Nonprofit regulation in Massachusetts

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Nonprofit regulation in Massachusetts 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.


Massachusetts 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 Massachusetts organization or based out-of-state. In Massachusetts a number of groups and organizations are exempt from registration.[1]

Massachusetts is one of 32 states that allows registrants to use either the Unified Registration Statement (URS) or the state registration form. Organizations based in Massachusetts, however, must use the state form.[2] Only seven states requiring registration do not accept the URS.

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.[3][4]
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.[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 Massachusetts Attorney General, Division of Public Charities is the agency in the state that oversees rules governing donor solicitation and registration.

DocumentIcon.jpg See law: Massachusetts General Law Chapter 12, sections 8e and 8f and Massachusetts General Law Chapter 68, sections 18 through 35

Registration requirements

Seal of the State of Massachusetts

Any nonprofit group or organization located in Massachusetts, unless exempt, must register with the Massachusetts Attorney General, Division of Public Charities. Any non-exempt nonprofit, in any state, intending to solicit in Massachusetts must also register, along with anyone intending to solicit in Massachusetts 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.

Exemptions

A number of groups are exempt from registering in Massachusetts:[1]

  • If an organization raises less than $5,000 and has no paid fundraisers
  • If an organization receives contributions from less than 10 people and has no paid fundraisers
  • Religious groups
  • Fundraising efforts for an individual
  • Fraternal organizations (unless they make a fundraising appeal for a charitable purpose)

The following groups are specifically named as exempt:[1]

  • American National Red Cross
  • Grand Army of the Republic
  • American Veterans of World War II, Korea, and Vietnam
  • Vietnam Veterans of America
  • AMVETS
  • United Spanish War Veterans
  • American Legion
  • Disabled American Veterans of the World War
  • Military Order of the Purple Heart
  • Paralyzed Veterans of America
  • Veterans of World War I of the U.S.A.
  • Veterans of Foreign Wars of the United States

Procedures

Nonprofits based out-of-state may register using either the Unified Registration Statement (URS) form or the state form. In-state nonprofits, however, must use the state form, Form PC.[1]

Documents

The following documents are required along with your registration form:[1]

  • Group's articles of organization or charter
  • Bylaws
  • List of current officers and directors and their mailing addresses
  • IRS determination letter (and if a group doesn't have one, a note that determination is pending)

Signature and fee

Two signatures are required, from the organization's president and another authorized officer or trustee.

If an organization is using the URS or the state Short Form, the fee is $150; if an organization is using the state Form PC, the fee is $100 in addition to a sliding scale fee from $35 to $100 depending on the organization's revenue.[1]

Filing procedures

Registration materials must be mailed to:[1]

Non-Profit Organizations/Public Charities Division
Office of the Attorney General
One Ashburton Place
Boston, MA 02108

Renewal

Registration is valid for one year. A registration renewal must be filed no later than four and a half months after end of the group's fiscal year. Organization's may request up to two six-month extensions. Renewals require the Form PC, as the URS is not accepted. Organizations must include IRS Form 990. The renewal fee is the same sliding scale used for the initial registration.[1]

Financial reporting

If an organization received more than $200,000 but less than $500,000, it must submit financial review by Certified Public Accountant. If it received more than $500,000, it must submit an audit by Certified Public Accountant. Private foundations that file a Form 990-PF with the IRS are exempt from this requirement.[1]

Recent news

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

See also

External links

Footnotes