Multi-state Charity Compliance Webinar – November 28th 2:00 pm

Simple Charity Registration is an affordable form fill software designed to reduce the amount of time and resources it takes your organization to fulfill your state charity compliance requirements.

How can SimpleCharityRegistration.com help you accomplish your mission?

4 Simple Steps:

  1. Identifying up front which states your organization will need to register in and in which states you may be exempt from registration requirements
  2. Collecting all information necessary to file up-to-date state specific forms (registration, renewal, exemption, or extension), with instructions and resources all in one place
  3. Sending email reminders of renewal and annual financial due dates, saving you from missed deadlines and penalties
  4. Storing your data from one year to the next, available to you at any time to add a new state or renew a previous one, keeping you compliant

Laptop

4 Simple Steps to Compliance Video

Simple Charity Registration is designed to allow you to do your registration in parts as you have the information available, making now the perfect time to get started on your registrations and renewals while waiting for your financials to be complete.

Simple Charity Registration looks forward to helping you spend more of your valuable resources on your mission while staying compliant.

Join Us for a free, 30-minute webinar on Tuesday, November 28th at 2:00 pm EST.

Register Now

 

Here are some other resources that will be helpful throughout the registration process: GuideStar’s blog on State Registration Requirements for Fundraising, our blogs on what to prepare for registration and how Simple Charity Registration can help.

Please take a minute to visit our website www.SimpleCharityRegistration.com and create a free account or contact us to learn more at 800.780.6027 or email us at support@simplecharityregistration.com with any questions.

Thank you
Your Simple Charity Registration Support Team

What is Religious Exemption?

There is an old joke about an IRS auditor who calls a clergyman to confirm a large donation from a parishioner and asks, “Did Mr. Thompson donate $10,000?” The clergyman thinks a moment and replies with a smile, “He certainly will!”

The interesting thing is that while that donation is tax-deductible for Mr. Thompson, like other nonprofit organizations, the church doesn’t have to pay taxes on it, but unlike other charities, it has even less responsibility for reporting it.

So, what is religious exemption? For charities this is a big question because exemption can mean tax exemption, exemption from financial reporting, and exemption from state charitable solicitation registration in many cases.

Let’s talk about tax exemption and exemption from financial reporting to break it all up. Later we will get into religious exemption from charity registration.

Why is there a special classification for religion?

Churches are protected from government interference by the First Amendment to the Constitution. Therefore, the degree to which an organization is associated with the direct practice of religion determines their level of accountability (reporting) to the IRS and subsequently to the states.

The IRS categorizes religious charities accordingly: churches, their integrated auxiliaries, religious organizations, and other. Each type as defined by the IRS determines what level of reporting they need to do. In general, churches and their integrated auxiliaries (per the IRS) are treated differently from “religious organizations” as follows:

  1. “Church” (used as an overarching term to indicate any similar place of worship, such as a synagogue or mosque) – The IRS gives 14 attributes of a church, primarily among which is being a legally recognized organization and having a congregation and an ordained clergy (see the IRS Tax Guide for Religious Organizations Glossary);
  2. “Integrated auxiliary” is a 501(c)(3) nonprofit and public charity that is associated with a church or denomination and is internally funded, though missionary groups and youth groups do not usually need to meet this last criteria. Churches and Integrated Auxiliaries (including the definition of a missionary group) are further defined in the Code of Federal Regulations, 26 CFR Section 1.6033-2(g) & 2(h);
  3. “Religious organizations” — according to the IRS, these can include nondenominational ministries, interdenominational and ecumenical (encompassing multiple Christian faiths) organizations, and groups whose purpose is for the study or advancement of religion; and
  4. Other — If the activity of the organization is primarily secular in function when performed by other groups, the charity may not fit in the religious exemption. 7.26.2.2.1 (03-30-1999)

The biggest difference is that because of the need for the separation between church and state, churches and their integrated auxiliaries don’t have to file a Form 990, while religious organizations do. The other end of that separation is that religious organizations can do some, not substantial, issue based lobbying while churches cannot. Page 10 of the IRS Webinar on Churches and Religious Organizations: Do’s and Don’ts has a chart to help you see where you might fit by what is required of you.

