Assembly Standing Committee on Privacy and Consumer Protection

Good morning and welcome to the Assembly's first outcome review hearing. Are we first? Well, that's such an honor. Thank you, Assembly Member Irwin. And it's really an honor to be chairing this outcome review. And I want to start by thanking Speaker Rivas for spearheading this effort.

It is the first of its kind oversight initiative that aims to empower Assembly Members to assess and improve outcomes of laws we've enacted. And as Members who are really, I think, were you the first of the 12 year class or close second?

Second.

Second. So we are starting to see the payoff of the 12 year term limits because it allows us both to enact these laws, but also to see the outcome of them. So really this is part of Speaker Rivas's commitment to oversight and accountability and I think an important part of what we as legislators need to be doing.

So I want to thank everybody who's here, all of our panelists, for taking time out of their day to come and testify, as well as of course, to our Committee staff, to the Rules Committee, the sergeants that are here early, and other capital support staff for making this hearing possible.

Finally, of course, the outcomes review hearing wouldn't be possible without the tireless investment of Assembly Member Irwin, who has really made nonprofit oversight a part of her legacy here in the Legislature, and of course, her staff, who they always empower everything we do.

I know this is really, we will look at this, but it is a small piece of what you've done to make sure that nonprofits succeed here in California, Assembly Member Irwin.

So the goal here is to promote government accountability and transparency and to ensure that the laws that are passed in this building are tailored and refined to benefit Californians, and then they actually do benefit Californians.

Recommendations made at this review should guide us as lawmakers to improve the implementation of enacted laws, hopefully leading to stronger, more comprehensive legislation. Today we're focused on AB 488, which was authored by Assembly Member Irwin in 2021 and is one of 14 laws chosen to review in this first year of the outcomes review process.

The Attorney General adopted regulations on AB 488 in March of 2024, making this review timed perfectly to assess how the rollout of the AG's regulations impacted charitable organizations and the fundraising platforms that solicit on their behalf.

I really, I'm not going to say much more because I'm going to turn it over to Assembly Member Irwin to talk about AB 488 herself. She will begin the hearing and then we will hear from panelists to discuss the struggles and strengths of AB 488 implementation.

We will hear from Bernard Gerard, who is here in person from the Attorney General's Office, Geoff Green, the Chief Executive Officer of the Association of California Nonprofits, and then Nick Aldridge of PayPal Giving Fund and Emily Barson of GoFundMe.

If any members want to join us, we will have member discussion after we hear from both Assembly Member Irwin and all of our panelists. So I will turn it over to you, Assembly Member Irwin.

Thank you very much, Chair and good morning everybody. I would first, just as Chair Bauer-Kahan did, thank the speaker for envisioning this outcomes review process and selecting one of my bills to help pilot this new form of oversight in the Assembly.

I would also like to thank the Chair and the Privacy Committee staff for putting together this hearing and for the incredible background paper. With this being my final year in the Assembly, I had the honor to enact a significant amount of legislation. Currently my count is at 113 laws.

It is no easy job as a legislator trying to keep track of what you did last session. It is even harder to do it for laws that have been passed over the course of 11 years.

Something I do keep those 113 laws front of mind for my staff is that we have a chart hanging on my office wall. It has every one of those 113 laws organized by session.

Each one is color coded green for fully implemented, yellow if we are monitoring its progress, and red for if its implementation has stalled or failed. That chart has helped my staff and I follow up each session, making effort to turn any yellows or reds into a sea of green.

That brings us back to why we are here today. AB 488 from 2021 is on that chart and it is currently yellow, meaning we are still monitoring its progress despite it being passed by this Committee and the entire Legislature nearly five years ago.

Chair Bauer-Kahan has asked me to present to this Committee an overview of AB 488 to help all of us get up to speed and hopefully let our panelists dive right into their experiences implementing the law. AB 488 was the result of multiple attempts over a number of years by myself and a large group of stakeholders to modernize California's charitable solicitation laws.

While the Attorney General has long held that the responsibility to oversee charitable solicitation at the time, California law mostly contemplated charities using the postal service or telephone calls as their main source of fundraising.

While the prevalence of fundraising online was not as dominant as it is back in 2018 as it is today, every stakeholder understood the growing trend toward doing everything online and that donating to charities wouldn't avoid that fate. That made the question of updating the law not do we need to, but how should we? Each group of stakeholders had a different goal in mind.

For the Attorney General and the Department of Justice, it was to ensure a level playing field for those seeking to fundraise for charities and that charities and donors were as protected online as they would be donating anywhere else.

For charities, it was regaining control of their own fundraising and reputation, something online donation websites had begun to put in the hands of others. And finally, for those online platforms, it was the rules of the road with outdated laws that did not address the capabilities or risk that the Internet presented.

