Pennsylvania’s Solicitation of Funds for Charitable Purposes Act (“Charitable Purposes Act”) has long required registration of charitable organizations with the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations (the “Bureau”). New amendments to that act will begin to impact charitable organizations effective as of February 20, 2018, most notably for smaller charities to avoid the expense of formally audited financials.
The amendments to the Charitable Purposes Act increase the dollar threshold of gross annual contributions to an organization that trigger the necessity of a CPA or public accountant audit of the organization. Prior to the amendment, charitable organizations with gross annual contributions equal to or exceeding $300,000 were obligated to file audited financial statements. After the amendment, charitable organizations with gross annual contributions equal to or exceeding $750,000 must file audited financial statements. This shift in monetary thresholds was intended to benefit charitable organizations, so as to save smaller organizations from the hassle and expense of an audit.
Just by way of example, if a charitable organization would have received $700,000 in annual contributions prior to the amendment, that organization would have been required to undergo an audit of its financial records. With this new amendment to the Charitable Purposes Act, however, only a review of the financial statements is now required in the same circumstance.
Note that dollar thresholds have also shifted relative to reviews, compilations and internally prepared financial statements. After the change, charitable organizations with gross annual contributions from $100,000 to less than $250,000 may now just obtain a compilation of their financial statements to be filed with the Bureau. Charitable organizations with less than $100,000 are permitted to submit internally prepared financial statements in order to meet the requirements under the Charitable Purposes Act.
Next, organizations seeking to file their annual registration statements on their given due date can now wait to send them until the actual due date (provided the statement is postmarked as of the due date).
Finally, various Charitable Purposes Act filings made by organizations will be met with deemed approval time after 15 days, as opposed to 10 days. In other words, the Bureau now has 5 additional days to question a filing before it will be deemed approved.
DISCLAIMER: This article is for educational purposes only and is not intended as a substitute for legal advice. Please contact GKH’s Corporate Practice Group directly with questions about how these laws and other nonprofit laws and procedures relate to your specific organization.
Prepared by GKH attorneys Peter Kraybill and Jonna Stratton. Attorneys Kraybill and Stratton are members of GKH’s Corporate Practice Group.