It is important to know where your organization falls on this spectrum to know what is required of you at the federal level. Next, we will delve into how it affects state compliance.

This information is not intended as legal advice or instruction.

State Charity Registration Exemptions

You have started your nonprofit and you have applied to the IRS for a federal exemption, but wait, that does not mean you are exempt from filing state taxes, paying local sales taxes or registering your charity in each state.  Approximately 40 states require you to file a state charity registration application, several require you to apply for a corporate license and some you will need state tax exemptions.

These application processes are completely different than Federal tax exemption.  The state charity registration is your organization notifying the state that you will be soliciting its residents for donations.  The application that you provide to them is there way of assuring transparency to their citizens.   Looking for an exemption from filing a state charity registration application? Well, good luck!!  Those laws have more loop holes than an amusement park.

One hundred percent of all states offer some type of exemption but qualifying for that exemption and keeping it is a different story. Each state law has its own definitions and requirements for those exemptions. Some states only require an initial letter notifying them that your organization believes it is exempt while others require you to file an application for approval to the state charity office and a few require annual notifications.  In those states the fees are reduced for the exemption not the required paperwork.

Here are some common state exemptions:

Revenue <$25,000 (can vary from $5,000 to $50,000)

Religious Organizations or their affiliated groups

Educational Institutions or their supporting groups

Membership Organizations – Fraternal, Social, alumni, or professional

Veteran’s Organizations including Police, Fire and Rescue Groups

Political Party or Candidates for Office

Donations for a Specified Individual

Hospitals

Some other not so common state exemptions:

Childcare Providers

Adoption Agencies

Clinics

Boys and Girls Clubs

Less than 10, 35 or 100 Donors per Year

As noted before, and will be discussed in our next post on the common exemptions, each of these exemptions have their own requirements designated by the state where you are soliciting donations.  They are not only determined by the state where you are physically located but in each state where you are soliciting donations.  You may be exempt in your home state but not in others; as well as your organization could be exempt in foreign states but not your state of origination.

If you have any comments, questions or concerns, please contact us at 800-780-6027 or support@simplecharityregistration.com for more detailed answers.

 

Trusted Nonprofit Resources

National Association of State Charity Officials (NASCO)

The National Association of State Charity Officials (NASCO) is an association of state offices charged with oversight of charitable organizations and charitable solicitation in the United States.  They have taken a leadership role in promoting uniform state charity registration and filing requirements, amicus briefs, and multistate lawsuits targeting fundraising deception. NASCO members have also participated in drafting the Uniform Law Commission’s Oversight of Charitable Assets Act which is a model for state solicitation law and jurisdictional guidelines for state regulation of charitable solicitation on the Internet.

National Council of Nonprofits (Council of Nonprofits) 

The National Council of Nonprofits (Council of Nonprofits) is a trusted resource and advocate for America’s charitable nonprofits. Through their powerful network of State Associations and the nation’s largest network of nonprofits they serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. They identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve.

Association of Fundraising Professionals (AFP)

The Association of Fundraising Professionals (AFP) represents more than 30,000 members in over 230 chapters throughout the world, working to advance philanthropy through advocacy, research, education and certification programs.  The association fosters development and growth of fundraising professionals and promotes high ethical standards in the fundraising profession.

National Association of Attorney Generals (NAAG)

The National Association of Attorneys General (NAAG) was founded in 1907 to help attorneys general fulfill the responsibilities of their office and to assist in the delivery of high-quality legal services to the states and territorial jurisdictions. The Association’s members are the attorneys general of the 50 states and the District of Columbia and the chief legal officers of the Commonwealths of Puerto Rico (Secretary of Justice) and the Northern Mariana Islands, and the territories of American Samoa, Guam, and the Virgin Islands.

