State Charitable & Corporate Compliance for Nonprofits


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State nonprofit registration and compliance requirements can be challenging and confusing. The complexity is compounded by a lack of uniformity among the states in how registration and compliance are achieved.

Keeping abreast of these requirements, meeting state expectations, and ensuring that a nonprofit’s greatest assets, its reputation and integrity, are spared from embarrassing press in print or on the evening news are of paramount importance.

Also, with state budgets in disarray, new governance requirements and increased scrutiny at the state and federal levels, the risks of noncompliance have never been higher. The costs associated with required registration and compliance in all states, both in terms of time and money, is likely far less than the expenditures required if administrative or enforcement proceedings are initiated in just one state.

This program will give you a broad overview of state charitable and corporate compliance requirements for nonprofits and provide valuable reference information that will assist you in meeting these requirements.

Published in: Business, Technology
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State Charitable & Corporate Compliance for Nonprofits

  1. 1. State Charitable & Corporate Compliance for Nonprofits Ron Barrett October 26, 2011A Service Of: Sponsored by:
  2. 2. INTEGRATED PLANNING Advising nonprofits in: • Strategy • Planning (617) 969-1881 • Organizational Development info@synthesispartnership.comA Service Of: Sponsored by:
  3. 3. Affordable collaborative data management in the cloud.A Service Of: Sponsored by:
  4. 4. Today’s Speaker Ron Barrett VP of Nonprofit Services National Corporate ResearchAssisting with chat questions: Hosting:April Hunt, Nonprofit Webinars Sam Frank, Synthesis PartnershipA Service Of: Sponsored by:
  5. 5. Presenter’s Contact Information Ron Barrett VP of Nonprofit Services National Corporate Research. Ltd. 1100 G Street, NW, Suite 420 Washington, DC 20005 6
  6. 6.  Charitable Solicitation Registration, Renewal & Compliance  Nonprofit Corporate 7
  7. 7.  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 8
  8. 8. 9
  9. 9.  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? 10
  10. 10.  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 11
  11. 11.  Who Must Register: Anyone “soliciting” charitable donations  When to Register: Before solicitation  Where is Registration Required: 39 states & DC Caution: Beware of Exemptions, Exceptions & 12
  12. 12. Charitable Solicitation Registration, Renewal & Compliance Registration required; accepts URS Registration required; does not accept URS Registration required by Texas LETSA, PSA & VSA Registration NOT required 13
  13. 13.  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 14
  14. 14. Not so “Unified” after all…  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) 15
  15. 15.  AR: Irrevocable Consent for  NH: Conflict-of-Interest Policy Service of Process  NC: Fundraising Disclosure  CA: Annual Registration Renewal  ND: Registered Agent Consent Fee Report (RRF-1) & Certificate of Authority  DC: Basic Business License  TN: Summary of Financial  GA: Supplement to URS Activities  ME: Maine Application Cover  UT: Supplement to URS  MI: Supplement to URS (if filing  WA: URS Addendum 990-EZ)  WV: URS Supplement  MN: Supplement to URS  WI: Supplement to Financial  MS: Form FS Annual Financial Report on Form Other than 308  MO: Solicitation 16
  16. 16. Exemptions: They exist (industry-based, monetary threshold, named persons) but there’s a 17
  17. 17. Charitable Solicitation Registration, Renewal & Compliance Hospitals must register Hospitals exempt with application or review Hospitals exempt with conditions Hospitals exempt from registration 18
  18. 18. Charitable Solicitation Registration, Renewal & Compliance Registration required for educational institutions Exempts educational institutions with application or notice Exempts educational institutions with conditions Exempts educational institutions 19
  19. 19.  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 20
  20. 20. 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 & 21
  21. 21.  Online Registration:  Required in CO, HI, NM  Available in CA, MI, OH, OK, SC, TN, UT, WI  Growing 22
  22. 22.  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 23
  23. 23.  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) 24
  24. 24.  DC: “Anything but” Basic  Basic Business License  Itemized Financial Application Statement  Certificate of Occupancy  Fundraiser Contracts  DCRA Clean Hands  Purpose Statement Certification  Good Standing Certificate  Tennessee: Summary of  OTR Registration Financial Activities  Qualification in DC  Massachusetts: 14-page  Certified resolution annual renewal (Form PC)  IRS Determination Letter  Charter and 25
  25. 25.  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 & 26
  26. 26.  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? 27
  27. 27. 28
  28. 28.  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? 29
  29. 29.  Corporate vs. Charitable Compliance  Annual Report Requirements  Update address, names of contact at company, officers & directors  Registered Agent  Annual Report Filing 30
  30. 30.  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 31
  31. 31.  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 32
  32. 32. Helpful Resources Multi-State Filer Project (URS and Filing Guidelines) National Association of State Charity Officials National Corporate Research  Forms Library & Filing Guidelines  Corporate Transactions & Compliance Blog 33
  33. 33. Find listings for our current season of webinars and register at: NonprofitWebinars.comA Service Of: Sponsored by: