DCP: Frequently Asked Questions from Charitable Organizations and Paid Solicitors

Frequently Asked Questions from Charitable Organizations and Paid Solicitors

 

Sections 21a-175 through 21a-190l, Connecticut General Statutes

 

 

How does an organization register?  Application for registration is made annually. An organization which has never been registered with Connecticut files an initial application using the initial application form, which can be downloaded from the Department of Consumer Protection website. Already-registered organizations receive a renewal registration application by mail from the Department. If a registered organization does not receive a renewal form or needs another copy, it can email ctCharityHelp@ct.gov and request a renewal form. There is an annual $50.00 registration fee. With both applications, the organization is required to submit a financial report of the organizationís most recent fiscal year as well as information about the organization, its personnel, and its purposes. The Department will mail a verification of registration to you when it is processed. You can check the status of your registration at any time on the Department of Consumer Protection website.

 

I want to fundraise/hold a fundraiser/event for X charity, do I have to file anything with Public Charities?  In order to fundraise for an existing charity, the prospective fund raiser will need to have the charityís WRITTEN permission to use its name. Most often, charities have development offices to assist volunteer fund raisers. Such a volunteer does not have to file anything on behalf of the charity, but he or she should make sure the charity is registered with Public Charities prior to any type of solicitation.  

 

What financial information is required with the registration application?

A copy of an Internal Revenue Service Form 990, Form 990N, Form 990-EZ, or Form 990-PF(whichever is appropriate for the organization), for its most recently completed fiscal year end. If an organization files a Form 990N, it must complete a Form 990 or 990EZ for state purposes.  Please note that even if the organization is not exempt from federal taxation and, therefore, does not file one of these forms with the IRS, it still must complete the form for state purposes.

 

If the IRS form the organization submits with its registration application reports gross receipts exceeding $500,000 (excluding grants or fees from government agencies and revenue from trusts held by a trustee, usually a bank, for the benefit of the organization), it must also file an audit report of an independent public accountant. The auditor's opinion can relate to the IRS form or to a separate set of audited financial statements. It is very important to observe the distinction between gross receipts and gross revenue for purposes of the audit threshold. Gross receipts include the total income from an activity without deducting expenses related to the activity. For example, if $50,000 worth of raffle tickets are sold and the prizes cost the organization $30,000, the full $50,000 is counted toward gross receipts, not just the $20,000 the organization netted.

 

If the organization is newly organized and has not yet completed its initial fiscal year, a financial report will not be required. The organization will have to include a financial report when and if it renews its registration.

 

 

Do I need to file an audit?  What kind of audit is required?  If the IRS form the organization submits with its registration application reports gross receipts exceeding $500,000 (excluding grants or fees from government agencies and revenue from trusts held by a trustee, usually a bank, for the benefit of the organization), it must also file an audit report of an independent public accountant. The auditor's opinion can relate to the IRS form or to a separate set of audited financial statements. If the audit report refers to a set of financial statements, those statements must be included with the report. The auditorís report must be on the auditorís letterhead and must be signed by the auditor. Only an audit report fulfills the requirement; compilations and review services offered by certified public accountants are not acceptable.

  

 

What if a registration is rejected?  Registrations are not approved unless all the required forms, fees and required attachments are included with the application. If your application is incomplete, the Department will email a notice to you which will detail any additional information or material you must provide to complete your application. Once the application is complete, the Department will send an approval of your registration application. Any organization whose registration is deemed deficient may request a hearing on its noncompliant status within seven days after receipt of the notice that the registration application is deficient. A hearing shall be held within seven days after the Department receives a request, and a decision must be issued by the Department no later than three days after the hearing.

 

 

Do I have to register with Public Charities first or get my 501(c)(3) status with the IRS first?   An organization that wishes to solicit charitable funds in Connecticut is not required to be a 501(c)(3) or incorporated as a non-stock corporation prior to registration with Public Charities. Charities MUST register with Public Charities BEFORE any type of solicitation in Connecticut. They do not have to wait until they are a 501(c)(3) charity. Some charities need to start soliciting in order to raise funds to pay the IRS application fee and any other costs associated with becoming a 501(c)(3) IRS-recognized charity. If a charity does solicit before obtaining this status, the charity should not misrepresent its tax-deductible status.  More information regarding tax exempt status can be obtained by calling the IRS at 1-877-829-5500.

 

 

My organization is located outside the State of Connecticut and our only contact is via the internet, so do we need to register?   A set of principles devised during a meeting of Charities officials in Charleston, South Carolina, called the Charleston Principles, addresses the issue of internet solicitation. The State of Connecticut has not legislatively adopted the Charleston Principles, but we do abide by them. Pursuant to the Charleston Principles, if an organization is located in CT and only solicits via the internet (donate button on website) it needs to register in CT. If an organization is located outside of CT and only solicits via the internet (donate button on website), it does not need to register. This assumes that a resident of Connecticut just happens across the out-of state organization's website on their own accord; the organization did not direct the resident to the website. For instance, a Connecticut resident wants to help dolphins and searches the internet for a group that helps dolphins. If the organization that the resident chooses is located outside of CT, the organization does not need to be registered in the state, just because someone in Connecticut happened upon its website. However, if the out-of-state charity decides to contact this Connecticut resident for another donation, or otherwise solicits a resident of Connecticut, it will need to register before doing so.     

