OHIO STATE FUNDRAISING REGISTRATION AND REGULATION

Transcription

1 Last Updated: July 2013 OHIO STATE FUNDRAISING REGISTRATION AND REGULATION Calfee, Halter & Griswold LLP 1 Table of Contents 1. Overview 2. Ohio Charitable Laws 3. Resources 1. Overview To protect residents, legitimate charitable organizations and the charitable community, most states have laws requiring 501(c)(3) charitable organizations that solicit contributions from the public to register and file periodic reports. The states that do not require registration are: Vermont, Indiana, Iowa, South Dakota, Nebraska, Texas (with limited exceptions), Wyoming, Montana, Idaho, Nevada and Delaware. Although specifics vary, the 39 states and the District of Columbia that regulate charitable fundraising generally require covered organizations to register with a state agency before soliciting the state s residents for contributions. Most of the state fundraising statutes exempt certain organizations, such as charitable organizations whose gross contributions fall below certain thresholds, from their registration and filing requirements. Many states also exempt religious, educational and other defined categories of charitable organizations from the registration and filing requirements. The information that must be submitted in or attached to the state registration forms varies from state to state, and often includes periodic financial reports, copies of organizational documents, and the identification of directors and officers of the organization. Many states accept a copy of IRS Form 990 in place of some or all of the required financial reports. All information submitted in the registration reports is generally made available to the public. 1 Previous reviews completed by Pro Bono Research Group, Moritz College of Law, The Ohio State University: David Boylan & Randy Leppla. - 1

2 To determine specific registration and filing requirements, charitable organizations that are engaged in or about to engage in fundraising should consult these guides, experienced counsel and the agencies in all states in which the organization expects to be doing business. Doing business in a particular state may include any of the following: (1) soliciting contributions by mail, phone or otherwise from individuals, businesses or other charities located in the state; (2) conducting mission-based programs; (3) employing individuals; (4) maintaining a checking account; or (5) owning or renting property. In some states, local governments or municipalities may also require organizations soliciting charitable contributions to register and file periodic reports. These local regulations are beyond the scope of these guides. Many states, including some that do not require charities to register and report, regulate fundraising activity by professional solicitors and fundraising counsel. These regulations are also beyond the scope of these guides. a. Unified Registration Statement The Unified Registration Statement (URS) is an alternative to filing state registration forms in cases where covered charitable organizations are soliciting contributions in multiple states. The form is an ongoing project of the National Association of Attorneys General (NAAG) and the National Association of State Charity Officials (NASCO) in collaboration with the Multi-State Filer Project, Inc. (MFP) All states that require covered charitable organizations to register will accept the URS in lieu of their own registration form except for the states of Colorado, Florida and Oklahoma. The states that accept the URS form, however, may continue to require additional financial reports or other filings, such as copies of the latest IRS Form 990, the organization s IRS determination letter, or other organizational documents. In addition, the following states also require the filing of supplemental forms and/or information in addition to the URS: Arkansas, California, Georgia, Maine, Minnesota, Mississippi, North Carolina, North Dakota, Tennessee, Utah, Washington, West Virginia, Wisconsin and the District of Columbia. Massachusetts accepts the URS for initial registration only The URS can be downloaded at This website contains helpful information about registration requirements and an up-to-date list of the states that accept the URS. It is important to note that a separate URS must be submitted in each state where the charitable organization is required to register. There is no central or reciprocal registration process

3 b. Fundraising Via the Internet and the Charleston Principles Most of the state statutes that require registration literally apply to internet solicitations that reach residents of the state. However, minimum contacts with the state and the practicality of applying these statutes to activities beyond more traditional fundraising techniques (e.g., telephone, direct mail, in-person solicitations) raise a number of issues that have troubled and perplexed state charity officials. Therefore, the National Association of Attorneys General and the National Association of State Charity Officials have published the Charleston Principles, which provide guidelines to states as to when covered charities may be required to register with regard to charitable solicitations via the internet. The Charleston Principles are guidelines only; they are not binding on the states and may change as laws change. Ohio has not yet enacted any statutes or adopted any regulations speaking directly to the jurisdictional issues surrounding fundraising via the internet within the state. Under the Charleston Principles, a charitable organization that has its principal place of business in the state (and is thus domiciled in the state) and uses the internet to solicit contributions in that state must register in that state. If the organization is not domiciled in a state, it still must register if (1) it specifically targets persons in the state or receives contributions from persons in the state on a repeated and ongoing or substantial basis through or in response to website solicitations or (2) its non-internet activities alone would require registration in the state (e.g., direct mail or telephone solicitation into the state). The foregoing is a summary only. For more information on the Charleston Principles, including a complete copy with annotations, see It is strongly recommended that charitable organizations intending to solicit contributions via the internet seek the advice of experienced counsel concerning registration under state fundraising laws. c. Prohibited Conduct Most states have statutes that prohibit a variety of false, misleading, unfair and/or deceptive practices in connection with charitable fundraising. For example, states typically prohibit organizations from making statements that funds are being solicited for a charity or will be used for charitable purposes when such is not the case. These statutes authorize state attorneys general to prosecute violations, and courts may impose monetary fines and criminal penalties. Charitable organizations should seek advice from experienced counsel if they have doubts or concerns regarding the scope of their fundraising activities