The compliance landscape was both too casual and too constricting at the same time. What ended up being sent to the Governor and signed into law looked fairly similar to the way traditional charitable solicitation was regulated. The law created a new type of entity, a charitable fundraising platform that needed to register and report to the DOJ.

Similar to professional fundraisers, fundraising councils and commercial conventors. That was not the correct spelling there. This registration, pronunciation, this registration and reporting would provide the DOJ with the tools to provide accountability.

It also created a new type of designation for traditional charity, a platform charity, when their activity focused on partnering with a charitable fundraising platform to receive tax deductible donations. The law outlined the conduct expected of the charitable fundraising platforms and platform charities setting out guardrails to protect recipients, charities, and donors.

This included a provision defining good standing for charities, preventing charitable fundraising platforms from soliciting to, for recipient charities who were not authorized to solicit donation. Something new was also introduced by AB 488, sanctioning online solicitation for a charity without their consent.

The ability and interests of charitable fundraising platforms to fundraise, not just for charities who signed up but for all registered charities, had been a point of sensitivity among stakeholders.

To address this concern, protections were negotiated into law that allowed charitable fundraising platforms to do limited forms of solicitation without getting prior consent from the charity, while safeguarding the rights of charities to collect donations from platforms without removing their ability to assert control over who fundraised on their behalf.

As with many multi year efforts with large stakeholder groups, some issues remain difficult to resolve in the Legislature. These mostly centered on specific timelines for various activities, while each stakeholder's unique characteristics inhibited broad consensus. These issues eventually ended up being placed into a section set to be explored and decided by the Attorney General through regulation.

I think that it's a fair oversight, a fair overview of the statute, and I think we are far more interested in hearing from our, we're all far more interested in hearing from our panelists today.

I'm looking forward to hearing from each of you about the work you have done to implement AB 488, the successes and the challenges you have faced serving California's charitable fundraising needs in this new landscape, and your suggestion on further refining our laws to better serve Californians. Thank you.

Thank you, Assembly Member Irwin. I think some may be wondering why this bill is in this Committee, but I think it's critically important that we mention the consumer protection aspect of this, which is as people donate on these platforms, they have an intent, and we want to make sure that their intent is fulfilled through the giving of these platforms.

And so it's an honor to oversee this hearing as a result of that. So we will start with Brian Gerard Armstrong, who's here in person from the office of the Attorney General. Come on up. And I want to welcome Assembly Member Ward for joining us. Thank you. And I see we have a presentation.

Good morning. My name is Brian Gerard Armstrong. I'm a supervising Deputy Attorney General for the state of California. I'm thankful to speak before you with this opportunity to address how the public charities are protected through charitable fundraising platform laws.

So on the screen we have a slide to go along with my presentation. AB488 and Implementing Regulations AB488 and its implementing regulations can be found in Government Code Sections 12599.9, and 10, and in Sections 314 to 323 of Title 11 of the California Code of Regulations.

After rulemaking was completed, the 10 implementing regulations became effective on March 262024 June 122024 and January 12025 depending on the regulation. For instance, platforms were not required to register until June 12, subject to a grace period, and other requirements were delayed to give platforms more time to comply with those regulations.

Rulemaking for the regulations included a public hearing, three public comment periods, 380 individual public comments from stakeholders including law firms and prominent platforms and platform charities, and a very rigorous review from the Office of Administrative Law. There was and remains a tremendous public and charity protection need for AB488. Online solicitations are pervasive and ubiquitous.

They've supplanted traditional methods of charitable solicitation. Yet the Charitable Supervision act did not specifically address solicitations by Internet companies.

Internet companies engaged in charitable fundraising at that time did not register and report under the Charitable Supervision act in spite of holding charitable assets or soliciting charitable donations, and furthermore, many donors incorrectly believe their donations were made directly to charities of their choice.

Their donations would be given to their selected charities, their donations would be sent to charities promptly or within a reasonable time, and so forth. One recent example involves flipcause, a platform that charities nationwide use to solicit donations, and Flipcause stopped remitting donations to about 3,200 charities that are now owed about $29 million.

Many Internet companies also did not distinguish lawfully between, or did not distinguish between lawfully operating charities and charities not legally allowed to solicit, and the appearance of the charity on the platform led donors to incorrectly believe they were lawfully operating or had otherwise been vetted.

Many charities also did not give prior permission for Internet companies to solicit donations for them, which compromise their ability to protect their brand and identity and control their fundraising.

PayPal engaged in this activity in 2017, and this continues to be a problem, as GoFundMe recently created unauthorized donation pages for more than 1.4 million charities, prompting an outcry from charities nationwide. Furthermore, many charities and the public lacked adequate information on the charitable donations solicited by these Internet companies.

So with all that in mind, it was necessary to implement regulations to address those needs, including Section 315 which requires registration and reporting by charitable fundraising platforms and platform charities section 316 on good standing, section 317, which requires, along with AB 488, conspicuous disclosures that prevent a likelihood of deception, confusion or misunderstanding.

