Demystifying State CharityRegistration Laws

The Foundation Center

Delivered by

Tony Martignetti, Esq.

Martignetti Planned Giving Advisors, LLC

March11, 2014

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Where We’re Headed

• What is Charity Registration• Why comply with the laws• Where do you register• What is a solicitation• How do you register• Registration in NY• Plan for how to get going• Continuing Education

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What Is Charity Registration

Requirements throughout the states and D.C. that charities register with authorities--or be exempt--everywhere they solicit.

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Why Comply With The Laws

• IRS Form 990 • Criminal & civil penalties, including

- NY: civil fraud- NJ: civil fine, $10,000- CT: criminal; 1 yr/$5000- PA: misdemeanor; 5 yrs/$10,000- MD: civil fine, $5000- DC: civil fines, penalties, fees- FL: 3rd degree felony; 5 yrs/$5000- GA: civil fine; $25,000

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Why Comply With The Laws

• Board member liability; fiduciary duty

• Gift challenge from donor or heir

- Disgruntled donor hires enterprising attorney

• Right thing to do; operate within the laws

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Where We Are

√ What is Charity Registration√ Why comply with the laws• Where do you register• What is a solicitation• How do you register• Registration in NY• Plan for how to get going• Resources

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Where Do You Register

Everywhere you solicit, except where you’re exempt

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What Is A Solicitation

• Varies state to state

• A few neat categories

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What Is A Solicitation

• Mere existence of website accepting donations

- “Donate Now” button

- Passive solicitation

- NY, NJ, FL, GA, IL, DC, VA, others

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What Is A Solicitation

• Website accepting donations + induce donors to it

- email, US mail, phone, ads, meetings, events

- Active solicitation

- CT, CA, MD, TX (not email), UT, WA, WI

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What Is A Solicitation

• Ask for charitable support by- Email- US Mail- Phone- Meetings- Events- Advertisements

• Active solicitation• These are a solicitation in nearly every state

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Even If You Are Soliciting

• You might be exempt• Exemptions vary drastically across states

- Mission, with qualifications

- Gross revenue

- Gross fundraising revenue

- Revenue from within the state (kindest)

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Charleston Principles

• Uniform definition of solicitation• National Association of State Charities Officials

(NASCO)• Not adopted by all states• Uncertain where adopted

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Where We Are

√ What is Charity Registration√ Why comply with the laws√ Where do you register√ What is a solicitation• How do you register• Registration in NY• Plan for how to get going• Resources

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How Do You Register-Forms

• Vary drastically across the states• Unified Registration Statement (URS)• A few neat categories

- URS only (+ state idiosyncrasies) (NY)- URS + state forms - Non URS

--”foreign corporation doing business”

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How Do You Register-Docs

• Typical documents- By laws & articles of incorporation

- IRS determination letter- Board list- Financial report- IRS Form 990

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How Do You Register-Fees

• A few neat categories- Flat (NY)- Tiered by gross revenue or contributions- Tiered by in-state revenue (kindest)

• HI most expensive: $750 for largest• 32 $100• 3 free: KY, MI, NM

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How Do You Register in NY

• 2 governing laws- Executive, EPTL

• Exemptions- Religious- Education, with qualifications- Gross contributions under $25,000 & no

professional fundraisers (incl. employees)- All or most funding from 1 gov’t agency, with

qualifications- Veterans, law enforcement, PTA

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How Do You Register in NY• Apply for exemption

• Not exempt

- URS or state form (CHAR 410)

- IRS tax exempt letter, by-laws, articles of incorp., 990, financial stmnt.

- Indefinite registration for $25

- Annual financial reporting

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NY Annual Financial Reporting

• Gross revenue under $100,000- unaudited report + $10

• Gross revenue up to $250,000*- fin. stmnt w/CPA review + $10

• Gross revenue over $250,000* or paid fundraisers- audited fin. stmnt w/CPA opinion + $25*changes to $500,000 on 7/1/14

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Where We Are

√ What is Charity Registration√ Why comply with the laws√ Where do you register√ What is a solicitation√ How do you register√ Registration in NY• Plan for how to get going• Resources

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Plan For How To Get Going-1

• Charity starts at home-- enforcement also starts at home

-- FL, GA, WA-- register there

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Plan For How To Get Going-2

• Very high fundraising revenue states, if any

- dollar amount

- percentage of fundraising revenue

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Plan For How To Get Going-3Web Based Fundraising

• Do you need every state?- if not, take safe harbor & restrict giving

• Where solicit most- descending state populations

-- www.census.gov- work down the list

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Plan For How To Get Going-3Non Web Based Fundraising

• Where solicit most- query database for constituent frequency by state- descending order of frequency- work down the list

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Plan For How To Get Going-4

• Don’t be intimidated or overwhelmed

• Follow a plan

• One to three per month

• May be exempt in some

- need to apply for exemption?

• You can do this

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Continuing Education

• tonymartignetti.com• nasconet.org (state charity officials)• multistatefiling.org (URS & related• my book: Charity Registration: State-by-State

Guidelines for Compliance• site I’m building

-- give me your card for info

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