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HomeMy WebLinkAboutRegulating the Solicitation of Funds Residents of the City of South Bend and Providing Penalties Where such Solicitation Fraudulently Conducted of RespentedORDINANCE No. 4997 -67 Passed by the Common Council of the City of South Bend, ig 67 0 Presented by me to the Mayor of the City of South Bend, June 27, in g 67 Approved and signed by Clerk of Common Council Clerk IDEAL 0011§1110 PRESS FILED IN CLERK'S OFFICE ORDINANCE N0. 4927 -67 APR 2 51967 AN ORDINANCE REGULATING THE SOLICITATION OF FUNDS FROM RESIDENTS OF THE CITY OF KATHRYN L. BLOUGH SOUTH BEND AND PROVIDING PENALTIES WHERE CITY CLERK, SOUTH BEND, IND. SUCH SOLICITATION HAS BEEN FRAUDULENTLY CONDUCTED OR REPRESENTED, AS AMENDED WHEREAS, it is hereby found and determined by the Common Council of the Municipal City of South Bend: 1. That numerous persons and organizations have been and are soliciting funds in the Municipal City of South Bend on the representation that such funds are to be used for charitable purposes, when in truth and in fact such funds are being used in large part for the private profit of unscrupulous individuals promoting such solicitation; 2, That a variety of frauds and misleading devices are employed in such solicitations; 3. That persons engaged in the business of promoting solicita- tions fail to properly account for funds solicited; 4. That telephone solicitations by professional solicitors and professional promoters are a cause of annoyance to the in- dividuals solicited and, in many cases, tactics used by such solicitors are coercive, abusive or misleading; 5, That as a result of such pernicious activities honest, deserv- ing and needed charities suffer; 6. That residents of the city have been and are in constant peril of being defrauded and imposed upon due to a lack of adequate regulation of charitable solicitations, and WHEREAS, the Common Council believes that if the public were given full information concerning the solicitations, it could protect itself against victimization by disreputable fund raisers, and WHEREAS, it is necessary in the interest of the public welfare of the Municipal City of South Bend for the Common Council to regulate solicitations for charitable purposes, NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE MUNICIPAL CITY OF SOUTH BEND THAT: !1 DEFINITIONS The following definitions shall be controlling with reference to the provisions of this ordinance: 1. "Person" means any individual, firm, partnership, corporation, company, association, society, organization, or league, and includes any trustee, receiver, assignee, agent, or other representative thereof. 2. "Solicit" and "solicitation" means the request, directly or indirectly, of money, credit, property, financial assistance, or other thing of value on the plea or representation that such money, credit, property, financial assistance, or other thing of value will be used for a charitable purpose as those purposes are defined in this section. These words shall also mean and include, but not be limited to, the following methods of securing such money, credit, property, financial assistance, or other thing of value: a. Any oral or written request; 0 b. The making of any announcement to the local press or by telephone concerning a local appeal or cam- paign to which the public is requested to make a contribution for any charitable purpose connected therewith; c. The distribution, circulation, posting, or publishing of any handbill, written advertisement, or other local publications. d. The sale of, or the offer or attempt to sell any ad- vertisement, advertising space, book, card, chance, coupon, device, membership, merchandise, subscription, ticket or other thing. 3. "Solicitation" as defined herein shall be deemed to have taken place when the request is made, whether or not the person making the same receives any contribution referred to in this section. 4. "Charitable" means and includes the words patriotic, philan- thropic, social service, welfare, benevolent, educational, civic, or fraternal, either actual or purported. S. "Contributions" neans and includes the words slms, food, clothing, money, property, subscription or pledge, and also donations under the guise of loans of money or property. 6. "Cost of Solicitation" means all costs of whatever nature in- curred in raising the funds solicited except bona fide educational material in such instances where the solicitation plan involves the promotion or sale of merchandise or an entertainment event; the cost of such merchandise or entertainment shall not be considered as part of the cost of solicitation, a Compensation in whatever form paid to a "Professional Promoter or Profess- ional Solicitor" is part of the "Cost of Solicitation ", ?. "Cost of Promotion" means, in connection with a charitable solicitation, the reasonable cost of acquiring goods or merchandise or an entertainment event when such is used in connection with the solicitation but does not include the cost of selling the goods or admissions nor the cost of bona fide educational materials. No cost included in the definition of "Cost of Solicitation" shall be considered a "Cost of Promotion ", 8. "Professional Promoter" means a person who for compensation plans, promotes, conducts, manages or carries on or attempts to plan, pro- mote, conduct, manage or carry on any drive or campaign for the purpose of solicitation contributions for or on behalf of any charitable person or en- gages in the business of solicitating contributions for charitable purposes, A bona fide officer or regular employee of a charitable person shall not be deemed a profess onai promoter by reason of his participation in charitable solicitations made by or on behalf of his employer, 9, "Professional Solicitor" means any person other than a pro- fessional promoter who is employed or retained for compensation to make solicitations in connection with a charitable solicitation or soiicitationso A bona fide officer or regular employee of a charitable person shall not be deemed a professional solicitor by reason of his participation in chari- table solicitations made by or on behalf of his empioyer. 