state charitable & corporate compliance for nonprofits

Sponsored by:A Service

Of:

State Charitable & Corporate

Compliance for Nonprofits

Ron BarrettOctober 26, 2011


Of:

Advising nonprofits in:

• Strategy

• Planning

• Organizational Development

www.synthesispartnership.com

(617) 969-1881

[email protected]

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Today’s Speaker

Ron BarrettVP of Nonprofit Services

National Corporate Research

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6

Presenter’s Contact Information

Ron Barrett

VP of Nonprofit Services

National Corporate Research. Ltd.

1100 G Street, NW, Suite 420

Washington, DC 20005

[email protected]

www.nationalcorp.com

linkedin.com/pub/ronald-barrett/a/680/b00

mailto:[email protected]

http://www.nationalcorp.com/

http://www.linkedin.com/pub/ronald-barrett/a/680/b00



7

Charitable Solicitation Registration,

Renewal & Compliance

Nonprofit Corporate Compliance


http://www.nationalcorp.com/ncr/

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Nonprofit vs. Tax Exempt, 501c3, Charitable

Organization:

Nonprofit status is a matter of state law, which governs the

organization and creation of the entity

Tax exemption is mostly a matter of federal law

All tax-exempt organizations are nonprofits

Not all nonprofits are tax-exempt

Not all nonprofits are charitable organizations

Not all tax-exempt organizations are charitable organizations



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How is “charitable solicitation” defined?

Why is registration required?

When should registration occur?

Who must register?

Where is registration required?

What are the consequences of not

registering?



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Charitable Solicitation Statutes & Administrative Rules

Model Charitable Solicitations Act, 1986

Multi-State Filer Project: NAAG/NASCO’s URS

Charleston Principles

IRS (New Form 990)

Protection of Charitable Assets Act



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Who Must Register: Anyone “soliciting” charitable donations

When to Register: Before solicitation

Where is Registration Required: 39 states & DC

Caution: Beware of Exemptions, Exceptions & Exclusions



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Registration required; accepts URS Registration required; does not accept URS

Registration required by Texas LETSA, PSA & VSA Registration NOT required

Charitable Solicitation Registration, Renewal & Compliance

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Supporting Documents: Good Standing

Certificates, Articles & Bylaws,

Qualification, Financial Reports,

Fundraising Contracts, Determination

Letter and Other Documentation

Prerequisites:

Formation/Qualification/Registered Agent

Forms: State-Specific vs. Unified Registration

Statement



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Initial Registration: Accepted in 34 states and DC; Required in DC, KY, LA & MS

State-by-State Guidelines: Registration & Compliance

State-Specific Addendums Required:(17 states require supplements or state-specific attachments)

Not so “Unified” after all…



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AR: Irrevocable Consent for

Service of Process

CA: Annual Registration Renewal

Fee Report (RRF-1)

DC: Basic Business License

GA: Supplement to URS

ME: Maine Application Cover

MI: Supplement to URS (if filing

990-EZ)

MN: Supplement to URS

MS: Form FS Annual Financial

MO: Solicitation materials

NH: Conflict-of-Interest Policy

NC: Fundraising Disclosure

ND: Registered Agent Consent

& Certificate of Authority

TN: Summary of Financial

Activities

UT: Supplement to URS

WA: URS Addendum

WV: URS Supplement

WI: Supplement to Financial

Report on Form Other than 308



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Exemptions: They exist (industry-based,

monetary threshold, named persons) but

there’s a catch.



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Hospitals must register

Hospitals exempt with conditions

Hospitals exempt with application or review

Hospitals exempt from registration

19


Registration required for educational institutions Exempts educational institutions with application

Exempts educational institutionsExempts educational institutions with conditionsor notice

20

All states and DC exempt religious

organizations (some states limit

to those that do not file IRS

Form 990).

Many states require an

exemption filing or letter.



21

Fees

Free: AZ, AR, KY, MI & NM

Low Cost: (mostly <$50 and up to $100)

AL, AK, CO, CT, GA, IL, KS, LA, ME,

MN, MS, MO, NH, NY, ND, OK, RI,

SC, UT, WA, WV & WI

High Cost: (some vary based on

receipts/contributions, but often over $200): CA, DC,

FL, HI, MD, MA, NJ, NC, OH, OR, PA, TN & VA

Potentially Expensive: ($750 to $2,000) HI, OR &

MA



22

Online Registration:

Required in CO, HI, NM

Available in CA, MI, OH, OK, SC, TN, UT, WI

Growing slowly



23

Charleston Principles

“…receive contributions on a repeated, ongoing or substantial

basis”

What constitutes online solicitation:

Active vs. passive solicitation

Interactive vs. non-interactive website

Donate Now, Social Media, Email Marketing



24

Nevada (City of Las Vegas – Application for

Charitable Solicitations Permit)

Florida (Pinellas County Opinion and Appeal)

Texas (LETSA, PSSA & VSA)

DC (BBL-EZ)

Rhode Island (CD ROM)

Missouri (501c3s Exempt from Compliance)



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DC: “Anything but” Basic

Basic Business License

Application

Certificate of Occupancy

DCRA Clean Hands

Certification

Good Standing Certificate

OTR Registration

Qualification in DC

Certified resolution

IRS Determination Letter

Charter and Bylaws

Itemized Financial

Statement

Fundraiser Contracts

Purpose Statement

Tennessee: Summary of

Financial Activities

Massachusetts: 14-page

annual renewal (Form PC)



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Renewal/Compliance: Annual Registration or Renewal

Annual Report &/or Audit

Use of URS more limited (25 states & DC)

URS Required in DC, LA & MS for renewal

Amendments: Updates and amendments are required (theory vs. practice)

Due Dates & Fees

Extensions: Federal & State; Not available in all states

Status: Charity and fundraiser status searches, certificates & documents



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Failure of fundraisers to register impacts charities

Consequences of failing to register and

non-compliance

Civil and criminal prosecution (Entity and/or

Officers & Directors)

Late fees, civil fines, attorney’s fees

Forced return of charitable donations

Publicly announced cease & desist orders

Loss of ability to raise funds in state

Taxation of all charitable donations received

How do states become aware of noncompliance?



28www.nationalcorp.com


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How is “nonprofit corporate compliance”

defined?

Why is compliance required?

When should compliance occur?

Who must comply?

Where is compliance required?

What are the consequences of

noncompliance?



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Corporate vs. Charitable Compliance

Annual Report Requirements

Update address, names of

contact at company, officers

& directors

Registered Agent

Annual Report Filing Fee



31

Types of Reports and Where They are Filed

Initial and/or Annual (most states)

Biennial (AK, DC, IA, NE & VT)

Periodic (NH, OH, PA & TX)

Special (MD, MO, NV & TN)

Voluntary (MS)

Not Required (AL*, NY, NC, OK & SC*)

* Only required in AL and SC if IRS 990-T is filed

Paper vs. Online Filings



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Consequences of Non-Compliance

Late fees, interest and penalties

Loss of good standing and ability to

conduct business in a state

Suspension, revocation, and administrative

dissolution

Loss of right to use name

Loss of access to courts



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Helpful Resources

Multi-State Filer Project (URS and Filing Guidelines)

http://www.multistatefiling.org

National Association of State Charity Officials

http://www.nasconet.org

National Corporate Research

Forms Library & Filing Guidelines

http://www.nationalcorp.com/ncr/service/show/43

Corporate Transactions & Compliance Blog

http://nationalcorp.wordpress.com/

http://www.multistatefiling.org/

http://www.nasconet.org/

http://www.nationalcorp.com/ncr/service/show/43

http://nationalcorp.wordpress.com/


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