Nonprofit regulation in Maine

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Nonprofit regulation in Maine 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.

Maine 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 Maine organization or based out-of-state. In Maine a number of groups and organizations are exempt from registration, but only religious organizations are automatically exempt; other exempt organizations must obtain an exemption license annually.

Maine does not allow registrants to use the Unified Registration Statement (URS); they must instead use the individual state form.

According to Guidestar, an organization that reports on nonprofit companies, regulation of nonprofit activity protects donors and organizations from potential fraud and helps "to maintain trust in the [nonprofit] sector." According to the London School of Economics, nonprofit disclosure requirements can create privacy concerns among potential donors, thereby having an unintended negative impact on donor participation.

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

IRS building in Washington, D.C.

According to the Foundation Center, there are over 1.5 million nonprofit organizations in the United States. 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).

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.” 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.

Governing agencies

The Maine Department of Professional and Financial Regulation is the agency in the state that oversees rules governing donor solicitation and registration.

See law: Maine Revised Statutes Annotated, Title 9, Chapter 385, sections 5001 through 5018

Registration requirements

Seal of the State of Maine

Any nonprofit group or organization located in Maine, unless exempt, must register with the Maine Department of Professional and Financial Regulation. Any non-exempt nonprofit, in any state, intending to solicit in Maine must also register, along with anyone intending to solicit in Maine on behalf of a nonprofit. Registration must occur at least 30 days before soliciting. 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.

Exemptions

A large number of groups are exempt from registering in Maine. Only religious organizations are fully exempt from registration requirements; other exempt groups must apply for an exemption license.

The following groups are exempt from registering:

• Any organization that received less than $35,000 and has no paid fundraising staff
• Any group that receives contributions from less than 35 people and has no paid fundraising staff
• Membership organizations that raise contributions solely from members, "irrespective of whether the solicitation activities are conducted by members"
• Contributions solely for a named individual are exempt as long as all money goes to the person
• Educational organizations
• Nonprofit hospitals

Procedures

Organizations may not use the Unified Registration Statement (URS) in order to register, but must instead use the individual state form.

Documents

If the organization is non-exempt, the following documents are required along with your registration form:

• List of current officers, directors, trustees and principal officers
• List of people responsible for contributions received
• List of states in which the group is also registered
• IRS determination letter
• IRS Form 990 or budget for current year
• Copies of contracts with professional fundraisers

If the organization is exempt, the following documents are required along with your registration form:

• IRS Form 990
• Current list of officers, directors, trustees and principal officers

Signature and fee

Organizations must have the signature of an authorized officer.

The registration fee for non-exempt organizations is $50; the fee for exempt organizations is $10.

Filing procedures

Registration materials must be mailed to:

State of Maine Department of Professional and Financial Regulation
Charitable Solicitations Program
Augusta, ME 04333

Renewal

For non-exempt organizations: all registration licenses expire on November 30 each year and must be renewed before that date; organizations will receive a renewal 60 days before the expiration date. A $50 late fee is incurred if the renewal is not in on time; if groups do not renew by March 1, registration lapses and must be reapplied for altogether. Renewal applications must include the following:

• An "Annual Fundraising Activity Report"
• Copies of fundraiser contracts not already on file
• A list of officers, trustees, etc, if any changes have occurred since previous renewal
• A fee of $25

For exempt organizations: all registration licenses expire on November 30 each year and must be renewed before then; organizations will receive a renewal 60 days before the expiration date. A $50 late fee is incurred if the renewal is not in on time; if groups do not renew by March 1, registration lapses and must be reapplied for altogether. There are no extensions. Renewal applications must include the following:

• A list of officers, trustees, etc, if any changes have occurred
• A $10 fee

Financial reporting

There are no annual financial reporting requirements beyond those concerning the Annual Fundraising Activity Report above.

Recent news

This section links to a Google news search for the term "Maine + donor + privacy"

Maine Donor Privacy News Feed

See also

• Maine
• IRS code, section 501
• Nonprofit organization

External links

• Maine Department of Professional and Financial Regulation, Charitable Solicitations Act