.
- Professional solicitors are not required to register individually if employed by a fundraising firm, but independent solicitors may need to register. Fundraising counsel licensure is not required in Tennessee.
- Use of terms like “POLICE,” “FIREFIGHTER,” or “VETERAN” in solicitations requires written authorization from a bona fide organization or department.
Catastrophic Illness Trusts:
- Trusts or custodial accounts for catastrophic illnesses must notify the Division of Charitable Solicitations before soliciting and file annual accountings (excluding banks or trust companies acting as trustees). Financial records must be retained for at least three years.