10. "Religious" and "Religion" or "Church" means any activity dir- ectly involving the promulgation or observance of any system of worship or to the building or maintenance of places of worship. The words "Religious" and "Religion" or "Church" as used herein do not include "Charitable" activ- ities as defined herein, even though cared on or sponsored by a religious organization. 11, "Commission" means the Charitable Solicitations Commission of the Municipal City of South Bend, Indiana° 3 12. "Political Parties" as defined by Indiana law, their subdivisions, and their bona fide candidates for public office are specifically exempted from and shall not be subject to the provisions of this ordinance as the in- tent of the ordinance is to regulate the solicitation of charitable contribu- tions 13, Charitable Solicitations which raise less than $500°00 in total contributions shall not be subject to the provisions of this ordinance, II CHARITABLE SOLICITATIONS COMMISSION There is hereby created, for the administration of this ordinance, a Charitable Solicitations Commission. Members of this Commission shall be appointed by the Mayor to serve for a period of four years and any vacancy occurring shall be filled in the same manner as provided for in the original appointment except that the first Commission shall be appointed as follows: Three of the members shall be appointed for a term of one(1) year; two shall be appointed for a term of two (2) years; and two shall be appointed for a term of three (3) years Thereafter, all terms shall be for a period of four (4) years as hereinabove provided. The members of this Commission shall serve without remuneration and any member thereof may be removed by the Mayor. The Charitable Solicitations Commission shall be composed of seven members and shall consist of one member who shall be an officer of the Police Depart- ment who shall be designated by the Chief of Police and six additional members to be appointed by the Mayor, one on recommendation of the St. Joseph County A.P.L,- C,I,0. Council, one on recommendation of the Better Business Bureau, one on recommendation of the Council of Churches of St. Joseph County, one on recommendation of the St. Joseph County Veteran Commander's Council and two from the citizenry -at large; provided, however, that the Mayor is not required to appoint all or any of the candidates so recommended. It is further provided that no one shall be appointed as a member of the commission who is the organi- zer or local head of any charitable, educational or philanthropic agency, 4 The Commission shall organize by electing its own officers, deter- mine its time and place of meetings and shall adopt such other regulations as in its own judgment shall be necessary for the successful administration of the terms and conditions of this ordinance. Five of the members shall constitute a quorum. All actions of the Commission may be by a simple majority of the members except as otherwise provided. The Commission shall have power to issue permits and revoke permits as herein after provided and further, have the power to summon witnesses, take testimony, to make in- vestigations, conduct hearings and do and perform all other acts which may be necessary and proper within the scope of its duties and functions. The Commission shall give to the public full information, from time to time, about its activities and shall publish an annual report analyzing the effectiveness of its regulations and the activities of per- sons registered under this ordinance. III REGISTRATION AND PERMIT REQUIRED; EXCEPTION No person shall solicit contributions within the Municipal City of South Bend, Indiana, for any person or charitable purpose unless the person for whose benefit the solicitation is conducted is registered with the Commission and a permit for such solicitation has been issued by the Commission; provided, however, that the provisions of this section shall not apply: (1) To any solicitation made by and on behalf of a person or charitable purpose if conducted by members or officers there- of voluntarily and without remuneration for such solicitation, among the established and bona fide membership thereof or the normal constituency or supporters thereof, or (II) If the solicitation is in the form of collections or contribu- tions of regular assembly or services of such person or chari- table purpose. 