Also section 318 on charity consent and Section 320 on the sending of donations to charities. Now, this section requires donations to be sent within certain time periods depending on the context.

Donors and charities should not have to wait several months, a year or more for donations to be dispersed and when there are charity ineligibility or disbursement issues such as good standing, also money laundering, terrorist activity, hate speech or non compliance with a platform specific policies.

This section provides for consulting with a donor to specify another charity to be sent donations for certain solicitations. This allows platforms to ascertain and honor donor intent and allows the donation to still be used for a charitable purpose and for the public's benefit.

Section 321 involves providing accounting to charities and section 322 involves providing information to donors and platform users after donations are sent.

I want to talk a little bit more About Good Standing AB 488 and Regulation Section 316 require charitable fundraising platforms or platform charities to not solicit or disperse donations to charities not in good standing with the Registry of Charities and Fundraisers, the IRS, or the Franchise Tax Board.

Good standing means a charity's tax exempt status has not been revoked by the IRS or the Franchise Tax Board or is not prohibited from, from soliciting or operating by the Attorney General for failure to comply with the Charitable Supervision act and per regulation section 312, which predates AB488, a charity is prohibited from soliciting or operating when a charity's registration status with the Registry is delinquent, suspended or revoked, or is subject to a cease and desist order.

Now, a charity that has been out of compliance with their reporting requirements for years was now incentivized to resolve these issues because of AB AB 488 to be able to collect donations through platforms.

Although this requirement encouraged charities to cure their bad standing status with the Registry, especially delinquent charities, this has dramatically increased the demand on the Registry to immediately help resolving delinquencies and reinstate good standing.

Giving Limited fixed Resources and the Inefficiencies with Chair with receiving charity filings via paper in the mail, the Registry has been unable to process submissions from delinquent charities as quickly as we would like. Thus, we continue to review and adjust procedures to speed up processing and improve service outcomes.

This includes modernizing the Registry's existing business system to an online filing service that permits online filing and payment of fees and for Registry staff to communicate with charities and fundraisers electronically versus, say, sending paper letters and notices.

With this new system, the Registry seeks to shift from paper filings and paper checks to an online system that will improve efficiencies and customer service and expedite processing.

New charities as of October 2025 are able to register online through an early release version of this online filing service, and the Registry is communicating with those newly registered charities via email. Other charities, including delinquent charities, will be able to use the online filing service later this year, anticipated to be in the summer of 2026.

Further, since July 2025, the registry has stopped switching a charity's registration status from good standing to delinquent until the online filing service becomes available for all charities in the summer of 2026. The registry has also implemented a procedure for curing delinquent registrations for eligible charities.

This involves temporarily changing a majority of delinquent charities to good standing and making compliance easier if they complied by January 152026. Many charities have taken advantage of this procedure and the Registry is almost done processing those submissions.

Once completed, the Registry would revert the charities to delinquent that did not cure in response to the notices informing them of this procedure. Want to talk a little bit more about registration and reporting compliance?

The Registry established a Fundraising platforms program after AB488 and its regulations became effective and has been focused on facilitating compliance with registration and reporting. As of February 102026 the number of registrations from charitable fundraising platforms for 2024 is 174, while in 2025 it's 177 and and in 202671 with 47 registrations pending renewal.

The number of annual reports that have been accepted for 2024 is 63. The number of registrants that have filed annual reports but have been reviewed and sent incomplete notices is 60, and the number of 2024 annual reports that have not been filed by registrants is 78.

We're hoping that this number will drop given notices sent assessing late fees and warnings of delinquent reg. 2025 annual reports are due July 152026.

As for enforcement, we are concerned that the number of registered charitable fundraising platforms is low, so we are reviewing the market and determining which unregistered platforms to send notices to register in addition to several already sent, thus promoting compliance with AB488 and its regulations.

For instance, Flipcause is an unregistered platform from Oakland that charities nationwide use to solicit donations. Yet flipcause stopped soliciting or stopped remitting solicited donations and filed for bankruptcy. Before filing for bankruptcy, the Attorney General issued flipcause a cease and desist order.

We then took a leadership role in the bankruptcy proceeding to ensure a bankruptcy trustee now controls flip. FLIP causes underlying assets. As for other enforcement, we are very disturbed that GoFundMe recently created unauthorized donation pages for charities nationwide.

We are also unable to discuss any non public investigations, but rest assured we are committed to continuing to take action where appropriate to safeguard online donations and protect charities and donors from fraud, deception and other wrongdoing. Thank you so much for your time Assembly Members.

Thank you. And now we will bring up Jeff Green and Mr. Armstrong. Do you mind hanging out Questions? Thank you so much.

