Changes to the Charitable Solicitations Act: What Every Nonprofit Should Know

Transcription

1 Changes to the Charitable Solicitations Act: What Every Nonprofit Should Know Community Foundation of Sarasota County August 28, 2014

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3 Organizations described by the IRS in section 501(c)(3) are charitable organizations, eligible to receive tax-deductible contributions. Organized and operated exclusively for exempt purposes No earnings may inure to any private stakeholder/individual May not participate in any campaign activity for or against political candidates

4 nonprofit board legal responsibilities Duty of care Actively participate in organizational planning; make sound and informed judgments/decisions Duty of loyalty Put the interests of the nonprofit before personal or professional concerns and avoid potential conflicts of interest Duty of obedience Ensure compliance with all applicable federal, state, and local laws and regulations; ensure that the organization remains committed to its established mission

5 nonprofit board fiduciary responsibilities oversee the nonprofit's finances evaluate financial policies approve annual budgets review regular financial reports ensure that the organization has the necessary resources to carry out its mission remain accountable to donors and the general public

6 what the public wants to see dollars invested in programs leading to positive outcomes leadership making wise decisions based on what is best for the organization accurate financial reporting

7 donors foundations corporate funders citizens volunteers media

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9 Florida Commissioner of Agriculture We are introducing a complete rewrite of Florida s charity laws so that Floridians will be protected from having their hard-earned money go to deceptive charities and Florida will not be a safe haven for bad actors from other states. -Adam Putnam January 14, 2014 Tampa Bay Times

10 Notice of Law Change Effective July 1, changes made during the 2014 legislative session to Florida s Solicitation of Contributions Act become law. The department is currently in the process of implementing the changes. Charities, Professional Solicitors and Professional Fundraising consultants will be notified as new information is required and changes are made. We appreciate your cooperation and patience during the implementation process.

11 Jenifer Schembri Principal

12 Florida Solicitation of Contributions Act The Florida Solicitation and Contributions Act (the Act ) generally applies to anyone who solicits contributions from Floridians, including charitable organizations, sponsors and fundraising professionals.

13 GENERAL RULES Every organization that solicits contributions in Florida must register annually and pay a fee, with the exception of the following exempt entities: Bona fide religious organizations Educational institutions Organizations that solicit only from its members Blood banks **effective July 1 st Organizations required to register must comply with the provisions of the Act.

14 SMALL ORGANIZATION EXEMPTION There is a limited exemption for organizations with less than $25,000 in total revenue, if fundraising is performed by uncompensated members, volunteers and officers.

15 SMALL ORGANIZATION EXEMPTION - Not required to submit the full registration form, but are required to file annually on an abbreviated form, without a registration fee. If the organization exceeds $25,000 at any time during its fiscal year, the organization must register within 30 days of crossing the $25,000 revenue threshold. - This annual exemption form is in lieu of a registration. Benefit is that a small organization is not required to register which triggers many provisions under the Act.

16 8 KEY PROVISIONS OF NEW LAW Financial Reporting Requirements Disaster Relief Reporting Florida Sales Tax Exemption Criteria Standard Solicitation Disclosure Requirement Elimination of Knowingly Standard for Unlawful Conduct Conflict of Interest Policy Collection Receptacles Ban on charitable solicitation

17 FINANCIAL REPORTING Registering organizations must submit either its Form 990 or a financial statement. This is not a new requirement.

18 NEW REQUIREMENTS: For organizations with annual contributions of $500,000 or more that submit a Form 990 the Form 990 must be prepared by a certified public accountant or another professional who prepares such forms or schedules in the ordinary course of his or her business.

19 For organizations that submit financial statements rather than the Form 990, the Act requires: Annual contributions of $1 million or greater audited financial statements by an independent certified public accountant Annual contributions of $500,000 to $1 million reviewed financial statements by an independent certified public accountant Annual contributions of less than $500,000 an audit, review or compilation are optional

20 The Department of Agriculture and Consumer Affairs may require a review or audit of any organization where it finds discrepancies. Additional reporting requirements are imposed on organizations that have more than $1 million in total revenue and spent less than 25% of its annual functional expenses on program services costs. The additional requirements related to the organization s leaders, compensation, travel expenses, and transactions with related parties as examples.