4 Many states also have additional statutes or regulations governing charitable gaming, such as casino nights sponsored by charitable organizations. The scope of these regulations is beyond the scope of these guides. d. Solicitation Format and Content Requirements Many states have particular requirements for the content of materials used to solicit charitable contributions. Usually, such state statutes will require certain disclaimers to be included and may regulate the font size of the disclaimers. Such requirements are beyond the scope of these guides. 2. Ohio Charitable Solicitation Laws a. General Regulation of the solicitation of funds by charitable organizations in Ohio is governed by Chapter 1716 of the Ohio Revised Code. A charitable organization is defined as either (i) any person determined by the Internal Revenue Service to be a tax-exempt organization pursuant to 26 U.S.C. 501(c)(3) or (ii) any person that is or holds itself out to be established for any benevolent, philanthropic, patriotic, educational, humane, scientific, public health, environmental conservation, civic, or other charitable purpose or for the benefit of law enforcement personnel, fire fighters, or other persons who protect the public safety, or any person who in any manner employs a charitable appeal as the basis of any solicitation or an appeal that suggests that there is a charitable purpose to any solicitation. "Solicit" or "solicitation" is defined as any request, directly or indirectly, for money, property, financial assistance, or any other thing of value on the plea or representation that all or any part of such thing of value will be used for a charitable purpose or will benefit a charitable organization. Every charitable organization that intends to solicit contributions in Ohio must file an annual registration statement online with the Ohio Attorney General s office unless such organization comes within a statutory exemption (as discussed in greater detail below). These forms and access to the online system are available at: ohioattorneygeneral When filing the annual registration statement online, the organization must answer detailed questions regarding its operations and fundraising activities, provide the names and addresses of any directors and officers and provide copies of certain organizational and tax-exemption documents

5 b. Annual Reporting Requirements Organizations required to register must submit the registration statement annually online with the Ohio Attorney General. As part of the online registration process, organizations will also need to provide certain annual financial report information. \ The financial report information, which is governed by O.R.C , shall include all of the following: i) A balance sheet; ii) A statement of support, revenue, and expenses, and any changes in the fund balance; iii) The names and addresses of the charitable organizations, fundraising counsel, professional solicitors, and commercial co-venturers used, if any, and the amounts of money received from each of them, if any; and iv) A statement of functional expenses that shall include, but not be limited to, expenses of the following categories: (a) Program; (b) Management and general; and (c) Fund-raising. The attorney general, by rule, may require additional information as part of the annual financial report. Any consolidated financial report information filed with the attorney general must include information about the parent charitable organization and the financial information arising from the activities of each chapter, branch, or affiliate of the charitable organization in Ohio that is covered by the financial report. c. Filing Fees The guidelines for filing fees required for registration are established under O.R.C (D) and are based on the contributions received by the charitable organization in Ohio in its most recent calendar or fiscal year. Organizations receiving contributions under five thousand dollars annually must register but are not required to pay any fees. Other organizations fees are as follows: (a) Fifty dollars, if the contributions received for the last calendar or fiscal year were five thousand dollars or more but less than twenty-five thousand dollars; (b) One hundred dollars, if the contributions received for the last calendar or fiscal year were twenty-five thousand dollars or more but less than fifty thousand dollars; and - 5 -

6 (c) Two hundred dollars, if the contributions received for the last calendar or fiscal year were fifty thousand dollars or more. d. Exemptions Certain charitable organizations may be exempt from the registration requirements described above. O.R.C identifies exempt charitable organizations, which include the following: (i) Any religious agencies and organizations, and charities, agencies, and organizations operated, supervised, or controlled by a religious organization; (ii) Any charitable organization that meets all of the following requirements: (a) It has been in continuous existence in this state for a period of at least two years; (b) It has received from the IRS a determination letter that is currently in effect, stating that the charitable organization is exempt from federal income taxation under subsection 501(a) and described in subsection 501(c)(3) of the Internal Revenue Code; (c) It has registered with the attorney general as a charitable trust pursuant to O.R.C ;; and (d) It has filed an annual report with and paid the required fee to the attorney general pursuant to O.R.C (iii) Any educational institution, when solicitation of contributions is confined to alumni, faculty, trustees, or the student membership and their families; (iv) Every person other than an individual, when solicitation of contributions for a charitable purpose or on behalf of a charitable organization is confined to its existing membership, present or former employees, or present or former trustees; (v) Any public primary or secondary school, when solicitation of contributions is confined to alumni, faculty, or the general population of the local school district; (vi) Any booster club that is organized and operated in conjunction with and for the benefit of students of public primary or secondary schools; (vii) Any charitable organization that does not receive gross revenue, excluding grants or awards from the government or an organization exempt from federal income taxation under section 501(a) and described in section 501(c)(3) of the Internal Revenue Code, in excess of twenty-five thousand dollars during its immediately - 6 -

7 preceding fiscal year, if the organization does not compensate any person primarily to solicit contributions. However, registration is required once gross revenue, excluding grants or awards from the government or a tax-exempt organization, exceeds twenty-five thousand dollars. The charitable organization, within thirty days after the receipt of the revenue, must file the registration statement described above. If a charitable organization is exempt from the registration requirement, it is exempt from the annual reporting requirement as well. 3. Resources Further information regarding charitable organizations and registration requirements may be found from the following sources: National Association of State Charity Officials, Multistate Filing, The Unified Registration Statement, Internal Revenue Service, Ohio Attorney General s Office, Charitable Law Section,