Good morning Chair Bauer-Kahan and Members Irwin and Ward. Geoff Green, I'm the CEO of the California Association of Nonprofits and I too have a presentation. Appreciate the opportunity to speak about this. I will start by just giving a few items of how we do our work and if the clicker will advance the slide.

Now it's going for it. Let's try that again. All right, so California association of nonprofits. We're 40 years old. We serve as a. Think of us as a trade association or chamber of commerce for the nonprofit sector across California. And that sector is vast. And we're going to talk about that briefly here.

But we really do three things. One is the policy and advocacy piece, which you are familiar with. Another is education. So we do several dozen of these now, mostly webinars.

Also some real old school, in person educational opportunities to help the sector understand not only how regulations and changing regulations affect them, but some of the basics of the business model.

So all the things that cut across the entire sector, whether we're talking hr, insurance, you name it, and then research, and research on the sector can be very difficult to get good current data.

We not only try to find when partners are doing good work and share that with our sector, but we also do some of our original data and I'll share some high level things that we're finding right now. So our advocacy, you see, is really centered around advocating for public investment in the sector.

You know, the nonprofit sector does what the private for profit sector won't and the public sector often can't. And we do so in combination with both, in partnership with both.

So our role really is to extend the reach of government, be a good partner, and to frankly solve the problems that are externalized by other sectors in our, in our world and in our communities. So we want a strong relationship with government. And this, this conversation here is obviously part of that. We believe in strong civic engagement.

We look after the nonprofit workforce. And so this is all part of what we're trying to do here in these conversations I mentioned here. You can view this at a later time if you'd like, but these are a range of things that we will help educate the sector on.

So we want to make sure folks are doing the work correctly and doing the best work they can, and that they have the most current information when they do. And then finally on the research and data, what I want to share with you is just a couple of high level pieces from our current causes count.

This is a report we first did back in 2014 and we are doing the third iteration now. But this gives you a sense of the importance of the sector in the state. So when we talk about any kind of regulation and how it affects the sector, I think it's always something we want to come back to.

We're Talking about nearly 110,000 organizations that's a 20% plus growth over 10 years. We're talking about hundreds of billions of dollars in assets. So we're approaching 800 billion in the nonprofit sector in just California alone in total assets. And the annual revenue is north of $430 billion. So it's not just people trying to.

Trying to solve problems in community and good volunteer work. It's a massive part of our economy and our workforce as well. So when we look at that, that means there's 1.4 million Californians working currently for a nonprofit, over 9% of our total workforce, and actually the third largest employer in the state of California.

So all of this is to say, even small impediments to this work happening can be very challenging to the state as a whole. The good news is nonprofits are widely trusted. Even in this era of attacks directly on the sector, coming mostly from the Federal Government.

The vast majority of majority of Californians believe that nonprofits are not only doing good work, but that they are improving their own lives and communities.

So in the context of that and the emergence of the platforms, our role, we took a very strong advocate role in 488, and this was really based on some principles that we had developed going back to 20172018.

This is, of course, the time of the emergence of online fundraising as a primary revenue source for the nonprofit sector. And really our principles, as you can see here, were just to protect the integrity of the relationship between donors and the nonprofits that they support. We wanted to see transparency with how these charitable platforms operated.

We wanted to see those dollars move in appropriate time frames onto the nonprofits for whom they were intended, and particularly maintain ownership of their own brand and control their own fundraising, seeing that as part of their speech.

So there's a whole range of principles here, but all of these were the sort of backstory for us, wrapped into 488 when it was first introduced. So ultimately, obviously, you know, the outcome. This is just a snapshot of our letter saying, please sign this, Governor. And sure enough, it was signed.

So when we look at what's happening today and ask the question of are we better off because of AB488, answer from us is that it's been a mixed bag.

And obviously you've heard from, from Mr. Armstrong here some of the reasons that it's been a challenge, but I want to overview just a few of the things we found.

So back in December into January about a ago, we actually did some surveying work amongst our membership, amongst the nonprofits in California to ask whether these initial Priorities that we believed would be should be achieved by 48 were the good news is largely when it comes to transparency, moving dollars appropriately quickly, that looked to be on the right side of the ledger.

And things were improving as far as people's trust that if they were using an online platform, those dollars would make it to where they were intended in a timely fashion. The biggest challenges, however, as have been referenced already, were first really three areas. One is the issues with the registry in California.

The second was that the position that platforms were put into as primary communicators back to nonprofits about their own status. And the ultimate end result of this was the disruption of fundraising efforts. And again, just to be clear, we're talking about 110,000, roughly nonprofits, 501c3 public charities in California.

During our hearing of the the two select committees on the nonprofit sector a year ago August, the DOJ staff shared that roughly 30,000 of those 110,000 were not in good standing, according to the registry. So at that level, our perspective is simply that's not a behavioral problem, that's an administrative problem, and that's a structural, systemic problem.

