Nonprofit regulation in Pennsylvania
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Nonprofit regulation in Pennsylvania involves a complex set of rules that govern nonprofit organizations and charitable giving throughout the state. Major issues surrounding nonprofit regulation nationwide include the following:
- contribution limits,
- donor disclosure, and
- the redefinition of issue advocacy.
Pennsylvania is one of 39 states that require charitable organizations, and those intending to solicit on their behalf, to register with the state in order to solicit contributions, whether they are a Pennsylvania organization or based out-of-state. In Pennsylvania a number of groups and organizations are exempt from registration. While these groups do not need to file for exemption, they are welcome to file an exemption request with the state.[1]
Pennsylvania is one of 32 states that allows registrants to use either the Unified Registration Statement (URS) or the state registration form.[2] Only seven states requiring registration do not accept the URS.
- Note: The following is not a how-to guide in managing an organization's registration and reporting requirements, but rather an attempt to share information about the relative degree of regulation governing nonprofit charitable activity at the individual state level. The information on this page was last updated in early 2015.
Background
According to the Foundation Center, there are over 1.5 million nonprofit organizations in the United States.[5] Section 501 of the U.S. tax code outlines which types of nonprofit organizations may be granted tax exempt status by the Internal Revenue Service. The section of this code that provides for exemption is section 501(a), which states that organizations are exempt from some federal income taxes if they fall under sections 501(c) or 501(d), or under section 401(a).[6]
Organizations classified as 501(c)(3) are nonprofit charitable, religious and educational organizations. These include organizations like the Red Cross and Habitat for Humanity as well as the American Civil Liberties Union and the Lucy Burns Institute, which provide, as defined in the federal code, “instruction of the public on subjects useful to the individual and beneficial to the community.”[7] Organizations granted 501(c)(4) status are political education organizations, and can engage in political lobbying. This includes donations to political committees that support or oppose ballot measures, bond issues, recalls or referenda. 501(c)(4) organizations can thus engage in issue advocacy, but they are not allowed to expressly advocate for the election or defeat of a particular candidate.
While the Internal Revenue Service designates eligible nonprofit charitable organizations with a federal tax exempt status, individual states require their own level of regulation and reporting, particularly when organizations attempt to solicit fundraising contributions. The amount of regulation required differs by state, as does the degree to which state regulations protect the privacy of individual donors. Three states, for instance, require annual copies of IRS Form 990 (schedule B), which lists individual contributors who contribute over a specified amount. Research shows that attempts to make contributions more transparent has an unintended negative effect on the number of contributors who give, as well as the amount.[4]
Governing agencies
The Pennsylvania Department of State, Bureau of Charitable Organizations is the agency in the state that oversees rules governing donor solicitation and registration.
See law: Pennsylvania Statutes, Title 10, Chapter 4B, sections 162.1 through 162.24
Registration requirements
Any nonprofit group or organization located in Pennsylvania, unless exempt, must register with the Pennsylvania Department of State, Bureau of Charitable Organizations. Any non-exempt nonprofit, in any state, intending to solicit in Pennsylvania must also register, along with anyone intending to solicit in Pennsylvania on behalf of a nonprofit. Non-exempt nonprofits might include traditional charitable organizations like the Red Cross or Habitat for Humanity, educational or policy organizations like the American Civil Liberties Union, or issue advocacy groups like the League of Conservation Voters.
- Note: Nonprofits in Pennsylvania that are exempt from registering may still be required to register under another Pennsylvania law, the Purely Public Charity Act, 10 Pa. Statutes, sections 371 through 385.[1]
Exemptions
A number of groups are exempt from registering in Pennsylvania. Organizations that are exempt do not need to file for an exemption. They may, however, complete Form BCO-2, Non-Renewal Notice Form if they believe they are exempt and want that formally recognized.
The following groups are exempt from registering:[1]
- Any organization that has revenue less than $25,000 and has no paid fundraising staff
- Religious groups
- Law enforcement, firefighters and public safety groups whose donations do not benefit people outside these memberships
- Educational organizations
- Parent-teacher associations (if recognized in a notarized letter from a relevant school district)
- Hospitals regulated by the Pennsylvania Department of Health or the Department of Public Welfare
- Veterans' groups chartered under federal law
- Volunteer firemen and ambulance and rescue squad associations
- Nonprofit, tax-exempt senior citizen centers
- Any corporation established by an act of Congress
Procedures
Nonprofits registering in Pennsylvania can use either the Unified Registration Statement (URS) form or the state form.[1]
Documents
The following documents are required along with your registration form:[1]
- Articles of incorporation
- Bylaws
- IRS determination letter
- IRS Form 990 for the previous year
- Groups who do not file a Form 990 must file BCO-23, Pennsylvania Public Discourse Form.
Organizations must also provide a financial statement, the nature of which depends on an organization's contributions for the year:[1]
- Organizations with contributions fewer than $50,000 must provide internally prepared, compiled, reviewed or audited financial statements
- Organizations with contributions fewer than $100,000 must provide compiled, reviewed or audited financial statements
- Organizations with contributions fewer than $300,000 must provide reviewed or audited financial statements
- Organizations with contributions over $300,000 must provide audited financial statements
Signature and fee
Two signatures, one from Chief Financial Officer and another from an authorized officer, are required. No notarization is necessary.
The registration fee depends on annual contributions and ranges from $15 to $250.[1]
Filing procedures
Registration materials must be mailed to:[1]
Office of the Secretary of the Commonwealth
Bureau of Charitable Organizations
207 North Office Building
Harrisburg, PA 17120
Renewal
Organizations must renew their registration annually, at least four and half months after close of an organization's fiscal year, or by May 15th if the group uses the calendar year.
Automatic 180-day extensions are granted. Failing to file on time or by the extension deadline, however, results in a $25 late fee each month. To renew, organizations must follow the same procedure as their initial registration, but do not need to refile articles of incorporation, bylaws and IRS determination letter. The fee for renewal is same as the initial registration fee.[1]
Financial reporting
Financial reporting requirements are satisfied by following the renewal process.[1]
Recent news
This section links to a Google news search for the term "Pennsylvania + donor + privacy"
See also
External links
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Fishman, S. & Barrett, R. (2012). Nonprofit Fundraising Registration: The 50 State Guide. NOLO.
- ↑ "Multistate Filing Form," accessed December 17, 2014
- ↑ Guidestar, Fundraising: What Laws Apply?" accessed February 18, 2015
- ↑ 4.0 4.1 London School of Economics, "Campaign finance laws that make small donations public may lead to fewer people contributing and to smaller donations," January 7, 2015
- ↑ Foundation Center, "Frequently Asked Questions," accessed December 17, 2014
- ↑ Cornell University Law School, "26 U.S. Code § 501 - Exemption from tax on corporations, certain trusts, etc," accessed January 13, 2015
- ↑ Cornell University Law School, "26 CFR 1.501(c)(3)-1 - Organizations organized and operated for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals," accessed January 13, 2014