5 IV APPLICATION FOR REGISTRATION AND PERMIT An application for registration and a permit to solicit shall be made to the Commission upon forms prescribed by it. Such application shall be sworn to or affirmed and filed with the Commission not less than sixty (60) days prior to the time at which the permit applied for shall become effective, provided, however, that the Commission may, for good cause shown, allow the filing of an application less than sixty (60) days prior to the effective date of the registration and permit applied for. The application herein required shall contain the following information: 1. The name, address or principal office of the person applying for the permit; 2. If the applicant is not an individual, the names and addresses of the applicant's principal officers and executives and a copy of the resolution, if any, authorizing such solicitation, certified to as a true and correct copy of the original by the officer having charge of the applicant's records; 3. The purpose for which solicitation is to be made, the total amount of funds proposed to be raised thereby, and the use or disposition to be made of any receipts therefrom; 4. A specific statement, supported by facts, and figures, if any, showing the need for the contributions to be solicited; 5. The names and addresses of the person or persons by whom the receipts of such solicitations will be disbursed; 6. The name and address of the person or persons who will be in direct charge of conducting the solicitation, and the names of all fund raisers connected or to be connected with the proposed solicitation if said fund raisers shall receive any paid compensation for their services; 7. An outline of the method or methods to be used in conducting the solicitation; 8. The time when such solicitation will be made, giving the preferred dates and the hour of day for the commencement and termination of such solicitation. 0 9. The estimated cost of the solicitation; 10. The amount of any wages, fees, commissions, expenses, or emoluments to be expended or paid to any person in connection with such solicitations, and the names and addresses of all such persons. The Com- mission may elect not to require such information as to regular staff or charitable organizations maintaining a permanent office in said Municipal City of South Bend; 11. A financial statement for the past preceding fiscal year of any funds collected for charitable purposes by the applicant, said state- ment giving the amount of money so raised, together with the cost of rais- ing it, and final distribution thereof; 12. A full statement of the character and extent of the chari- table work being done or to be done by the applicant, and showing how much thereof is being done or to be done in the Municipal City of South Bend; 13. A statement to the effect that if registration and a permit is granted, it will not be used or represented in any way as an endorsement by the Municipal City of South Bend or by any department or officer thereof; 14. Such other information as may be reasonably required by the Commission in order for it to determine the kind, character, and method of the proposed solicitation, and whether such solicitation is in the interest of, and not inimical to, the safety, convenience, or welfare of the resi- dents of the Municipal City of South Bend; 15. If, while any application is pending, or during the term of any permit granted thereon, there is any substantial change in fact, policy, or method that would materially alter the information given in the appli- cation, the applicant shall notify the Commission in writing thereof within seventy -two (72) hours after such change. Should the applicant fail to so notify the Commission, any permit issued to said applicant prior thereto shall stand suspended until a hearing is had pursuant to Article XVIII hereinafter set forth. 7 V FEES Each person registered for each applicant, at the time of appli- cation for registration and permit shall pay to the Controller of the Municipal City of South Bend a fee fixed by the Commission which shall not be less than one dollar ($1 <00) nor more than five hundred dollars ($500.00). The Commission shall establish a schedule of fees based upon the amount raised by solicitations on behalf of the person during its preceeding fiscal year and the City's total expense of regulating charitable solici- tations during the preceeding calendar year, VI INVESTIGATION The Commission shall examine all applications filed under Section IV hereof and shall make, or cause to be made, such further invest g.�Ltion of the application and the applicant as the Commission shall deem necessary in order for it to perform its duties under this ordinance. Upon request by the Commission, the applicant shall make available for inspection by the Commission, or any person designated in writing by the Commission as its representative for such purpose, all of the applicant's books, records, and papers at any reasonable time before the application is granted, during the time a permit is in effect, or after a permit has expired VII STANDARDS The Commission shall grant the registration and permit provided for in Section IV hereof whenever it finds or reasonably believes: 1. That all of the statements made in the application are true; 2. That the applicant, or if the applicant is not an individual person, that its managing officers and managing agents be of good character and reputation for honesty and integrity; 3. That the local control and supervision of the solicitation will be under local, responsible and reliable persons; 0 