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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5850 February 4, 1981 CHARITABLE ORGANIZATIONS AND SOLICITATIONS ACT: Licensure of solicitor where only portion of contribution to be used for charitable purposes. A person who contracts to solicit funds for an organization, using representations that a part of the funds will be used for charitable purposes, must be licensed as a professional fund raiser even though the person solicited receives some benefit in return for the contribution. The Honorable Alfred A. Sheridan House of Representatives State Capitol P.O. Box 30014 Lansing, Michigan You have requested my opinion as to whether a person must be licensed under the Charitable Organizations and Solicitations Act, 1975 PA 169; MCLA 400.271 et seq; MSA 3.240(1) et seq, where he or she contracts with organizations to produce publications in their name to be financed through the sale of advertising to appear in those publications. Under the contract, the person solicits advertising in the name of the organization, stating to prospective advertisers that part of the money raised will be used for charitable purposes. The person then pays a portion of the gross revenue to the organization and retains the balance to produce the publication and as compensation. It is assumed from your hypothetical situation that some or all of the money received by the organization is used for charitable purposes. Thus, your question is: Where an individual, on behalf of a third party organization, solicits ads for a book to be published representing to prospective advertisers that part of the payment for the ad will be used for charitable purposes and part for non-charitable purposes, must the individual be licensed under the Charitable Organizations and Solicitations Act? 1975 PA 169, supra, requires organizations, not otherwise exempt thereunder, which solicit contributions for charitable purposes to obtain a license from the Attorney General and to comply with various statutory mandates in order to solicit charitable contributions. In addition, if a professional fund raiser is employed to conduct a solicitation campaign, that professional fund raiser must post a $10,000.00 bond and obtain a license from the Attorney General. 1975 PA 169, supra, Sec. 17. The central issue of your question concerns whether funds raised through the sale of advertising, using the solicitation method described above, constitutes soliciting 'charitable contributions' so as to subject the organization and the fund raiser to 1975 PA 169, supra. It may be stated at the outset that funds raised through the sale of advertising would not constitute charitable contributions if the purchasers of the advertising were not led to believe that some of the funds would be used for charitable purposes. Correspondingly, if funds were raised in the name of charity and no benefit, such as advertising, was given to the donor, those funds would constitute charitable contributions. You raised a hybrid situation in which funds are solicited in the name of charity, while the donor is given some benefit in return. The title of 1975 PA 169, supra, includes the legislative intent of that statute, as follows: 'AN ACT to regulate organizations and persons soliciting or collecting contributions for charitable purposes; to require registration, disclosure of information and licensing before solicitation of contributions; to provide for reporting of financial and other information by those licensed or registered and those claiming exemption; to prescribe standards of conduct and administration, and to prohibit certain actions; to provide for enforcement, investigation, and promulgation of rules by the attorney general; to preempt local regulation; to provide penalties for violations; and to repeal certain acts and parts of acts.' In accordance with 1975 PA 169, supra, Sec. 14, a licensed charitable organization must file financial reports with the Attorney General each year, disclosing the amount of money raised and the purposes for which that money was spent. In addition, it must file with the Attorney General copies of its contracts with professional fund raisers relating to financial compensation or profits to be derived by the fund raiser. 1975 PA 169, supra, Sec. 3(i). Those financial reports and contracts are maintained on file with the Attorney General and are open to public inspection. 1975 PA 169, supra, Sec. 8. Should circumstances indicate the need to do so, the Attorney General may compel the production of documents and testimony in an investigation of the operations of a charitable organization or professional fund raiser. 1975 PA 169, supra, Sec. 21. All of those provisions are designed to assure that money given for charitable purposes will in fact be expended for those charitable purposes. It is not uncommon for charitable organizations to offer a contributor some benefit to induce donations. That benefit may range from a token key ring or decorative stamps to place on holiday mail to tickets for a concert or charity ball. The common thread is that money is raised through representations that it will benefit a charitable cause. If, simply because the donor was provided some benefit, such a payment could not be deemed a charitable contribution, then all of the safeguards established in 1975 PA 169, supra, could easily be circumscribed by an organization or fund raiser which feared public scrutiny of its financial affairs. 1975 PA 169, supra, Sec. 2(b), defines the word 'contribution' as follows: "Contribution' means the promise, grant, or payment of money or property of any kind or value, including promises to pay, except payments by members of an organization for membership fees, dues, fines, or assessments, or for services rendered to individual members, if membership in the organization confers a bona fide right, privilege, professional standing, honor, or other direct benefit, other than the right to vote, elect officers, or hold offices, and except money or property received from a governmental authority or foundation restricted as to use.' That definition does not specify that the donor may not receive any benefit in the transaction for the payment to constitute a 'contribution.' To the contrary, the definition implicitly recognizes that a payment might constitute a 'contribution' even though the donor receives a benefit. It does so by stating that '. . . payments by members of an organization for membership fees, dues, fines, or assessments, or for services rendered to individual members, if membership in the organization confers a bona fide right, privilege, professional standing, honor, or other direct benefit, other than the right to vote, elect officers, or hold offices, . . .' are excepted from the definition of 'contribution.' Had the mere conferring of a benefit upon the donor automatically meant that a payment was not a 'contribution,' it would not have been necessary to set out that special exemption for certain payments made by members to their organization. It is a general rule of statutory construction that the words of a statute are to be accorded meaning and not treated as mere surplusage. Scott v Budd Co, 380 Mich 29; 155 NW2d 161 (1968); Stowers v Wolodzko, 386 Mich 119; 191 NW2d 355 (1969). Accordingly, it is my opinion that a 'contribution,' as defined by the statute, includes money solicited for a charitable cause, even though some benefit is given to the contributor. (1) 1975 PA 169, supra, Sec. 2(a), defines 'charitable organization' in pertinent part, as follows: "Charitable organization' means a benevolent, educational, philanthropic, humane, patriotic, or eleemosynary organization of persons which solicits or obtains contributions solicited from the public for charitable purposes . . .' (Emphasis added.) In the context of your question, the organization on whose behalf the advertising was solicited would constitute a 'charitable organization' within the meaning of 1975 PA 169, supra. Unless the organization met the statutory criteria for an exemption to the act, it would have to obtain a license before engaging in the sale of advertising to fund its charitable purposes. 1975 PA 169, supra, Sec. 2(f), defines 'professional fund raiser,' as follows: "Professional fund raiser' means a person who for compensation or other consideration plans, conducts, manages or carries on a drive or campaign of soliciting contributions for or on behalf of a charitable organization, religious organization, or any other person; or who engages in the business of or holds himself out as independently engaged in the business of soliciting contributions for such purposes. A bona fide officer or employee of a charitable organization is not a professional fund raiser unless his salary or other compensation is computed on the basis of funds to be raised or actually raised.' (Emphasis added.) Under the plain language of the statute, before undertaking a drive to sell advertising through the use of a charitable appeal, an individual or organization which contracts to conduct such a drive, on behalf of a charitable organization, would have to file a $10,000.00 bond and become licensed by the Attorney General. It is my opinion, therefore, that a person who solicits the sale of advertising through the use of representations that some of the money raised will be used for a charitable purpose must comply with the requirements of 1975 PA 169, supra. The mere fact that some benefit is conferred upon a person who responds to a charitable appeal does not exempt what would otherwise clearly be a charitable fund raising drive from the safeguards set forth in 1975 PA 169, supra. Frank J. Kelley Attorney General (1)
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