Your Local State Charity Office

We have a blog devoted with a list of the State Charity offices!! Almost all states have an association devoted to nonprofit assistance no matter where your organization is in its life-cycle. Whether you just need a form or something more complex they will most likely have the answer. Most state associations offer online training, research and local events that you can attend to get more familiar with your fellow non-profiteer!

GuideStar 

GuideStar encourages nonprofits to share information about their organizations openly and completely. They combine the information that nonprofits supply them with data from several other sources to provide information that advances transparency, enables users to make better decisions, and encourages charitable giving.

Please contact us with any comments, questions or concerns at (800)780-6027 or support@SimpleCharityRegstration.com.

 

3 Factors Affecting Your Nonprofit Registration Timeline

One of the most frequently asked questions we get in our support email is “How long will it take to get my charity registered”.  That depends on 3 factors: organizational paperwork preparedness, number of states registering, and the state office for which you are registering.

Prior to beginning the process you should have all of the following paperwork/information in hand to facilitate completing the questions that are required to fill in the forms. If you look at the left-hand side on the SimpleCharityRegistration.com website the navigation bar divides the questions by topic.  The sections will give you a sense of the types of required information you will need. You can even click on the sections ahead before entering information to see what you will need next.

Organizational Paperwork

In addition to the 990, 990-EZ, 990-PF or other financial reporting you will need:

  • Info on the origins of the charity, such as formation date and state, 501(c) designation and date or application date, organization type, purpose, mission, etc.
  • if this is an initial registration in states, you will also need to attach the articles of incorporation and by-laws
  • list of sources of government grants
  • personnel — list of board members with addresses (usually a business address other than the charity), key employees and their salaries and positions, and information about whether any of these people have connections to other related organizations or have any interaction with government agencies or courts
  • list of any paid professional fundraisers used by your charity along with their contracts and terms
  • a list of chapters, branches or offices of the organization
  • a list of resident agents for the states required as explained on the right side of the Resident Agent page

Most of these items are for answering the questionnaire, but some, like the articles of incorporation and by-laws, will need to be copied and attached to the registration form upon submission.

For the data entry, depending on the size of your organization, you should allow a few days just in case you need to contact other administrators in your office for missing information. The next step is proofing and putting the packages together. Add some signatures and stamps and you are on your way.

Number of States

The best part about having an account with SimpleCharityRegistration.com is once all the information is in the software printing and preparing each consecutive state application becomes easier and the next year when it is time to renew you only need to review the prior year’s information and add the current financials and you are on your way to knocking this once burdensome process right out of the park!!

States Where Registering

Depending on the time of year and which states you are registering the time for approval can take a couple of business days up to 6 weeks or more.  Take note of the renewal date for each state when registering as you know that will be the time of year the state offices will be the busiest and your initial registration application may take a little longer.

You may also enjoy our new welcome video and our two-part blog on this topic.

Please contact us with any comments, questions or concerns at (800) 780-6027 or support@SimpleCharityRegstration.com.

Frequently Asked Questions: What is Charity Registration

About the registration process:

What is charitable solicitation registration?

In order for states to provide their constituents with basic information about charities to whom they might donate and protect them and worthy charities from fraudulent ones, most states require charities soliciting in their state to file certain financial, organizational, and governance information.

Are all charities required to register?

Most states have a list of categories of charitable organizations that are exempt from registration. The State Registration Groups page of our questionnaire will help you determine whether or not you are exempt from registration.

When must I register?

Generally, you are not to solicit in a state until you register in the state or are determined exempt, so you should register prior to solicitation in a state. Most states give a 30-day grace period in which you can register after starting soliciting.

In which states am I required to register?

You will need to register in any state in which you solicit, providing that you do not fit in one of their exemption categories. Arizona, Delaware, Idaho, Iowa, Indiana, Montana, Nebraska, South Dakota, Texas, Vermont, and Wyoming all do not require charitable solicitation registration.

