Monthly Archives: July 2017

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.