Nonprofits looking to raise funds in Massachusetts need know how to register, who is exempt from registration, how to stay compliant, and understand the penalties for noncompliance.
To protect donors, charities must register with the state before soliciting contributions. In other words, before you even ask for donations, you must register.
The following will help Massachusetts nonprofits remain fully compliant.
How to Register
Before raising any funds in Massachusetts, all nonprofits must send initial registration materials to the Attorney Generals Office (AGO), including:
A copy of the organizations Articles of Incorporation
A list of current officers and directors
A copy of the organizations bylaws
A copy of the IRS determination letter, if the organization has one
The initial registration fee is $100, made as a check payable the Commonwealth of Massachusetts."
Massachusetts nonprofits are also required to obtain a Certificate of Solicitation through the AGO. This is done by preparing one of the following forms:
Domestic nonprofits, those incorporated in Massachusetts, must file either the Short Form PC, if the organization has not yet completed its first fiscal year, or the Form PC, if the organizations first fiscal year has already passed.
Foreign nonprofits, those incorporated outside Massachusetts, but have registered in Massachusetts to transact business, must file either the Short Form PC, or the Unified Registration Statement (URS).
The fee for the URS or the Short Form PC is $50. The fee for the Form PC is between $35-$250, depending on the organizations revenue.
Who Is Exempt?
Certain organizations are exempt from fundraising registration, including those with less than $5,000 in annual contributions, or receive them from fewer than 10 people. In these instances, all fundraising must be done by unpaid volunteers.
Additionally, religious institutions, fraternal organizations, and appeals for individuals are also exempt.
For a full list of exemptions, and criteria for exemption, please refer to state law.
How to Stay Compliant
Massachusetts nonprofits are required to file an annual renewal registration with the AGO. Renewal is due 4.5 months after the close of the organizations fiscal year. For example, if your calendar ends Dec. 31, the renewal is due May 15.
Both domestic and foreign nonprofits must file Form PC. The fees, as above, depend on your organizations revenue. When you mail the filing to the AGO, attach a completed copy of IRS Form 990. Charities with more than $200,000 in annual revenue must also submit a financial statement.
Penalties for Noncompliance
There are several reasons to register for charitable solicitation, including avoidance of fines and penalties.
First, its state law. Each of the 50 states has specific requirements for initial and ongoing fundraising registration. Similarly, each has specific penalties for late or improper registration, or failure to register at all. Typically, it is a fine or a late penalty.
Second, the IRS wants to know. With your annual 990 filing, you publicly release a statement of the states in which your organization is registered, your activities, and your financial situation. States or an individual donor checking the public records can easily see whether your organization is registered to fundraise in a specific state. Also keep in mind, anything submitted on the 990 is legally assumed to be factual, under penalty of perjury.
Third, your donors may ask! Just as they might want to see an IRS determination letter in order to claim a donation on their tax return, your donors may want to know your organization is registered and compliant. Massachusetts has a charitable registry, where prospective donors can and do search before giving. Dont risk losing donations, or looking amateurish!
Whether your nonprofit is domestic or foreign, is new or has been in action for a while, consult your records and check with the state to ensure your organization is in compliance. If you are, great! If not, take proper action. Your organization, community, and donors will thank you.
James Gilmer, Communications Director of Harbor Compliance, helps nonprofits with their registration and compliance filings. Call him at 717-723-9317, or email email@example.com.
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