4. That the applicant is not engaged in any fraudulent trans- action or enterprise; S. That the solicitation will not be a fraud on the public; 6. That the solicitation is prompted solely by a desire to finance the charitable cause described in the application, and will not be conducted primarily for private profit; 7. That the cost of solicitation and /or promotion shall be reasonable and shall not exceed a reasonable portion of the receipts to be realized from the solicitation. Whenever any Professional Promoters or Professional Solicitors are employed in connection with the solicita- tion a copy of the contract between the applicant and such Professional Promoters or Professional Solicitors must be submitted to the Commission with the application for registration and permit in order that the Com- mission may determine whether said contract is in compliance with the provisions of this ordinance. 8. That the kind, character, and method of the proposed solici- tation,_ u, are such that the solicitation will be in the interests of and not inimical to the safety, convenience, or welfare of the residents of the said Municipal City of South Bend; 9. That the Commission shall file with its secretary for public inspection a written statement of its findings of fact and its decision upon each application. If the application is denied, the Commission shall notify the applicant by certified mail, at the address given in the application, stating the reasons therefor. VIII COST OF SOLICITATIONS - LIMITATIONS The cost of solicitation for a charitable solicitation shall not exceed a reasonable portion of the gross amount realized from such solici- tation after deduction of the cost of promotion. Cost of solicitation in excess of twenty -fire percent (25 %) of the gross amount realized from the solicitation after the deduction of cost of promotion shall establish a prima facie case that the cost of solicitation is unreasonable. 6 IX COST OF PROMOTION - LIMITATIONS The ccst of promotion for a charitable solicitation shall not exceed a reasonable portion of the gross amount realized from all events held and publications, debts and services sold, given away, or used as prizes in connection with the solicitation. Cost of promotion in excess of seventy -five percent (75 %) of the gross amount realized from such events, publications, goods and services shall establish a prima facie case that the cost of promotion is unreasonable. X MISREPRESENTATION 1. No person shall directly or indirectly solicit contributions for any purpose by misrepresentation of his name, occupation, financial condition, social position, residence, or principal place of business, and no person shall make or cause to be made any misstatement, deception, or fraud in connection with any solicitation of any contribution for any pur- pose in the Municipal City of South Bend, or in any application or report filed under this ordinance. 2. No charitable organization or professional fund raiser soliciting contributions shall use a name, symbol, or statement so closely related or similar to that used by another charitable organization or governmental agency that the use thereof would tend to confuse or mislead the public. 3. Nor shall a charitable organization or professional fund raiser, solicit funds by the use of statements or material that would in- dicate that such funds were being raised for an organization or agency from which such organization or agency explicit permission for the raising of such funds has not been received in accordance with other provisions of this ordinance. 10 EMi BOOKS AND RECORDS No person shall solicit any contributions for any charitable pur- pose without maintaining a system of accounting whereby all donations to it and all disbursements by it are entered upon the official books or records of such person's treasurer or other financial officer. XII REPORTS REQUIRED It shall be the duty of all persons registered and issued permits under this ordinance to furnish to the Commission within sixty (60) days after the solicitation has been completed, a report and financial statement showing the amount raised by the solicitation, the amount expended in coll- ecting such funds, including a report of the wages, fees, commissions, and expenses, paid to any person in connection with such solicitation, and the disposition of the balance of the funds collected by the solicitation. In the case of charitable organizations maintaining a permanent office in the Municipal City of South Bend, the wages of regular full -time staff employees may be entered as a total figure. The entire report filed by said person shall be available for public inspection. The permit holder shall make available to the Commission, or to any person designated in writing by the Commission as its representative for such purpose, all books, records, and papers whereby the accuracy of such report may be verified. XIII CHARITABLE SOLICITATIONS REGISTRATION AND PERMIT - FORM Registrations and permits issued under this ordinance shall bear the name and address of the person to whom the permit is issued, the serial number of the permit, the date issued, the dates within which the permit holder may solicit, and a statement that the permit does not constitute an endorsement by the Municipal City of South Bend or by any of its depart- ments, officers, or employees of the purpose or of the persons