What is solicitation?

States have different definitions, but for the most part it means any oral or written request for funds or services with the promise of the donation going to the support of a charitable purpose. See the definition in the Pennsylvania Solicitation of Funds for Charitable Purposes Act as a sample.

Does my website count as solicitation?

The Charleston Principles: Guidelines on Charitable Solicitations Using the Internet suggest that internet representation of a charity qualifies as solicitation in a state if it is sent directly to an individual or entity in the state, if there are regular donations coming from the state, or if there is follow-up with donors in the state either by direct mail, telephone, etc. or via other regular contact (such as newsletters, announcements, press releases, etc.)

What is the typical registration process?

The typical process involves:

  1. Initial registration
  2. Renewal registration and/or annual reporting (financial reporting)
      • this usually occurs at a point in time following the end of your fiscal year or on the anniversary of registration
        • a couple states, Georgia and DC, renew biannually
    • a few states do not require registration registration renewal, but do require annual financial reporting

What if I am not able to renew on time?

There are three options that states use — our questionnaire will walk you through the state processes:

  1. Extension of renewal
  2. No extension of renewal, but extension of annual financial report
  3. No extensions — usually because they have a later due date

I use paid fundraising services. Are there additional requirements?

Two things you will need to keep in mind:

  1. A paid fundraiser must be registered in a state before you can begin a solicitation campaign in that state.
  2. Most states require that contracts with fundraisers and commercial co-ventures usually need to be filed with states prior to solicitation or within 30 days (or at least attached to registration forms)

Are there other requirements?

  1. Many states also require business registration, even if you are registered or exempt from charitable solicitation registration.
  2. Maintain records for no less than 3 years — most states require it

 

About how Simple Charity Registration can help:

How does Simple Charity Registration work?

Our service walks you through a series of questions that will fill in the forms required for the states in which you solicit. It will then produce the form and a checklist and instructions of what you need to do to send in your form. Our How it Works tab will guide you.

Does the charity file the forms or is that part of the service provided by Simple Charity Registration?

The charity files, using the auto-filled forms that appear on the bottom of the left navigation area. There is a checklist attached giving information on where to file, what to attach, and how much to pay, along with additional helpful information.

Is the service fee the same as the state fee? Does the fee include state fees or only the use of the application and printable forms?

Our fee is for our DIY software which streamlines the registration process. State fees are separate and are set by the individual states for either initial registration or renewal/annual reporting.

Our service will help you to determine which type of forms and which states that your organization will need to file your charity compliance documents in as well as help you collect, file and store your organization’s information in an efficient time saving manner.  There are also many resources on our site for your organization to take advantage of and we provide reminder emails for your annual compliance deadlines as well as information on changing state filing requirements.

What if I have questions?

Our Customer Support will be glad to help you with technical questions. We can help with some state specific issues, but we are not legal advisers, so we may refer you to the state websites for help.

Please contact us with any comments, questions or concerns at (800) 780-6027 or support@SimpleCharityRegstration.com.

 

Religious Exemption from Charity Registration – Do You Qualify?

What Does Religious Exemption Mean Regarding State Compliance?

Our blog on religious exemption at the federal level started with a joke, so here we go again (sort of).

A few years ago, the show How I Met Your Mother had a running gag that Canadians were afraid of the dark. After the lights go out in a Canadian expat bar in New York and everyone complains, the exasperated and defeated Canadian on the show asserted, “Nobody likes the dark.”

And so it goes with state compliance for charities. It is fair to say that, “Nobody likes state charitable solicitation registration.” Those who have the slightest inclination that they might be exempt are eager to find that they are, but some exemption criteria are hard to understand from state to state. Religious exemption is primary among those because state definitions vary.

So, how do you tell if you’re exempt from state charitable solicitation registration?

