Nonprofit regulation in Michigan
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Nonprofit regulation in Michigan 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.
Michigan 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 Michigan organization or based out-of-state. In Michigan a number of groups and organizations are exempt from registration. Organizations that believe they are exempt must apply and be approved for exemption by the Attorney General's Charitable Trust Section.[1]
Michigan 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 Michigan Attorney General's Charitable Trust Section is the agency in the state governing rules concerning donor solicitation and registration.
See law: Michigan Code of Laws sections 400.271 through 400.294
Registration requirements
Any nonprofit group or organization located in Michigan, unless exempt, must register with the Charitable Trust Section. Any non-exempt nonprofit, in any state, intending to solicit in Michigan must also register, along with anyone intending to solicit in Michigan 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 Michigan. Exempt groups, however, must apply for exemption and be approved by Attorney General's Charitable Trust Section by using the Request for Exemption form.
The following groups are exempt from registering:[1]
- Organizations receiving less than $25,000 that have no paid fundraisers
- Religious organizations (these groups are excluded from the state's definition of charitable organization and thus these laws do not apply to them)
- Educational organizations certified by Michigan State Board of Education
- Appeals for named individuals, assuming there were no paid fundraisers and all money, less reasonable expenses, went to the individual
- Government entities
- Veterans' organizations
- Hospitals licensed in the state
- Parent-teacher organizations
- Advocacy groups
- Private foundations
- Child care providers
- Organizations whose sole source of funding is another charitable group
- Service clubs
- Any nonprofit solely under control of a religious or fraternal society
- Any person registered under and complying with requirements of the Michigan Public Safety Solicitation Act
Procedures
Nonprofits registering in Michigan can use either the Unified Registration Statement (URS) form or the state form. If using the URS, however, organizations must complete the "Michigan Supplement to IRS Form 990-EX" if the group has received more than $100,000 and files Form 990-EZ.[1]
Documents
The following documents are required along with your registration form:[1]
- Articles of incorporation
- Bylaws
- Names and addresses of officers and board of directors
- For out-of-state groups, a copy of "Certificate of Authority to Transact Business in Michigan" if they are incorporated in another state and have chapters in Michigan
- IRS determination letter
- Copies of fundraising contracts
- Samples of solicitation materials
- Most recent IRS Form 990, unless newly formed
- Note: if an organization received more than $500,000, it must submit an audited Certified Public Accountant financial statement; if it received more than $250,000 but less than $500,000, Certified Public Accountant reviewed statements are sufficient.
Signature and fee
One signature, by either a principal officer or director, is required.
There is no registration fee.[1]
Filing procedures
Registration may be filed electronically. Alternatively, all registration materials may be mailed to:[1][8]
Department of Attorney General, Charitable Trust Section
P.O. Box 30214
Lansing, MI 48909
Renewal
Registration expires seven months after the end of an organization's fiscal year. It must be renewed 30 days before expiration. Extensions may be applied for in writing, and are generally granted for five months. Organizations may choose to renew using the URS or the state Renewal Solicitation Form. If using the URS, however, organizations must complete Michigan Supplement to IRS Form 990-EX if they received more than $100,000 and file Form 990-EZ. Organizations must also include the following:[1]
- Copies of fundraising contracts
- Samples of solicitation materials
- Copy of most recent [IRS Form 990]], unless newly formed
- Note: if an organization received more than $500,000, it must submit an audited Certified Public Accountant financial statement; if it received more than $250,000 but less than $500,000, then a Certified Public Accountant reviewed statement is fine.
The renewal application can be submitted either online or in the mail. There is no renewal fee.
Financial reporting
There are additional annual financial reporting requirements beyond what is required for annual registration renewal.[1]
Recent news
This section links to a Google news search for the term "Michigan + donor + privacy"
See also
External links
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 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
- ↑ Michigan Attorney General, "How to Submit Your Forms," accessed February 2, 2015
