Demystifying CharityRegistration

Making Your Solicitations Legal

AFP Western Massachusetts

Delivered by

Tony Martignetti, Esq.

Martignetti Planned Giving Advisors, LLC

January 19, 2011

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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 MA & CT• Plan to get you going• Continuing Ed.

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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- MA: Notice; then civil penalty $50/day to $10,000 against officers & board members --> individually liable; reimbursement not allowed (effective 1/1/11)- CT: criminal; 1 yr/$5000- NY: civil fraud- NJ: civil fine, $10,000- PA: misdemeanor; 5 yrs/$10,000- MD: civil fine, $5000- DC: civil fines, penalties, fees- FL: 3rd degree felony; 5 yrs/$5000

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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 MA & CT• Plan to get you going• Continuing Ed.

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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, AZ, 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

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

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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 MA & CT• Plan to get you going• Continuing Ed.

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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) - URS + state forms - Non URS

-- “corporation doing business”- State forms only

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How Do You Register-Docs

• Typical documents- By laws & articles of incorporation

- Tax exempt letter- Board list- Financial report- IRS Form 990

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How Do You Register-Fees

• A few neat categories- Flat (CT)

- Tiered by gross revenue (MA) or contributions

- Tiered by in-state revenue (kindest)

• HI most expensive: $750 for largest

• 32 $100

• 5 free: AZ, AR, KY, MI, NM

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How Do You Register in MA

• Attorney General & Secretary of the Commonwealth Corporations Division

• Few exemptions

- AG: Red Cross or veterans

- Corp. Div.: religious or raise < $5000

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How Do You Register in MA• Attorney General

- Form PC

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How Do You Register in MA

• With Form PC

- Tax-exempt letter

- By laws

- Certificate or Articles of Incorporation

- Form 990

- Financial statement if gross revenue > $200,000

- Fee $35 (< $100,000) to $250 (> $500,000)

• Annual reporting on Form PC

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How Do You Register in MA• Corporations Division: Annual Report + fee

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How Do You Register in CT

• Attorney General• Main exemptions

- religious- education, with qualifications- hospital, ditto- < $50,000 in contributions, ditto

• Apply for exemption

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How Do You Register in CT

• Register with state form or URS

• $50 fee• Annual filing of financial report and Form 990 + $50

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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 MA & CT• 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

-- NJ, FL, GA, AZ, 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- register where passive solicitation

triggers registration- 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

• Prioritize• Two to three per month• May be exempt in some

- need to apply for exemption?

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Continuing Education

• My blog http://www.mpgadv.com or scan:

-all the forms will be on my blog

• Send me a LinkedIn message

• National Association of State

Charity Officials, www.nasconet.org

• URS, http://www.multistatefiling.org

• My book: Charity Registration: State-by-State Guidelines for Compliance, http://www.StateCharityRegistration.com