Posted on December 11, 2003

California Attorney General to Propose Tighter Fundraising Requirements

California state attorney general Bill Lockyer plans to propose new regulations that would require written contracts listing fees and expenses, including payments to celebrities who headline fundraising events, between charities and professional fundraisers, the Los Angeles Times reports.

Lockyer's proposal was made in response to a scandal involving professional fundraiser Aaron Tonken, who earlier in the week pled guilty in U.S district court to one count of mail fraud and a count of wire fraud in a case involving payments to celebrities in return for their participation in charity fundraisers. Lockyer said his office has not ruled out bringing charges against some of the celebrities involved or adding them to the civil complaint against Tonken.

According to a recent story in the Times, celebrities sometimes abuse charity events by taking cash or jewelry in exchange for their presence. "I do know there are celebrities who will not do an event, ones you wouldn't think need the money, without being paid," said Paulette Maehara, president and CEO of the Association of Fundraising Professionals. "There's nothing illegal about it, but it detracts from money that could go toward the organization's mission."

Lockyer's office, which employs 12 attorneys and 11 auditors to regulate the state's 87,000 charities and trusts, will introduce the proposal as part of a package of reforms in the state legislature in January. In addition to requiring contracts that disclose all fundraising expenses, the proposed regulations would require fundraisers to deposit the funds they raise at celebrity events in bank accounts controlled by charities and would require larger nonprofits to have their financial statements audited by certified public accountants. The regulations also would require charities in the state to work only with registered commercial fundraisers.