Opinion ID: 1743494
Heading Depth: 1
Heading Rank: 5

Heading: Exemptions from the Act

Text: The defendants contend that there is no reasonable basis on which to discriminate against the professional solicitor and that, therefore, the additional requirements imposed on the professional solicitor, from which employees and volunteers of charitable organizations are exempted, violate their constitutional rights. Section 48-3-501(5) (Supp. 1989) defines professional solicitors as: any person who, for a financial or other consideration, solicits contributions for, or on behalf of, a charitable organization, whether such solicitation is performed personally or through his agents, servants or employees or through agents, servants or employees specially employed by or for a charitable organization, who are engaged in the solicitation of contributions under the direction of such person, or a person who plans, conducts, manages, carries on or advises a charitable organization in connection with the solicitation of contributions. A salaried officer or employee of a charitable organization maintaining a permanent establishment within the state shall not be deemed to be a professional solicitor. However, any salaried officer or employee of a charitable organization that engages in the solicitation of contributions for compensation in any manner for more than one (1) charitable organization, shall be deemed a professional solicitor. No attorney, investment counselor, or banker who advises any person to make a contribution to a charitable organization shall be deemed, as a result of such advice, to be a professional solicitor. A majority of the states specifically regulate professional solicitors and exempt employees and volunteers of charitable organizations by definition. See, e.g., Ala. Code § 13A-9-70 (1994); Ariz.Rev.Stat. Ann § 44-6551 (1994); Ark. Code Ann. § 17-41-101 (Michie 1995); Col.Rev.Stat. Ann. § 6-16-103 (West 1992); Conn. Gen. Stat. Ann. § 21a-190a (West 1994); Ga. Code Ann. § 43-17-2 (Harrison 1994); Haw. Rev. Stat. § 467B-1 (Supp. 1992); Ill. Ann. Stat. § 225-460/0.01 (Smith-Hurd 1993); Ind. Code Ann. § 23-7-8-1 (Burns 1994); Iowa Code Ann. § 13C-1 (West 1995); Kan. Stat. Ann. § 17-1760 (1995); Ky.Rev.Stat. Ann § 367.650 (Baldwin Supp. 1995); Me. Rev. Stat. Ann. tit. 9 § 5003(10) (West 1980); Mass. Gen. Laws Ann. ch. 68 § 18 (West 1988); Mich. Comp. Laws Ann. § 400.272 (1988); Minn. Stat. Ann § 309.50 Subd. 6 (West 1996); Miss. Code Ann. § 79-11-501(d) (1996); Mo. Ann. Stat. § 407.453 (Vernon 1990); N.H. Rev. Stat. Ann. § 7:21 (1988); N.J. Stat. Ann. § 45:17A-20 (West 1995); N.Y. Exec. Law § 171-a(4) (McKinney 1993); N.C. Gen. Stat. § 131F-3(8) (1994); N.D. Cent. Code § 50-22-01(5) (Supp. 1995); Ohio Rev. Code Ann. § 1716.01(I) (Anderson 1992); Okla. Stat. Ann. tit. 18 § 552.2 (West 1986); Or. Rev. Stat. Ann. § 128.801(7) (1990); 10 Pa. Cons. Stat. Ann. § 162.3 (Supp. 1996); R.I. Gen. Laws § 5-53-1(10) (1995); S.C. Code Ann. § 33-55-20(9) (Law Co-op 1990); Utah Code Ann. § 76-10-601(2) (1995); 9 Vt. Stat. Ann. § 2471(8) (1993); Va. Code Ann. § 57-48 (Michie Supp. 1996); Wash. Rev. Code Ann. § 19.09.020(8) (West Supp. 1995-96); W. Va. Code § 29-19-2(7) (Supp. 1996); Wis. Stat. Ann. § 440.41(7) (West Supp. 1995). Charitable corporations are required by the Act to register with the Secretary of State and submit reports of their solicitation activity. The most significant justification for imposing additional requirements on professional solicitors under the Act is that charitable organizations are regulated under other statutes while professional solicitors are not. See Tenn. Code Ann. § 48-3-504 (Supp. 1989). See also, Tennessee Nonprofit Corporation Act, Tenn. Code Ann. § 48-51-701 (1995); § 48-53-104 (1995); § 48-64-301 (1995); Quo warranto actions, Tenn. Code Ann. § 29-35-102 (1980); Administration of Charitable Trusts, Tenn. Code Ann. §§ 35-9-101 to 35-9-106 (1991); Federal tax reporting requirements, 26 U.S.C. § 6033 (Supp. 1996). In addition, professional solicitors may not be directly supervised by the charities on whose behalf they solicit, they have no fiduciary obligation to the charitable organizations, and usually have great discretion in conducting a solicitation campaign and handling the contributions paid to the solicitor for the benefit of the charitable organization. In this case, the agreement between the defendants and the Fraternal Order of Police No. 35 authorized the defendants to train and supervise the solicitors, conduct the solicitations and control the funds received. This arrangement was in sharp contrast to the understanding expressed by prospective donors in the affidavits filed in this case. The record establishes that professional solicitors and the employees and volunteers of charitable organizations are not similarly situated and that the provisions of the Act exempting these entities from the definition of a professional solicitor are narrowly tailored to serve a compelling State interest, the protection of the public from solicitation fraud. The classifications made in Sections 48-3-501(5) do not violate the freedom of speech or equal protection provisions of the state or federal constitutions. [5]