California Commercial Fundraiser Bond for Charitable Purposes
Three Parties of the Commercial Fundraiser Bond
The California Office of the Attorney General requires the commercial fundraisers to file a bond to conduct business. This bond consists of three parties: the obligee (the state), the principal (commercial fundraisers), and the surety company. If a commercial fundraiser conducts unlawful acts within their business, anyone harmed by it may file a claim against the bond. If the state approves the claim, the surety company will pay the claim up to the full bond amount. The commercial fundraiser must then repay the surety company for the paid claim.
What does the commercial fundraiser bond do?
Any California business that solicits fundraising for charity or hires employees to fund-raise must file a bond. Section 21599 of the Governmental Code of the State of California outlines the requirements to lawfully collect funds for charity. The California Commercial Fundraiser Bond for Charitable Purposes protects the public and the government from any harm caused by the commercial fundraiser’s noncompliance with the Code.
Bond Amount, Cost, and Validity
The bond amount is the maximum amount of coverage the harmed party can file a claim for. The California Attorney General sets the required amount for the California Commercial Fundraiser Bond for Charitable Purposes at $25,000.
The bond premium, or cost, generally runs 1-3% bond amount. The premium covers the cost of issuing the bond itself and keeping the bond active. The state may issue additional costs to file the bond.
If paid annually, the bond remains in force until cancelled. If the principle cancels the bond, they must notify the state before the cancellation date.