Charity verification for California AB 488 compliance

Online platforms give charities new ways to collect donations and allow millions of people to raise money for themselves, loved ones, and good causes. Online retailers can also partner with charities as part of cause marketing campaigns, allowing customers to add donations to their tab or give to a charity when making specific purchases.

However, the proliferation of online giving has also led to a rise in charity-related scams and fraud. Verifying organizations that try to solicit or receive donations online could help ensure that funds go to legitimate charities. 

What is California AB 488?

California Assembly Bill 488 (AB 488) was passed in October 2021 and is being implemented through a series of regulations that are expected to conclude on January 1, 2025.

The law aims to increase transparency in online fundraising and protect donors from fraud, deception, and unfair solicitations. It does this by introducing new registration, disclosure, fund segregation, fund distribution, and solicitation requirements for charitable fundraising platforms and platform charities.

To comply, platforms can only solicit and distribute donations online for charities that are in good standing with California’s Registry of Charities and Fundraisers, the California Franchise Tax Board (FTB), and the Internal Revenue Service (IRS). 

A charity could fall out of good standing if the FTB or IRS revokes its tax-exempt status, or if the California Attorney General (AG) prohibits it from soliciting or operating in the state. Either could happen if the charity fails to file mandatory reports with the federal or state government. 

Platforms may need to regularly check the status of charities listed on their website before raising or distributing money on their behalf to comply with AB 488. 

Who does AB 488 impact?

AB 488 applies to charitable fundraising platforms and platform charities that are based in California or are based elsewhere and ask for (or allow users to ask for) donations from Californians. 

Charities that use their own online platform to raise money for themselves don’t count as a charitable fundraising platform. Additionally, the law focuses on situations when people and organizations are raising money for a charitable organization online, not campaigns to raise money for individuals. 

Charitable fundraising platforms include:

• Charitable crowdfunding companies and services, including platforms that list charities for potential donors, such as PayPal Giving Fund, or allow users to create fundraisers for charities, like Facebook.
• Peer-to-peer fundraising platforms, like GoFundMe and DonorsChoose. 
• Fundraising platforms that white label their platform for charities.
• Companies that allow customers to add a donation to a charity or round up their purchase amount and donate the difference when checking out online. 
• Companies that make donations to charities when users take specific actions, such as voting for causes or liking a post. 
• Companies that raise money for more than six charities in a calendar year through online charitable sales promotions. For example, when they donate a dollar to a charity each time a customer buys a certain item.

A platform charity is a charity or charitable trustee (an individual or organization soliciting charitable funds) who uses a charitable fundraising platform to ask for donations.

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Confirming charities’ good standing for California AB 488 compliance

The requirement for charitable fundraising platforms to verify the good standing of charitable organizations was effective starting March 26, 2024. As of June 12, 2024, the platforms will also be required to register themselves with the California Attorney General’s Registry of Charities and Fundraisers.

To ensure that your platform is compliant, you may need to regularly confirm that the charities you and your users are raising money for are in good standing by checking the IRS, FTB, and California AG databases. 

• The IRS’s list of tax-exempt organizations
• The FTB’s entity search tool or revoked exempt organizations list
• California’s Registry of Charities and Fundraisers

The responses you receive from the IRS, FTB, and California AG databases can tell you whether a charity may operate or solicit in California, along with various statuses associated with the charity’s current standing, such as whether the charity is current, dissolved, or suspended. Additionally, results from the FTB show whether the charity’s tax-exempt status is current or revoked. 

Although you can search each database on your own, third-party solutions can streamline the initial check and provide ongoing monitoring so that your team doesn’t have to manually check or cross-reference these sites. 

Solution providers that offer Know Your Business (KYB) checks may be familiar with regularly querying government databases. And although AB 488 only mandates the verification of good standing, you may want to collect and verify identifying documents from the charity and associated persons as a best practice.

Persona can help you verify charities

AB 488 can affect every charitable fundraising platform and platform charity that wants to raise money online from Californians, regardless of where they’re based. The law also might serve as an example for other states that want to fight charity scams and fraud, inspiring additional regulations. 

Persona’s identity platform uses a building-block approach to power your identity operations. Choose the products that suit your verification and fraud prevention needs and configure them to account for new laws. 

For AB 488 compliance, use Persona to automatically verify a charity’s status based on data from the California Attorney General's Registry of Charities and Fundraisers, the California Franchise Tax Board, and the IRS Business Master File. AB 488 checks can also be incorporated into a larger business verification process to comply with other regulations to protect yourself from reputational risks that could arise if you don’t screen individuals and charities on your platform.

For example, an online payment platform might conduct KYB checks before onboarding a new organization to comply with anti-money laundering (AML) laws and defend against fraud. If they’re using Persona’s platform, they can easily add the AB 488 check if the organization is a charity. 

You can also add products and solutions to help verify users’ ages, prevent fraud, uncover existing fraudulent accounts, and expand into new regions. To keep everything in one place, you can easily integrate third-party data sources and tools, including CRMs and customer support, into our platform via Persona Marketplace. 

If your organization needs to comply with California AB 488, contact us so we can learn more about your requirements and show you a personalized demo.