  1. Churches and their integrated auxiliaries – In nearly every state, if not all, churches and their integrated auxiliaries are exempted from charitable solicitation registration, either by:
    1. not being included in the definition for charitable organization
      1. (ex. Mississippi for churches; Pennsylvania), or
    2. by being given a direct exemption because no 990 is required by IRS
      1. (ex. Alaska, Colorado, Minnesota)
  2. Religious organizations required to file a 990 will need to
    1. file in some states
      1. (ex. Alaska, Virginia, West Virginia); and
    2. will be exempt in others
      1. (ex. Connecticut, Rhode Island, Utah).

You may find the summary of religious exemptions provided by the National Council of Nonprofits to be helpful for you.

In addition, if you open a free, no-obligation account on Simple Charity Registration, you will find the exact wording of the state exemption questions and links to where you can find the legal definitions to assist you. Plus, if you determine that you must register or that you need to apply for exemption, or write to the state to get confirmation that you are exempt, you can proceed to do so using our 4 Simple Steps to Compliance.

We can show you that you no longer need to be afraid of the dark!

Please contact us with any comments, questions or concerns at (800)780-6027 or support@SimpleCharityRegstration.com.

This information is not intended as legal advice or instruction.

8 Common Mistakes With Charity Registration in Michigan

When we talked with the Michigan Charitable Trust Section about the exemption process for our last blog, we received a treasure trove of information on how to avoid common mistakes when submitting registration, renewal, and exemption forms to their office. We are glad to share them with you.

  1. Foreign (out-of-state) charities need a Resident Agent in Michigan. This can be a third party provider or a sister charity or even a board member.
  2. You can’t report on a time period that has not already passed. If you are doing an initial registration and you have not yet filed your financial forms, submit the registration with a letter identifying your organization’s FY end date and when your 990/Audit will be complete. Your organization will be put into a pending status until you submit the current 990.  A pending organization may solicit unless otherwise notified.
  3. Provide all necessary documentation. This is actually a sticking point with most states. Before submission, carefully check that you have all materials requested in the state’s instructions. Michigan has very thorough instructions and Simple Charity Registration also provides a checklist of required attachments.
  4. Michigan nonprofit corporations need 3 directors on their board of directors. Your Michigan-based nonprofit corporation board of directors needs to have a minimum of 3 members (unless it is a private foundation or a corporation formed to care for a dentally under-served population). Note, this is for nonprofit corporations formed under the laws of the State of Michigan and does not apply to foreign (out-of-state) charities.
  5. 990-N filers need to complete financial information on their registration form. The registration or renewal form will be incomplete without it.
  6. Don’t include Schedule B of the IRS 990. Michigan doesn’t require it, so there is no need to make it public record.
  7. Pay attention to financial audit and review requirements and that your 990 and audit/review cover the same fiscal year. Essentially, you will need to provide a review or audit by a certified public accountant (CPA) if your total contributions plus fundraising minus government grants is between $275,000-$525,000. If that figure is over $525,000 you are required to attach a financial audit prepared by an independent CPA using generally accepted accounting principles. Don’t forget to attach your IRS 990, 990-EZ, or 990-PF as well. Michigan may provide a one-time waiver to these requirements. For specifics, see the Michigan line-by-line form instructions.
  8. BONUS: 4 exemption tips in 1 for the Michigan Request for Exemption (CTS-03) form:
    1. Educational Exemption: This only applies to educational institutions located in Michigan.
    2. Hospital Exemption: An out-of-state licensed hospital applying for this exemption must show documentation from their regulator in their home state.
    3. Exemption based on getting all funds from a charity already registered with Michigan: This exemption from the Charitable Organizations and Solicitations Act (COSA) cannot be used if your organization is self-funded. It only pertains to being funded in whole by another charity registered in Michigan.
    4. Documentation: Include the necessary documentation to prove your exemption claim as explained in the chart on pages 2-3 of the Michigan Request for Exemption (CTS-03) Form.

