Relating to measures to prevent and reduce fraudulent charitable solicitations and theft during declared disasters, including establishing a designation program for disaster relief nonprofit organizations and financial institutions; creating a criminal offense; increasing a criminal penalty.

Contracts

• Third-Party Fundraising Agreements: You must amend contracts with marketing agencies to include strict indemnification clauses regarding Texas Penal Code §32.61. If a third-party marketer misrepresents your organization, you face the 300% mandatory penalty.
• Disaster Service Agreements: For-profit contractors (debris removal, roofing, remediation) must review service contracts. Clauses regarding "contingency" payments must be drafted to ensure they cannot be construed as "volunteer" services if insurance claims are denied.

Hiring/Training

• Sales Script Audits: Field sales teams must be retrained immediately. Scripts must explicitly state the commercial nature of the transaction. Using ambiguous language like "we are here to help" or "disaster relief team" without clarifying for-profit status is now a felony risk.
• Volunteer vs. Employee Distinction: Ensure clear separation between paid staff and volunteers. Claiming "volunteer" status to secure a sale or donation when the individual is paid is a specific criminal offense.

Reporting & Record-Keeping

• Fund Segregation: Accounting systems must track disaster-specific donations separately. If funds are solicited for a specific disaster (e.g., "Hurricane Relief"), they cannot be commingled with general operating funds. You must be able to produce an audit trail proving specific dollars went to the specific relief effort.
• Designation Documentation: Once the SOS program is active, designated entities must maintain physical and digital proof of their status to display to potential donors.

Fees & Costs

• Civil Liability: The law mandates a penalty of 300% of collected funds plus attorney's fees for violations. This is a mandatory award; judges have no discretion to lower it.
• Insurance Review: Consult your broker regarding Directors & Officers (D&O) and General Liability coverage. Many policies exclude defense costs for "criminal acts" or "intentional fraud." Since civil liability is tied to the criminal code definition, your coverage may be voided.