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Nonprofit regulation in Minnesota

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Nonprofit regulation in Minnesota 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.


Minnesota 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 Minnesota organization or based out-of-state. In Minnesota a number of groups and organizations are exempt from registration. These groups must apply for exemption; it is not automatic.[1]

Minnesota 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.

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 Minnesota Attorney General is the authority in the state that oversees rules governing donor solicitation and registration.

DocumentIcon.jpg See law: Minnesota Statutes, sections 309.50; 309.515; 309.52; and 309.53

Registration requirements

Seal of the State of Minnesota

Any nonprofit group or organization, unless exempt, located in Minnesota must register with the Minnesota Attorney General. Any non-exempt nonprofit, in any state, intending to solicit in Minnesota must also register, along with anyone intending to solicit in Minnesota on behalf of a nonprofit. Nonexempt 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 large number of groups are exempt from registering in Minnesota. Groups that are exempt, however, must apply for exemption by filing the Verification of Exemption From Registration form.

The following groups are exempt from registering:[1]

  • Any organization that did not or does not plan to receive more than $25,000, if they have no paid fundraising staff
  • Religious organizations
  • Educational groups
  • Private foundations that do not solicit from more than 100 people
  • Membership organizations
  • Appeals for single individuals

Procedures

Nonprofits registering in Minnesota can use either the Unified Registration Statement (URS) form or the state form. Organizations that use the URS must also submit the State of Minnesota Supplement to Unified Registration Statement.[1]

Documents

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

  • Articles of incorporation
  • IRS determination letter, if available
  • Most recently filed IRS Form 990 or financial statement
  • List of board of directors
  • Copy of audited financial statements if total revenue exceeds $750,000

Signature and fee

Two signatures from any two officers is required. Signatures do not need to be notarized. Before signing, however, board of directors must adopt a resolution approving and certifying contents of the application.

The registration fee is $25.[1]

Filing procedures

Registration materials must be mailed to:[1]

Office of the Attorney General
1200 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101

Renewal

No renewal is required, but all groups must file an annual financial report. Failure to report will result in a cancelled registration.[1]

Financial reporting

An annual financial report must be filed no later than the 15th day of the seventh month following the end of an organization's fiscal year. To file, organizations must complete either the Unified Registration Statement (URS) or the state form. If using the URS, however, organizations must file a supplemental form. The financial statement must contain:[1]

  • A balance sheet, statement of income and expenses and statement of functional expenses
  • If an organization received more than $750,000, they must provide a copy of a Certified Public Accountant audit
  • Most recently filed IRS Form 990, if available
  • List of board of directors

Extensions

Organizations may receive an extension up to four months; requests can be made electronically.[1]

Fee

There is a $25 fee to submit the financial report.[1]

Recent news

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

See also

External links

Footnotes