The takeaway for today is that the Michigan Charitable Trust Section reads your application thoroughly and will request additional or corrected information if needed. Save yourself and your charity some time by filing correctly the first time.

And of course, using Simple Charity Registration can help you do just that.

Charity Registration Exemption in Michigan

If you’ve ever registered in Michigan or even looked into it, you might have been confused by their several different forms, rules, and exemption categories. Michigan has enveloped both their Charitable Solicitations and Charitable Trusts exemptions into a multi-level registration and exemption process similar to New York’s,

The Charitable Solicitations Act (COSA) requires that:

A charity that solicits or receives contributions from Michigan sources in excess of $8,000, or a charity that compensates individuals for fund raising services, must have a charitable solicitation license, unless an exemption applies. It is important to note that a Michigan Charitable Solicitation License (MICS) is required for those organizations that receive contributions even if the contributions are not actively solicited.

This is the regular charitable solicitation registration that we think of. In addition, Michigan includes registration for any Michigan charity or a foreign (out of state) charity holding assets in Michigan under a separate law, the Charitable Trusts Act (STCPA). Both laws are for the protection of Michigan residents to ensure that donor monies go to the purposes intended.

Since each law carries its own exemptions and registration requirements, charities soliciting in Michigan as described above and/or holding assets in Michigan will need to complete the Michigan CTS-03 form to help them determine which registration(s) they need to do based on which exemptions they may fall under.

While the form may seem confusing to look at, the questions are clear and the process is easy to follow.

  • An organization with no exemptions files the solicitation registration (COSA) form CTS-01 and renews with CTS-02.
  • An organization with both exemptions files the CTS-03 and does not need to file that form again (renew) after they receive the determination letter from MI that they are exempt unless and until something changes in their status.
  • An organization exempt from solicitation registration (COSA) files the CTS-03 and the CTS-05 No renewal on the CTS-03 (see above).
  • A foreign organization exempt from charitable trust registration STCPA needs to file the CTS-01 solicitation registration (COSA) and the CTS-03 Request for Exemption. No renewal for the exemption (see above). File CTS-02 for COSA renewal.

Using Simple Charity Registration will make it even easier.

If you want to know more, go to www.michigan.gov for a smart explanation of charitable trusts and charitable solicitation in Michigan.

June Newsletter – Nonprofit Renewal Deadlines, Audits, & Upcoming Webinar

Summer Salutations

June 30th State Charity Registration Deadlines

Did you know that not only do you need to file an extension with the IRS you need to also file for an extension of time to file with the Secretary of State or the Attorney General’s office for your Charity Registration Renewal or Annual Financial forms?

Eight states have due dates that are 6 months after the fiscal year end so for 67% of our customers they should be preparing to send their state renewals or preparing extensions for Kansas, Illinois, Maryland, Michigan, Minnesota, New Jersey, New Mexico and Tennessee.  

Alaska, North Dakota, and Wisconsin are not far behind with due dates beginning September 1st. If you are waiting for your financials to be ready, sign into your account today to print and send in your extension forms if not file your renewal packages today!!

Other states to be aware of are DC, FL, GA, NV, OK, RI, UT and WV which use the organization’s registration anniversary date as the renewal due date which is dependent on your previous registration.  Those dates can be found on your last registration approval letter from the state or the state’s website.

Audits

Did you know that 22 states have audit requirements??  Audit requirements begin at 200K for some state registrations and renewals while most average around 500K for an independent audit.  Total revenue is the trigger for most audits while contributions are the basis for other states and about half have some type of exclusion for government agency fees & grants as well as some “other types” of income.  Read the Blog

Webinar

If you would like to get to know us better or need a refresher join our webinar on July 6, 2017 at 2:00 EST.  Please register at  Simple Charity Registration – annual state charity registration made easy!

See how it works click here

If you have any comments, questions or concerns, please contact us at 800-780-6027 or support@simplecharityregistration.com for more detailed answers.