Maryland is home to 32,000 nonprofit organizations that employ nearly 263,000 people, representing 10.6% of the state’s workforce.  The Office of the Attorney General is charged with representing the “public interest in the protection of charitable assets” and has established the Charitable Enforcement and Protection Workgroup, effective July 1, 2014, to assist in this effort.  Part of the workgroup’s responsibilities is to identify Maryland charities which are not registered with the Charitable Organization Division of the Office of the Secretary of State.
The most recent report submitted by the Attorney General to the General Assembly indicates the following:
·         According to the IRS website, as of November 25, 2014, there are 20,075 organizations in Maryland classified as public charities.
·         However only those organizations which solicit charitable contributions from the public are required to register with the Secretary of State.  Please note that religious organizations and public safety organizations are exempt from the registration requirements.  Additionally those organizations which solicit contributions only from its membership may be exempt from the registration requirements.
·         As of November 24, 2014, there are 9,669 charitable organizations registered with the Office of the Secretary of State to solicit charitable contributions in Maryland.
·         The number of charitable organizations having delinquent registrations is 2,311 (23.9% of total registrations).
·         An additional 957 organizations have begun but have not completed their registration.
·         There are 3,154 organizations that receive less than $25,000 per year in charitable contributions.  These organizations are not required to file the full registration but are required to file an annual fundraising notice.
·         Through September 30, 2014 the Office of the Secretary of State had collected $44,405 in late fees from delinquent registrations.
What does it mean to “solicit charitable contributions”?  This term is broadly defined to include almost any method of oral, written, or online request for contributions.  A physical presence in a state is not required – sending a letter or an email to someone located in the state is usually enough.
What about online donations through the charity’s website?  Most state statutes were drafted before the Internet so online activities were not specifically addressed.  However this requirement is generally interpreted to include activities such as sending an acknowledgement email or letter to a person that the charity knew (or should have known) resided in the state and passive solicitation activities, through the use of a ”donate now” button on the charity’s website.
Does this mean that your charity should be registered in all 50 states, simply because you have a “donate now” button on your website?  Probably not, unless you have received donations from residents of any of those states.  When your charity sends its first acknowledgement letter in response to a donation from a resident of a particular state, the registration requirement in that state is likely triggered.
It is important that the charity track its donations by donor and by state in order to identify when the charity may be required to submit a registration application in a new state.
The good news is that many states accept the “unified registration statement” so that it is not necessary to spend a lot of time researching each state’s requirements.
For more information on Maryland’s registration requirements, please go to www.sos.state.md.us/charity/registercharity.html.
To research whether a charity has been registered in Maryland, please go to www.sos.state.md.us/charity/searchcharity.aspx.
Please contact our office for assistance in completing a nonprofit “nexus” study and preparing nonprofit registration applications for other states. You may reach us by phone at: 410.581.0800 or 301.470.7476. or by email at: info@rsandf.com