21 DISASTER RELIEF REPORTING Organizations that solicit contributions in Florida for a charitable purpose related to a specific disaster or crisis and receives at least $50,000 in contributions must file quarterly disaster relief financial statements until all funds are distributed. The Department of Agriculture and Consumer Affairs will post each disaster or crisis that is subject to these reporting requirements. Quarterly statements must detail the contributions secured and the manner in which the contributions are expended. Organizations registered for at least 4 consecutive years prior to soliciting contributions for a specified disaster are exempt from this new requirement.

22 FLORIDA SALES TAX EXEMPTION CRITERIA An organization eligible for Florida sales tax exemption will lose its eligibility (and their exemption if they have one) in the event that the Department of Agriculture and Consumer Affairs issues a final disqualification order based upon violations of the Act.

23 STANDARD SOLICITATION DISCLOSURE REQUIREMENT Registered organizations are required to include a standard disclosure, together with the organization s registration number in every solicitation, confirmation, receipt of reminder of a contribution. The Standard Disclosure is as follows: A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE WITHIN THE STATE. REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION BY THE STATE

24 The disclosure must include the toll free number for the Department of Agriculture and Consumer Affairs. In addition, the Act now requires the disclosure include a website which can be used to obtain the organization s registration information. Existing law if solicitation consists of more than one piece, the statement must be displayed prominently in the solicitation materials.

25 New law if the solicitation occurs on a website, then the disclosure must be conspicuously displayed on any webpage that identifies: A mailing address where contributions are to be sent, A telephone number to call to process contributions, or Provides for on-line processing of contributions.

26 ELIMINATION OF KNOWINGLY STANDARD FOR UNLAWFUL CONDUCT Prior Law it is unlawful for any person to knowingly submit false, misleading or inaccurate information in a document files with the Department of Agriculture and Consumer Affairs The Act removes the word knowingly from this section, lowering the standard for what constitutes unlawful conduct in charitable solicitations

27 Increases the importance of the organizations to carefully prepare and review any documents submitted to the Department of Agriculture and Consumer Affairs and to public in connection with solicitations. Sanctions and penalties have also been increased under this Act. One example is failure to provide an accurate Form 990 in connection with the organization s registration may carry significant penalties under the Act.

28 CONFLICT OF INTEREST POLICY Each organization required to register under the Act are required to adopt a conflict of interest policy, and the policy itself must require an annual certification of compliance with the policy by all directors, officers and trustees of the organization. A copy of this annual certification must be submitted as part of the Organization s annual registration. A conflict of interest is a related party transaction between a charitable organization and another party in which an officer, director or trustee of the charitable organization has a direct or indirect financial interest.

29 CONFLICT OF INTEREST POLICY The basis of a conflict of interest policy is not to ban these transactions, but to establish a policy of disclosure and approval by unrelated or disinterested directors or trustees following the disclosure to ensure the best interests of the organization. A conflict of interest policy is good governance for all nonprofit organizations.

30 COLLECTION RECEPTACLES: Organizations that are charities required to register under the Act must display a permanent sign on all collection receptacles on each side which contains the following information in letters at least 3 inches in height and no less than ½ inch in width, in a contrasting color: the name, business address, telephone number and registration number of the charitable organization; and Upon request, documentation of tax-exempt status and registration issued by the Department of Agriculture and Consumer Affairs

31 COLLECTION RECEPTACLES: Organizations that are not charitable must place a sign in public view on any collection receptacle that provides This is not a charity. Donations made here support a for-profit business and are not tax deductible.

32 WHO IS SOLICITING? There is a new ban on individuals who have been convicted of a felony in the last 10 years involving charitable solicitations, fraud, theft, or embezzlement. These individuals may not solicit charitable contributions on behalf of any organization. If an organization s officers, directors or trustees have had their right to solicitation revoked under this provision or in any other state, the Department of Agriculture and Consumer Affairs may ban the organization as a whole from solicitation.

33 FLORIDA SOLICITATION OF CONTRIBUTIONS ACT Presented by: Jenifer S. Schembri, CPA, Esq. Board Certified in Tax Law BLALOCK WALTERS, P.A th Street West Bradenton, FL (941)

34 Rob Lane, CPA Managing Shareholder

35 resources State of Florida Services/Business-Services/Charitable-Organizations IRS Stay Exempt Guide Council of Nonprofits Kerkering Barberio Blalock Walters

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