And it has proven to be so. So we have been working with DOJ on how do we fix this. Ms. Armstrong referenced a couple of very recent adaptations, which include this ability for some of the folks that are out of compliance to have sort of a temporary period to get back in compliance. That has been helpful.

So I think that's a good start. But the other challenge here of platforms as primary communicators, because most nonprofits that were in this not in good standing status were not aware of that, and there was not regular communication to all of them. And there's lots of reasons. Some of it is simply technology being old, very old school.

It was, in fact, the first they heard of it might have been from their fundraising platform and say, by the way, we can no longer give you a single cent. We've just checked, you're on the registry not in good standing. And then there was no quick way to fix that.

And Most of these 30,000, again, small administrative, minor errors. It could have been that leadership transferred lots of reasons that were not, in fact, about fraud, bad behavior, or otherwise problems with the charities themselves. So the platforms were put into the position of being the ones to give the bad news.

And that's not, of course, exactly what we want to see happening. And then the fundraising disruption, this can be truly fatal for small nonprofits. So larger entities that have capital that can float debt for a period of time or they might have reserves.

Or if they're frozen out of their own fundraising for weeks, even months, they can survive that many small nonprofits, and most nonprofits are small. In fact, in California, the vast majority of nonprofits have zero staff, and we're still the third largest employer, but most are very small.

And so when you're frozen out of fundraising efforts and the majority of fundraising is now online, that's a big problem. So in the old days, it wouldn't have been as big a problem. But. But with the onset of online fundraising becoming the major strategy, that is a huge problem.

So there are ways in which we think 488 has worked, and they were both just mentioned, and I'll just reiterate them. So when GoFundMe put out unauthorized fundraising pages for 1.4 million charities and there was a quick backlash, it was in fact 488.

That was the tool that we could say, this is very clearly in statute, not okay, they did walk that back, apologize to the sector for that, that lapse in judgment. And so we believe that having 488 on the books as it is is very helpful for something like that.

We also just were hearing about a much bigger problem, and this is really corporate crime. This is fraud. This is what Flip cause is. I will say one of the beauties of this story being broken. It was broken by a small nonprofit journalism program in Oakland, California. So I want to give them credit, Oakland Voices. But.

So this is now a much bigger issue. But again, having 488 very clearly on the book saying this is way outside of the bounds of legal operation for a platform is a valuable thing. So from our perspective, the things that we need from here are really several. The first is the modernization effort that Mr. Armstrong referred to.

So we're delighted and optimistic that this is underway. We first heard about this a little over two years ago, and we know it is coming soon. We are told it'll be 2026.

And so if that comes to pass, the response time issue that is the major root of a lot of these problems will be solved largely, we think the ease of making basic administrative corrections online. Again, this eliminates the paper, the additional staffing, the time, the communications, and then improve payment systems.

These are all things that most Western states have had for years, by the way. So we think this is important that California get to this point. These were the delays that were shared by the DOJ.

So we're talking 45 to 60 days for initial registration response, 45 days for email response, and renewals up to 90 to resolve a delinquency. And there are outliers far beyond this.

And we know this because we get the call from the charity that's had the challenge, and oftentimes the only way to solve that is to refer them to their elected Members offices to make a phone call or two. And so that's not a good system. Nobody wants that system.

And what we need is something that is much easier to navigate. So the good news is that this model is out there. We connected with our peers across the country, and again, most of these states are able to do it in 10 days or less. And that is because they have modern electronic systems.

And they're doing that with smaller staff, smaller numbers of nonprofits, to be sure, but as a proportional ratio, not anywhere of an outlier from what California would be doing.

The other issue is really statutory, and this is the Riley v. National Federation of the Blind decision back in 1988 at the Supreme Court established that there has to be a very high bar for a state to impede the communications of a nonprofit, and that includes their solicitation. So this has essentially become a First Amendment issue.

Most states in the country changed their laws after this decision to make sure that they were not inadvertently violating the free speech rights of the nonprofit sector and the charities that they served. And California did not.

And so part of the challenge we have is that there is nothing in California law that makes it that requires that to shrink that window down to something like the 10 days that we feel are more approved and certainly work most places in the country. So this is sort of an as yet untackled challenge for us.

So in closing, I'll just say I appreciate all of the attention on this issue. I think we're on our way to some of the solutions with the DOJ with the new system. But, you know, there's certainly some things that could be improved to help the nonprofit sector remain healthy. And 488 is a good step forward. So thank you.

Thank you. And now we will turn it to our two online witnesses, Mr. Aldridge, CEO, PayPal Giving Fund, and Ms. Barson, Senior Director of Policy Engagement at GoFundMe. We'll start with Mr. Aldridge. I see you. Perfect.

Thank you very much. I have a couple of slides to show just introducing PayPal Giving Fund and how we operate. And then I'll talk a little bit about the impact of PayPal, impact on PayPal Giving Fund of AB488, and particularly on the charities that we're supporting.

