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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.
- 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 Minnesota Attorney General is the authority in the state that oversees rules governing donor solicitation and registration.
See law: Minnesota Statutes, sections 309.50; 309.515; 309.52; and 309.53
Registration requirements
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
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 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
