Nonprofit regulation in North Carolina
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Nonprofit regulation in North Carolina 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.
North Carolina 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 North Carolina organization or based out-of-state. In North Carolina a number of groups and organizations are exempt from registration. In certain cases, exempt organizations must file for the exemption; it is not automatic.[1]
North Carolina 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[edit]
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[edit]
The North Carolina Secretary of State's Charitable Solicitation Licensing Section is the agency in the state governing rules concerning donor solicitation and registration.
See law: North Carolina General Statutes, sections 131F-1 through 131F-33
Registration requirements[edit]
Any nonprofit group or organization located in North Carolina, unless exempt, must register with the North Carolina Secretary of State's Charitable Solicitation Licensing Section. Any non-exempt nonprofit, in any state, intending to solicit in North Carolina must also register, along with anyone intending to solicit in North Carolina 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[edit]
A large number of groups are exempt from registering in North Carolina. Most of these organizations must file for exemption; it is not automatic.
The following groups are exempt from registering:[1]
- Any group with revenue under $25,000, if it has no paid fundraisers, officers or trustees (government grants and membership fees do not count towards this amount)
- Religious institutions
- Educational institutions (which includes all accredited institutions and their affiliates)
- Licensed hospitals
- Government agencies
- Noncommercial radio and TV stations
- Volunteer firefighters, EMTs and related services
- YMCA/YWCA
- Nonprofit continuing care facilities
- Tax-exempt nonprofit fire or emergency medical services that sell goods and services and do not ask for donations
- Bona fide volunteers
- Attorneys who advise others to make charitable contributions
- Community trusts as set out in 26 C.F.R. 1.170A9(e)(10) through (e)(14)
There are two exemption request forms: one for groups with revenue less than $25,000, 131F-3(3) Exemption Request Form, and one for educational institutions, Education Exemption Questionnaire.
Procedures[edit]
Nonprofits registering in North Carolina can use either the Unified Registration Statement (URS) form or the state form.[1]
Documents[edit]
The following documents are required along with the registration form:[1]
- Fundraising Disclosure Form for each contract a group enters into with fundraising consultants
- IRS determination letter, if any
- A signed IRS Form 990, Schedule A, and attachments (except schedule B) for preceding year
- Completed North Carolina Annual Financial Report Form for previous year
- Audit by a Certified Public Accountant
- If an organization has no preceding year on which to report, it must submit a budget for the current fiscal year
Signature and fee[edit]
A notarized signature from a treasurer or Chief Financial Officer is required.
The fee to register is on sliding scale based on previous year contributions, ranging from $0 to $200.[1]
Filing procedures[edit]
Registration materials must be mailed to:[1]
North Carolina Department of the Secretary of State
Charitable Solicitation Licensing Division
P.O. Box 29622
Raleigh, NC 27626
Renewal[edit]
Organizations must renew their registration each year;. Renewal must occur no later than four and half months after the close of a group's fiscal year; if using the calendar year, they must renew no later than May 15th. There is an automatic 60-day extension to file, and organizations can request by fax, along with copy of an IRS Form 8868, an extra 30-day extension.
To renew, organizations must complete the Renewal License Application Form for Charitable or Sponsor Organizations. The URS is also accepted, but organizations opting to use this method must also include the Fundraising Disclosure Form if they had any contracts with fundraisers. Organizations must also provide previous year financial information, including a signed and completed IRS Form 990, Schedule A, and attachment (except Schedule B) for the previous year; either a North Carolina "Annual Financial Report Form" or an independent Certified Public Accountant audit.
The fee to renew is same sliding scale used to determine the initial registration fee.[1]
Financial reporting[edit]
There are no additional annual financial reporting requirements beyond those described in the renewal process above.[1]
Additional requirements[edit]
All nonprofits in North Carolina must include disclosure on all solicitations and communication.[1]
Recent news[edit]
This section links to a Google news search for the term "North + Carolina + donor + privacy"
See also[edit]
External links[edit]
Footnotes[edit]
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 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
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