So thank you very much to the Committee for Including us in the review. It's an honour to participate and particular thanks to Assemblymember Owen and to the Office of the Attorney General for all of the work on AB488 to introduce a little bit the role we play in this.

It's probably enough to say that we are ourselves an IRS registered public charity, and our vision is to reimagine everyday giving to help charities. So we do this by enabling some of the leading online platforms to create opportunities for people to support charities they care about while they use their favorite websites and apps.

And if possible, we could just have a look at perhaps the slide after the first where I show a little bit about how our process works. So this is the vision and mission that I've covered. And if we go to the next slide, it sets out the process through which we encourage and enable giving.

So we, as PayPal Giving Fund, receive donations through various PayPal properties that could be the PayPal app, the PayPal website, PayPal Checkout Flows the donation of rewards that you might earn from using PayPal.

And we also work with other Internet companies, including GoFundMe, which we're very pleased to see here today, also with Meta, ebay, Twitch and various others. Donations to PayPal Giving Fund, as you've seen in this graph, have grown very significantly over time, from around $30 million a year in 2015 to just over a billion dollars last year.

And in total, we've raised around $4 billion. And we distribute those funds to nearly 200,000 charities each year in the US and worldwide. We don't charge CH charities or donors any fees beyond the payment processing fees for accepting the donation.

And our focus is making sure that our programs are as trustworthy, efficient and scalable as possible, delivering impact for the sector. So I could show you briefly the final slide where we talk a little bit about AB488 and its impact.

So I think one very key point is we do think AB 488 was successful in placing online fundraising platforms and platform charities on a much clearer compliance footing in California.

And the regulatory change and regime solved really quite a major problem by establishing clarity that people could support charities online without those charities prior to consent, subject to meeting requirements and discharging their responsibilities as platforms, from disclosures through to distribution. And it has provided as well, I think, a more tailored type of regulation than the alternatives.

For instance, requiring platforms to meet the requirements on professional fundraisers with every individual charity that we support would have been impossible in practice. So one important headline, and thanks are due to everyone involved really for establishing this clarity and helping to get online fundraising platforms on a clear footing.

There have certainly been some challenges and disadvantages for us in terms of the burden on our operations and some of the unintended consequences, I think, of the of the regulations.

We invested around five person years of time, mostly engineering, in operationalizing the regulatory requirements of AB488 through updates to our websites, interfaces, user agreements, policies, communications, really a very large amount of work.

And the reporting that we do each year on every distribution and every reassign to every charity, which we then share with each partner and with the Attorney General's office directly in the form of spreadsheets and questionnaires, is also a significant burden on us as a platform.

The questionnaire we send out to each of our partners is 43 questions long and the spreadsheets we generate include tens of thousands, sometimes hundreds of thousands of lines.

So certainly there is some effort involved for us in complying and that's taken resources away perhaps from other things we might have been doing to drive up the amount of giving. But we do understand the importance of compliance, of course, on the good standing issue that's been raised.

That is a focus for the Committee, as I understand it. Yes, charities, when they become delinquent, have been delisted from online giving platforms, including those that we power.

And that has caused us to interrupt fundraising, including in some quite high profile cases for major charities after their paperwork has gone astray, and in some cases to have to reassign funds against the wishes of those charities and their donors.

So that's certainly a challenge for us and we spend a lot of time as a platform charity working with nonprofits to identify, communicate and help resolve good standing questions, discrepancies, challenges.

And we've built systems to read in data from the Attorney General as well as the Franchise Tax Board as well as the IRS to try to determine the good standing status of every charity in accordance with the law.

But we still have charities querying why they are inactive, being very surprised by that, raising discrepancies in the data compared to the databases that we download, often they have more up to date letters that haven't yet made it through into the databases and often they just complain that they are trying to get the situation resolved and can we hold funds for them while they do that.

And that has been very challenging because it would take us out of compliance with the regulations if we hold the funds for too long. We have run some surveys of charities, many of them do report a lot of frustration with the process ranges from not understanding the instructions to not being able to fill in the forms correctly.

Payments going missing and the time it takes to get these issues resolved has been the main complaint for them. I would highlight particularly the issue of the speed of reassigns.

We under the regulations we're required to consult the charities, sorry, consult the charity's donors within 30 days of finding that they are out of good standing and ask those donors to recommend a different charity. And that risks undermining the donor intent. And it leads to complaints from charities that we are not supporting them.

And we do explain the obligations and I think they they understand the position we're in, but it is a source of great frustration to them. At the moment we have 1600 charities that are currently inactive so removed from our directory due to good standing issues in California alone.

So that's about 1 in 1100 of the charities in our directory. Of the systems we've put in place to meet the requirements of AB 488 regulations, they have been somewhat little used I would say. So we have to provide a means for charities to receive data about our fundraising from us without accepting our user agreement.

