Demystifying Charity Registration

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My presentation on Demystifying Charity Registration, Making your Solicitations Legal. This talk was delivered on January 19, 2011 to AFP Western Massachusetts.

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Demystifying Charity Registration

  1. 1. Demystifying Charity Registration Making Your Solicitations Legal AFP Western Massachusetts Delivered by Tony Martignetti, Esq. Martignetti Planned Giving Advisors, LLC January 19, 2011
  2. 2. Where We’re Headed <ul><li>• What is Charity Registration </li></ul><ul><li>• Why comply with the laws </li></ul><ul><li>• Where do you register </li></ul><ul><li>• What is a solicitation </li></ul><ul><li>• How do you register </li></ul><ul><li>• Registration in MA & CT </li></ul><ul><li>• Plan to get you going </li></ul><ul><li>• Continuing Ed. </li></ul>
  3. 3. What Is Charity Registration <ul><li>Requirements throughout the states and D.C. that charities register with authorities—or be exempt—everywhere they solicit. </li></ul>
  4. 4. Why Comply With The Laws <ul><ul><li>• IRS Form 990 </li></ul></ul><ul><li> • Criminal & civil penalties, including </li></ul><ul><li>- MA: Notice; then civil penalty $50/day to $10,000 against officers & board members --> individually liable; reimbursement not allowed (effective 1/1/11) </li></ul><ul><li>- CT: criminal; 1 yr/$5000 </li></ul><ul><li>- NY: civil fraud </li></ul><ul><li>- NJ: civil fine, $10,000 </li></ul><ul><li>- PA: misdemeanor; 5 yrs/$10,000 </li></ul><ul><li>- MD: civil fine, $5000 </li></ul><ul><li>- DC: civil fines, penalties, fees </li></ul><ul><li>- FL: 3rd degree felony; 5 yrs/$5000 </li></ul>
  5. 5. Why Comply With The Laws <ul><li>• Board member liability; fiduciary duty </li></ul><ul><li>• Gift challenge from donor or heir </li></ul><ul><li>- Disgruntled donor hires enterprising attorney </li></ul><ul><li>• Right thing to do; operate within the laws </li></ul>
  6. 6. Where We Are <ul><li>√ What is Charity Registration </li></ul><ul><li>√ Why comply with the laws </li></ul><ul><li>• Where do you register </li></ul><ul><li>• What is a solicitation </li></ul><ul><li>• How do you register </li></ul><ul><li>• Registration in MA & CT </li></ul><ul><li>• Plan to get you going </li></ul><ul><li>• Continuing Ed. </li></ul>
  7. 7. Where Do You Register <ul><li>Everywhere you solicit, except where you’re exempt </li></ul>
  8. 8. What Is A Solicitation <ul><li>• Varies state to state </li></ul><ul><li>• A few neat categories </li></ul>
  9. 9. What Is A Solicitation <ul><li>• Mere existence of website accepting donations </li></ul><ul><li>- “Donate Now” button </li></ul><ul><li>- Passive solicitation </li></ul><ul><li>- NY, NJ, FL, GA, IL, AZ, DC, VA, others </li></ul>
  10. 10. What Is A Solicitation <ul><li>• Website accepting donations + induce donors to it </li></ul><ul><li>- email, US mail, phone, ads, meetings, events </li></ul><ul><li>- Active solicitation </li></ul><ul><li>- MA, CT, CA, MD, TX (not email), UT, WA </li></ul>
  11. 11. What Is A Solicitation <ul><li>• Ask for charitable support by </li></ul><ul><li>- Email </li></ul><ul><li>- US Mail </li></ul><ul><li>- Phone </li></ul><ul><li>- Meetings </li></ul><ul><li>- Events </li></ul><ul><li>- Advertisements </li></ul><ul><li>• Active solicitation </li></ul><ul><li>• These are a solicitation in nearly every state </li></ul>
  12. 12. Even If You Are Soliciting <ul><li>You might be exempt </li></ul><ul><li>Exemptions vary drastically across states </li></ul><ul><li>- Mission, with qualifications </li></ul><ul><li>- Gross revenue </li></ul><ul><li>- Gross fundraising revenue </li></ul><ul><li>- Revenue from within the state (kindest) </li></ul>
  13. 13. Charleston Principles <ul><li>Uniform definition of solicitation </li></ul><ul><li>National Association of State Charities Officials </li></ul><ul><li>(NASCO) </li></ul><ul><li>Not adopted by all states </li></ul><ul><li>Uncertain where adopted </li></ul>
  14. 14. Where We Are <ul><li>√ What is Charity Registration </li></ul><ul><li>√ Why comply with the laws </li></ul><ul><li>√ Where do you register </li></ul><ul><li>√ What is a solicitation </li></ul><ul><li>• How do you register </li></ul><ul><li>• Registration in MA & CT </li></ul><ul><li>• Plan to get you going </li></ul><ul><li>• Continuing Ed. </li></ul>
