Nonprofit – Pennsylvania Bureau of Charitable Organization Alert

Nonprofit – Pennsylvania Bureau of Charitable Organization Alert

On December 22, 2017 Pennsylvania Governor Tom Wolf signed House Bills No. 1420 and 1421 into law which change state registration and filing requirements for charitable organizations in Pennsylvania.

House Bill No. 1420 amends filing thresholds for charitable organizations.  The Bureau of Charitable Organizations bases the filing threshold on gross annual contributions defined as “total national contributions from all sources based on the organization’s immediate preceding fiscal year”.  The goal with increasing the thresholds is to relieve the disproportionate financial burden on smaller organizations.  Gross contributions include contributions, bequests, trust income, and special event funds.  They do not include government grants or fee-for-service revenue.

Currently, the thresholds for filing with the Pennsylvania Bureau of Charitable Organizations are as follows:

• $300,000 or > of contributions – audited financial statements
• $100,000 to less than $300,000 of contributions – reviewed or audited financial statements
• $50,000 to less than $100,000 of contributions – compiled, reviewed, or audited financial statements
• Less than $50,000 of contributions – internally prepared financial information or compiled, reviewed, or audited financial statements

With the passing of House Bill No. 1420, effective February 20, 2018, the thresholds increase as follows:

• $750,000 or > of contributions – audited financial statements
• $250,000 to less than $750,000 of contributions – reviewed or audited financial statements
• $100,000 to less than $250,000 of contributions – compiled, reviewed, or audited financial statements

House Bill No. 1420 remains silent on requirements for Organizations receiving less than $100,000 in annual gross contributions.   Once the Bureau of Charitable Organizations releases the filing instructions, including the new thresholds, we expect to see a determination regarding any filing requirements for organizations who fall below the $100,000 threshold.

It is important to note that while these are the requirements for filing with the Pennsylvania Bureau of Charitable Organizations, all organizations need to be aware of IRS and other state filing requirements as well as any additional bylaw, contractual, or provider requirements.

House Bill No. 1421 clarifies that any registration statement postmarked on or before the renewal date will be considered on time and will not accrue late fees.  It also calls for a 15-day review period for the Bureau of Charitable Organizations. The goal of House Bill No. 1421 is to save nonprofits from incurring fines and penalties and to align the due date requirements with the IRS 990 and other state filing requirements. The effective date for House Bill No. 1421 is also February 20, 2018.

Article written by Marybeth Olree, to read more about her click here. Please contact Marybeth C. Olree, CPA  (mcolree@herbein.com), Linda S. Himeback, CPA (lshimeback@herbein.com, or Justine Bauer, CPA (jnbauer@herbein.com) with any additional question.