And we've had about one in a thousand enrolled charities asked to remove consent and receive that data. So about 250 charities in total and we've had about 1 in 150 charities opt out of a partner program.

So there is some use of these features, but it's relatively low compared to the effort that we've put into building the features and enabling them for charities just to close.

I'd say in terms of the wider impact on the sector, one thing we would highlight is the operational burden, while reasonable for many donations and programs, is particularly difficult for micro donations and online CCV style programs where a small donation might be made by the buyer or by the seller of an item and the requirements for fairly extensive disclosures and particularly to enable donors of very small donations.

If you're donating a dollar or even a few cents at checkout, you need to be provided with a way to share your details with the benefiting charity under AB488. That has been very challenging given the limited appetite that merchants online retailers will have for building these options for their customers to pass on their details.

So as a result of those requirements, we have seen microdonation programs close or never launch. And that's a shame for us as really encouraging new forms of giving like this is what we're in business for.

So I would close by saying in terms of improving AB 488 implementation and improving the statute and improving regulations, I think the aim of reducing the consequences for temporarily delinquent charities is absolutely the central one.

Allowing them to keep benefiting from programs while they resolve issues of good standing and making it easier and quicker for them to do so will make a big difference in terms of the number of issues and complaints that we are dealing with from affected charities.

I'd also say allowing a bit longer for distribution and particularly for reassignment where there are good standing issues would provide a further safety net for charities that are working to resolve those issues while better reflecting the intent of donors.

I would say that reducing the requirements for micro donations, small donations of a dollar or a few dollars, could also make a big difference to fundraising innovation in California and beyond.

And finally, I really welcome Brian's comments around making the process easier and more technology enabled for charities to complete their filings and remedy issues that will make a huge difference. So I was delighted to hear that and I'll close on that positive note. Thanks again for including us in this review.

Thank you. And then we will turn it over to Ms. Barson from GoFundMe. Great. Perfect.

Thank you. Thank you. Chair and Members of the Committee I appreciate the opportunity to testify today on AB488 and the regulations of charitable fundraising platforms. My name is Emily Barson and I serve as Senior Director of Policy and engagement at GoFundMe. Our mission is to help people help each other.

We facilitate donations to thousands of charitable causes and organizations, and we work to leverage innovation and technology to support the nonprofit sector and increase charitable participation. First, I want to begin from a place of shared intention. We support the core goals of AB 488, enhancing transparency and oversight in online charitable fundraising.

We believe trust is foundational to philanthropy, to the nonprofit sector, and to platforms like ours that exist to enable generosity at scale. At the same time, implementation of this law has resulted in unintended consequences for nonprofit organizations, hindering donations and placing significant barriers to secure and efficient online fundraising.

These organizations are facing increased administrative burden, uncertain timelines, and disruption to fundraising at critical moments. We appreciate Assemblymember Irwin's leadership in this effort, making California the first state to recognize the unique role of fundraising platforms in bringing fundraising laws into the digital age.

We have expressed our perspective and concerns throughout the implementation process, including previous communications with Assemblymember Irwin's office and with doj, advocating alongside Cal nonprofits to ensure the law isn't unintentionally harming the sector's ability to raise funds, and we've facilitated conversations between senior leaders at industry leading nonprofits to directly share their experiences and challenges with doj.

We hope this ongoing engagement demonstrates how seriously we take our responsibility to serve nonprofit organizations and our efforts to ensure the nonprofit sector can fundraise safely without interruption.

The key question is how to regulate online fundraising in a way that protects donors while ensuring that charities can reliably fundraise and platforms can responsibly innovate in support of the communities they serve.

And those communities are not abstract they are families relying on community food banks, patients needing medical care, disaster survivors waiting for relief, and local organizations providing shelter counseling, emergency support, and more.

When fundraising is delayed or interrupted due to administrative technicalities, especially at a time when other funding sources are at risk and organizations are trying to do more with less, the impact and harm on the people they serve is real. In California and beyond, charitable fundraising platforms are critical infrastructure.

We connect donors and nonprofits across the country, bringing new participants into the philanthropic system and directing critical dollars to organizations serving communities in need. We invest deeply in trust and safety, transparency, fraud prevention and regulatory compliance.

And we operate within a complex legal environment that includes charitable solicitation laws, consumer protection rules, tax laws, payment regulations, privacy requirements, and more. In many states, charitable solicitation laws predate the Internet and do not contemplate digital intermediaries.

AB 488 was a significant step forward because it created a new definition specific to charitable fundraising platforms that leadership matters, but statutory intent must also be paired with operational alignment. When definitions or requirements do not reflect how platforms function in practice, it can create unnecessary burdens with consequences that ripple across the sector.