conducting this solicitation. All permits must be signed by the Chairman of the 11 Commission and by the Mayor of the Municipal City of South Bend. Each solicitor of the charitable organization will be provided with an informa- tion card or similar identification signed by the person having control and supervision of the solicitation. Said card or identification shall carry on its face the name and address of the person to whom the permit was issued, the number of the permit, the dates during which the permit holder may solicit and shall identify by name the individual holder of said card or identification. Any individual soliciting without said card or identification shall be deemed to be in violation of this ordinance and said card or identification shall be provided for said individual solici- tor by and at the expense of the permit holder. Any permit issued by the Commission under this ordinance shall not be transferable or assignable. XIV NOTICE OF INTENT Any person, except churches and their directly connected agencies, desiring to conduct a charitable solicitation or on whose behalf a charitable solicitation is to be conducted shall file, at least sixty (60) days prior to the commencement thereof, with the Commission, a Notice of Intent containing the following information: (1) The proposed use of the net proceeds of the solicitation under the general headings required for reports under paragraph five (5) hereof. (11) The manner in which the solicitation shall be conducted, and an estimate of the cost of solicitation and the cost of promotion, if any and of the net proceeds expected for the charitable purpose. (III) If a professional Promoter or any Professional Solicitor are to be employed a copy of the contract of each. (IV) A certified copy of the resolution or other action authoriz- ing the solicitation. 12 of promotion, if any and of the net proceeds expected for the charitable purpose. Delete- - - - - -- (III) If a professional Promoter or any Professional Solicitor are to be employed a copy of the contract of each. (IV) A certified copy of the resolution or other action authoriz- ing the solicitation. (V) A report of all the receipts of the person during his pre- ceding fiscal year or all of its receipts from solicita- tions during the most recent year in which a charitable solicitation was conducted by or on behalf of such charitable person. Such report shall show the gross amount raised by solicitation, during the period covered, what portion thereof, if any, is attributable to promotional activities, the cost of promotion, the cost of solicitation and the amounts, if any, paid to each Professional Promoter and Professional Solicitor. The report shall also show what portion of the proceeds, if any, was allocated for local use and what portion, if any, was allocated to a national organization. The proportions allocated respectively to local use or to a nat- ional organization shall each be broken down in the report under the follow- ing categories insofar as they are applicable or among such other categories as may be approved by the Commission: 1. Agency administration. 2. Information and public education activities. 3. Social services. 4. Hospital care. 5. Educational institutions. 6. Research, 7. Other civic or philanthropic purposes. 8. Capital improvements. The Commission may, in its discretion, waive the filing of such statements as are duplicated substantially by reports already on file pur- suant to this section or to any other section of this Ordinance. 13 XV REQUIREMENT OF WRITTEN RECEIPT Any person receiving money or anything having a value of one dollar ($1,00) or more from any contributor under a solicitation made pur- suant to a permit granted under this ordinance shall give to the contribu- tor, upon request, a written receipt signed by the solicitor showing plainly the name and permit number of the person under whose permit the solicitation is conducted, the date, and the amount received; provided, however, that this section shall not apply to any contributions collected by means of a closed box or receptacle used in solicitation with the written approval of the Commission, where it is impractical to determine the amount of such contributions, i. X HEARINGS If the Commission denies an application for registration and per- mit it shall notify the applicant of its decision and the grounds therefor by certified mail, return receipt requested, and within five (5) days after the receipt of such notification, the applicant may fire a written request for public hearing on the application, together with exceptions to the grounds upon which the Commission based its denial of the application, Upon the filing of such request, the Commission shall fix a time and place for the hearing, which shall be within fifteen (15) days after the request is filed, and shall notify the applicant thereof, At the hearing, the applicant may present evidence in support of his application and exceptions. Any interested person may be allowed to participate in the hearing to present evidence in opposition to the application and exceptions, Within ten (10) days after the conclusion of the hearing, the Commission shall render a written report either granting or denying the application and shall state grounds upon which the decision is based. A copy of said report shall be served by certified mail, return receipt requested, upon the applicant, Said report shall constitute a public record. 