Nonprofit regulation in Tennessee

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Nonprofit regulation in Tennessee 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.

Tennessee 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 Tennessee organization or based out-of-state. In Tennessee a number of groups and organizations are exempt from registration. In certain cases, exempt groups have to file for exemption.

Tennessee is one of 32 states that allows registrants to use either the Unified Registration Statement (URS) or the state registration form. 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.

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 Tennessee Secretary of State's Division of Charitable Solicitation and Gaming is the agency in the state that oversees rules governing donor solicitation and registration.

See law: Tennessee Code sections 48-101-501 through 48-101-522

Registration requirements

Seal of Tennessee

Any nonprofit group or organization located in Tennessee, unless exempt, must register with the Tennessee Secretary of State's Division of Charitable Solicitation and Gaming. Any non-exempt nonprofit, in any state, intending to solicit in Tennessee must also register, along with anyone intending to solicit in Tennessee 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 Tennessee. Certain organizations have to file for exemption.

The following groups are exempt from registering:

• If an organization raised less than $30,000 (gross contributions that include the entire value of noncash items raised by outside fundraiser; membership fees do not count toward the limit)

To qualify for this exemption, organizations that fit the description must file an Exemption Request Form either online or via mail

• Religious groups (however, religious groups required to file an IRS Form 990 with the IRS are not exempt and must register)
• Educational groups
• Volunteer firefighter, rescue and civil defense organizations
• Community fairs and related events qualified by Tennessee Commission of Agriculture
• Political entities required to file with the Federal Election Commission or state commissions
• Hospitals and nursing homes regulated by Tennessee Department of Health
• Congressionally charted corporations

Procedures

Nonprofits registering in Tennessee can use either the Unified Registration Statement (URS) form, apply online, or via the state form.

Documents

The following documents are required along with your registration form:

• Articles of incorporation
• Bylaws
• IRS Determination letter

Signature and fee

Two officer signatures are required; notarization is not required.

The registration fee is $50.

Filing procedures

Organizations may register online or by submitting materials via mail. Registration materials must be mailed to:

State of Tennessee Department of State
Division of Charitable Solicitation and Gaming
William R. Snodgrass Tennessee Tower
312 Rosa L. Parks Avenue, 8th Floor
Nashville, TN 37243

Renewal

Organizations must renew their registration annually. Renewal is due by the last day of the sixth month after a group's fiscal year, or June 30 if using the calendar year.

Extensions of up to 90 days are available by filing an Extension Request form, either online or via mail.

Organizations may renew online or via mail by filing Application to Renew Registration of a Charitable Organization form, or just a URS. Organizations must provide: Summary of Financial Activities; a copy of a recent IRS Form 990; an audited financial statement if an organization received more than $500,000; and copies of any fundraising contracts.

The renewal fee is based on an organization's gross revenue on a sliding scale ranging from $100 to $500.

Financial reporting

If an organization registers during the first year of its operation, it must complete a quarterly financial report at the end of each quarter of its current fiscal year and submit it to the Division of Charitable Solicitation and Gaming. It is due 30 days at the end of each quarter and, like renewal, may be filed online or in the mail via a Quarterly Financial Report form.

Fee

There is no fee to submit the financial report.

Recent news

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

Tennessee Donor Privacy News Feed

See also

• Tennessee
• Tennessee Secretary of State
• IRS code, section 501
• Nonprofit organization

External links

• Tennessee Secretary of State, Division of Charitable Solicitations and Gaming