GoFundMe offers a safe and trusted platform where people can fundraise on behalf of charities they support, or where nonprofit organizations themselves can raise money on their own behalf. Under our operating model, GoFundMe does not receive or hold the donated funds. Funds are processed and delivered directly to nonprofit organizations by third party payment processors.

We also operate GoFundMe Pro, a white label software that thousands of the nation's top nonprofits use to power their own fundraising efforts. As a technology provider, GoFundMe Pro and many similarly situated platforms also work with third party processors and do not actually control the flow of funds.

Rather, funds donated to nonprofit organizations using our platform are delivered via third party payment processors, so we do not have the technical ability to redirect funds. Ensuring that statutory expectations reflect platform architecture and is critical for workable compliance. As part of a broad coalition of charitable fundraising platforms, platform charities, recipient organizations, and other stakeholders.

We submitted proposed statutory refinements to address the unintended consequences of AB488 while preserving the law's oversight goals. On the next slide, you can see some of the unintended consequences that we have experienced in our operations since the law went into effect.

As you've heard from other participants in the panel today, one of the most significant challenges has involved definition and practical application of the good standing requirements. The collateral consequences of the current framework are significant.

When a nonprofit falls out of good standing in California, they are placed on the May not operate list, and platforms often cannot technically isolate California donors from donors in other states.

As a result, an organization may lose the ability to receive online donations from residents of any state, which means a California administrative designation can effectively interrupt national fundraising efforts.

Additionally, many nonprofits do not even know they are on the May not Operate list until hearing that news from US or similar platforms and have to go through a labyrinthine process to regain their good standing, status, and ability to fundraise online.

We have proposed revising the application of good standing so that a charity only is deemed unable to operate if it is subject to a final cease and desist order or final suspension action following appropriate due process procedures.

That's intended to prevent charitable organizations from losing good standing and their ability to fundraise online for minor filing deficiencies that could be resolved through standard administrative processes. In addition, nonprofits frequently experience prolonged response times from the DOJ Charities Division, as Jeff spoke to when they are attempting to resolve registration or compliance issues.

These timelines can stretch for weeks or even months, far longer than in other states, and during that period charities are left in limbo, often unable to fundraise, uncertain about their status, and without clear guidance about how to come back into compliance.

Especially for organizations operating on tight margins with small and very stretched teams, a delay of several weeks can mean missing payroll, scaling back programs, or shutting down operations altogether. A regulatory system that allows fundraising to be paused for extended periods due to minor administrative issues raises serious due process concerns on behalf of nonprofits.

We had recommended a requirement that DOJ review all filings for the registry of charities and fundraisers within 10 business days, consistent with what happens in similar states, and subsequently allow the delinquent organization a grace period to fix the error before any change to their standing or their ability to operate rate.

We also proposed refinements to the annual reporting requirements, specifically reducing reporting burdens reflected in Form PL.4 by providing guidance that allows the Attorney General to collect aggregated information coupled with the authority to request additional information when warranted.

We believe this approach would maintain transparency and accountability while recognizing the scale at which platforms operate and the sensitive nature of certain data. We further proposed clarifying how redirection events are handled when a selected recipient charity becomes ineligible due to a good good standing issue.

As noted previously, for platforms that do not hold or control funds, redirection is not always operationally possible, so clarifying expectations in statute would reduce confusion and better align legal obligations with platform functionality. State charitable laws vary widely, creating a complex compliance landscape. California's legislative approaches often serve as a model for other states.

The experiences and refinements made here will not only affect nonprofits and platforms in California, they will also likely influence how other states approach regulation of online fundraising. We believe California can lead again by ensuring that AB488 remains both effective and equitable for the charitable sector and the donors who support it.

Online fundraising is not peripheral to nonprofit operations it is mission critical. Infrastructure platforms like GoFundMe exist to enable generosity, expand access to giving, and strengthen the connection between donors and the causes they care about. We welcome thoughtful regulation, we are committed to transparency and we invest heavily in compliance and trust trust.

We strive to support the nonprofit community and be good partners. But regulation must reflect operational reality. It must protect donors without unintentionally hindering donations or placing disproportionate burdens on the infrastructure that makes secure and efficient online giving possible.

When fundraising is delayed or cut off due to administrative technicalities or prolonged review periods, the impact is immediate and real. Meals go unserved, clinics postpone care, disaster relief flows, and in too many cases, the most vulnerable communities and organizations are the most impacted.

The key question of this hearing is are charities and donors better off than they were before AB488? We would say that given the aggressive implementation approach, prolonged timelines, and the lack of clear communication, that the unintended consequences have caused more challenges and impeded fundraising efforts at a critical moment.

However, we believe that with targeted refinements in the areas we've outlined, especially focused on the good standing definitions and application, that AB488 can achieve its goals while ensuring that charities can fundraise fundraise safely and consistently to best serve their communities. Thank you for your leadership and for the opportunity to testify today.