14 XVII REVIEW Any action taken by the Commission shall be final, except that any person or applicant may appeal to the Mayor for a review. The Mayor at his discretion may review, amend, modify, affirm or reverse a Commiss- ion action. The appeal shall be taken within twenty (20) days after the decision of the Commission complained about is mailed to the applicant or charitable person. Any appeal shall be initiated by filing a written not- ice of appeal with the Mayor and a copy with the Commission, setting forth the decision appealed from and the reason why appellant feels the decision is erroneous. The Mayor may adopt rules establishing procedures for hear- ing appeals taken. Any person claiming to be prejudiced by action of the Commission or of the Mayor under this ordinance may appeal to the St. Joseph County Cix::ult or Superior Court to reverse such action, but such appeal shall be limited to the claim that the Commission or Mayor has violated the appellants constitutional rights, has acted in excess of its jurisdiction, or has acted unreasonably, arbitrarily, and beyond the limits of its reason- able discretion. The members of the Commission and the Mayor shall not be liable far damages or for any claim against them as individuals because of action taken by them in performance of their duties under this ordinance. Th-'s :rd nan-e shall be liberally construed to achieve its purpose. XVIII REVOCATION Whenever it shall be shown or whenever the Commission has reason to believe that any person registered under this ordinance has violated any of the provisions thereof, or that any promoter, agent, or solicitor of a permit holder has misrepresented the purpose of the solicitation, the Commission shall immediately suspend the permit and give the permit holder written notice in person or by certified mail, return receipt requested, of the suspension and of a hearing to be held within seven (7) days of such suspension to determine whether or not the permit should be re- is voked. This notice must contain a statement of the facts upon which the Commission has acted in suspending the permit. At the hearing the permit holder, and any other interested persons, shall have the right to present evidence as to the facts upon which the Commission based the suspension of the permit and any other facts which may aid the Commission in determining whether this ordinance has been violated and whether the purpose of the solicitation has been misrepresented. If, after such hearing, the Commission finds that the ordinance has been violated or the purpose of the solicitation has been misrepresented, it shall within two (2) days after the hearing file in its office for public inspection and send to the permit holder by registered mail, or serve him in any manner provided by general law for the service of notices, a written statement of the facts upon which it bases such a finding and shall immediately revoke the permit. If, after the hearing, the Commission finds that this ordinance has not been violated and the purpose of the solicitation has not been misrepresented, it shall, within two (2) days after the hearing give to the permit holder a written statement cancelling the suspension of the permit and stating that no violation or misrepresent- ation was found to have been committed. In all cases where a suspension of the permit occurs, the Chief of Police shall be notified forthwith by the Commission of the suspension or revocation of any permit issued under this ordinance. In like manner, the Commission shall immediately notify the Chief of Police, subsequent to the hearing provided for hereinabove of the decision of the Commission. ,� 1' PENALTIES Any person, as hereinbefore defined, or any agent, servant, employee, or officer thereof, violating any of the provisions of this or- dinance, or who aids or abets in the procuring of a violation of any pro- vision, part or portion of this ordinance, or who files or causes to be filed an application for a permit which contains false or fraudulent 16 statements of fact, shall be deemed guilty of a misdemeanor and upon con- viction thereof shall be fined not less than Fifty Dollars ($SO.00) nor more than Three Hundred Dollars ($300.00) for each offense, and /or undergo imprisonment for not more than six (6) months, or both. Each violation shall be deemed a separate offense, and each act in violation of this ordi- nance shall constitute a separate offense and shall be punishable as such. XX SEPARABILITY If any provision, section, sentence, clause or phrase of this ordinance shall for any reason be adjudged or declared by any court of competent jurisdiction to be unconstitutional or invalid, such judgment or decision shall not affect the validity of the remaining portions of this ordinance. XXI EMERGENCY CLAUSE Since an emergency exists requiring passage of this ordinance for the protection of the residents of the Municipal City of South Bend, said ordinance shall be in full force and effect from and after its passage by the Councii, approval by the Mayor, and compliance with all statutory requirements. i i Member of the Common Council let & 2nd READING 5 -8 -67 COMMITTEE OF THE WHOLE 5 -22 -67 - continued 6 -26 -67 PURLG HEARING 5 -22 -67 - 6 -26 -67 3rd READING 6 -26 -67 NOT APPROVED 17 REFERRED Ordinance Committee 5 -22 -67 PASSED 6 -26 -67