  15. 15. How Do You Register-Forms <ul><li>• Vary drastically across the states </li></ul><ul><li>• Unified Registration Statement (URS) </li></ul><ul><li>• A few neat categories </li></ul><ul><li>- URS only (+ state idiosyncrasies) </li></ul><ul><li>- URS + state forms </li></ul><ul><li>- Non URS </li></ul><ul><li>-- “corporation doing business” </li></ul><ul><li>- State forms only </li></ul>
  16. 16. How Do You Register-Docs <ul><li>• Typical documents </li></ul><ul><li>- By laws & articles of incorporation </li></ul><ul><li>- Tax exempt letter </li></ul><ul><li>- Board list </li></ul><ul><li>- Financial report </li></ul><ul><li>- IRS Form 990 </li></ul>
  17. 17. How Do You Register-Fees <ul><li>A few neat categories </li></ul><ul><ul><li>- Flat (CT) </li></ul></ul><ul><ul><li>- Tiered by gross revenue (MA) or contributions </li></ul></ul><ul><ul><li>- Tiered by in-state revenue (kindest) </li></ul></ul><ul><li>• HI most expensive: $750 for largest </li></ul><ul><li>• 32  $100 </li></ul><ul><li>• 5 free: AZ, AR, KY, MI, NM </li></ul>
  18. 18. How Do You Register in MA <ul><ul><li>• Attorney General & Secretary of the Commonwealth Corporations Division </li></ul></ul><ul><ul><li>• Few exemptions </li></ul></ul><ul><ul><li>- AG: Red Cross or veterans </li></ul></ul><ul><ul><li>- Corp. Div.: religious or raise < $5000 </li></ul></ul>
  19. 19. How Do You Register in MA <ul><li>• Attorney General </li></ul><ul><ul><li>- Form PC </li></ul></ul>
  20. 20. How Do You Register in MA <ul><li>• With Form PC </li></ul><ul><li>- Tax-exempt letter </li></ul><ul><li>- By laws </li></ul><ul><li>- Certificate or Articles of Incorporation </li></ul><ul><li>- Form 990 </li></ul><ul><li>- Financial statement if gross revenue > $200,000 </li></ul><ul><li>- Fee $35 (< $100,000) to $250 (> $500,000) </li></ul><ul><li>• Annual reporting on Form PC </li></ul>
  21. 21. How Do You Register in MA <ul><li>• Corporations Division: Annual Report + fee </li></ul>
  22. 22. How Do You Register in CT <ul><li>• Attorney General </li></ul><ul><li>• Main exemptions </li></ul><ul><li>- religious </li></ul><ul><li>- education, with qualifications </li></ul><ul><li>- hospital, ditto </li></ul><ul><li>- < $50,000 in contributions, ditto </li></ul><ul><li>• Apply for exemption </li></ul>
  23. 23. How Do You Register in CT <ul><li>• Register with state form or URS </li></ul>• $50 fee • Annual filing of financial report and Form 990 + $50
  24. 24. Where We Are <ul><li>√ What is Charity Registration </li></ul><ul><li>√ Why comply with the laws </li></ul><ul><li>√ Where do you register </li></ul><ul><li>√ What is a solicitation </li></ul><ul><li>√ How do you register </li></ul><ul><li>√ Registration in MA & CT </li></ul><ul><li>• Plan for how to get going </li></ul><ul><li>• Resources </li></ul>
  25. 25. Plan For How To Get Going-1 <ul><li>• Charity starts at home </li></ul><ul><li>- enforcement also starts at home </li></ul><ul><li>-- NJ, FL, GA, AZ, WA </li></ul><ul><li>- register there </li></ul>
  26. 26. Plan For How To Get Going-2 <ul><li>• Very high fundraising revenue states, if any </li></ul><ul><li>- dollar amount </li></ul><ul><li>- percentage of fundraising revenue </li></ul>
  27. 27. Plan For How To Get Going-3 Web Based Fundraising <ul><li>• Do you need every state? </li></ul><ul><li>- if not, take safe harbor & restrict giving </li></ul><ul><li>• Where solicit most </li></ul><ul><li>- descending state populations </li></ul><ul><li>-- www.census.gov </li></ul><ul><li>- register where passive solicitation triggers registration </li></ul><ul><li>- work down the list </li></ul>
  28. 28. Plan For How To Get Going-3 Non Web Based Fundraising <ul><li>• Where solicit most </li></ul><ul><li>- query database for constituent frequency by state </li></ul><ul><li>- descending order of frequency </li></ul><ul><li>- work down the list </li></ul>
  29. 29. Plan For How To Get Going-4 <ul><li>• Prioritize </li></ul><ul><li>• Two to three per month </li></ul><ul><li>• May be exempt in some </li></ul><ul><li>- need to apply for exemption? </li></ul>
  30. 30. Continuing Education <ul><li>• My blog http://www.mpgadv.com or scan : </li></ul><ul><li>-all the forms will be on my blog </li></ul><ul><li>• Send me a LinkedIn message </li></ul><ul><li>• National Association of State </li></ul><ul><li>Charity Officials, www.nasconet.org </li></ul><ul><li>• URS, http://www.multistatefiling.org </li></ul><ul><li>• My book: Charity Registration: State-by-State Guidelines for Compliance , http://www.StateCharityRegistration.com </li></ul>

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