 

Does my organization/private foundation/client need to file a Form 990PF with Public Charities?   Per Internal Revenue Services instructions for private foundations filing the Form 990PF, the IRS requires that a foundation which files a 990PF with the IRS also file a copy with the State Attorney Generalís office in the State in which it is located. (Thus, if a foundation is located in Connecticut, it needs to file its Form 990PF with the Connecticut Attorney General's Office.)  This is an IRS rule that is not part of the Connecticut Solicitation Act, and further information can be obtained from the Attorney Generalís office. If the foundation solicits funds or charitable contributions, or if it is a privately-funded foundation and solicits funds from the public, it should be registered with Public Charities and also send a copy of the Form 990PF to the Attorney General's office per IRS instructions. If it is strictly privately-funded it only needs to file with the Attorney General's Office.  

 

Does a claim for exemption need to be re-filed?  No, a claim of exemption is only filed once, as long as the charity continues to qualify for the exemption. For example, if an organization claims an exemption using the $50,000 threshold exemption, and it goes over the limit 2 out of 3 years, it will need to register. If it then goes back under $50,000 threshold, it may reapply for exemption.

 

Does my group qualify for a religious exemption?  Any duly organized religious corporation, institution or society may apply for an exemption using Form CPC-54. The organization may be requested to submit additional information that the Department may require to substantiate this exemption. 

  

What is my charityís renewal date?   New applications are always due eleven (11) months after the organizationís fiscal year ends. For example, December year-ends are due by November 30. 

  

 

Why is the annual registration less than 12 months?  Registrations always expire on the last day of the eleventh month following the end of the organizationís fiscal year-end. This means your initial registration period may be less than 12 months, but it may also be more than 12 months. All timely renewals will be given the full 12-months time.

 

   

How much do I owe?  The registration fee is $50. If the registration is received after it has expired, a $25 per-month late fee is charged. The late fee is charged if the report is received, not postmarked, after the expiration date. The late fee is charged for every month or any part of a month the report is late.

 

 

I sent the $25 late fee, why do I owe another $25?   Late fees continue to accrue every month until the report is accepted.

 

 

My organization wants to hold a raffle and I was told I needed to contact your office?    

Raffle permit information can be found in the Charitable Games section of our website.   

     

 

My organization wants to hold an auction, do I need a permit for that?   The Solicitation Act does not regulate the type of fundraising an organization conducts. Fundraising can be anything from a lemonade stand to a raffle, to whatever creative idea an organization may have. The organization may need to contact their town, or the local or state police for more information regarding requirements or restrictions.

 

How do I withdraw my charitable registration?  If an organization has decided to no longer solicit funds in the State of Connecticut, it may just allow its registration to expire. In this case, the records will reflect "expired." As an option, it may send to Public Charities a letter of withdrawal, withdrawing its registration from the Public Charities records. 

Questions from Paid Solicitors and Fund Raising Counsel

 

I am a Fund Raising Counsel, what are my filing requirements?  In accordance with the Act, there must be a contract between you and the charity, the charity must be registered, and you are required to send a copy of such contract to Public Charities.   

 

Is what I do considered a Fund Raising Counsel or Paid Solicitor?  Please see the statutory definitions in Section 21a-190a(6) and (7), Connecticut General Statutes for the distinctions.  

Other questions -- incorporation, tax exemptions, games of chance

Registering with the Department of Consumer Protection to solicit funds, or claiming an exemption from registration, is unrelated to incorporating, obtaining tax exemption (state and federal) or being licensed to conduct games of chance (i.e. raffles, Las Vegas nights). There are other state and federal agencies you need to contact for information about those matters.

 

Incorporating

Although a charity does not need to incorporate, there may be advantages in doing so. We urge you to seek professional advice. In Connecticut, organizations incorporate through the Secretary of the State, 30 Trinity St., Hartford, CT 06106. Website: www.sots.state.ct.us

 

 

Tax Exemption

If an organization seeks exemption from federal income tax, the organization must apply to the Internal Revenue Service. Information about this can be obtained from the IRS by calling 1-800-829-FORM (3676) and ordering Publication 557, "Tax Exempt Status for Your Organization," or on the web at www.irs.govWe urge you to seek professional advice.    

 

State of Connecticut tax matters, including exemption from paying sales tax on products purchased by a charity, are handled by the Connecticut Department of Revenue Services, 25 Sigourney Street, Hartford, CT 06106. Website: www.ct.gov/drs

 

 

Games of Chance

Connecticut law allows certain organizations to conduct games of chance, such as raffles, Las Vegas Nights, or bingo nights. Permits are required. Inquiries should be directed to the Gaming Division within the Department of Consumer Protection by email at: DCP.Gamingcharitable@ct.gov

 



Content Last Modified on 10/8/2013 3:25:18 PM