Maine’s Charitable Contributions Act: Be Sure Your Good Deeds Remain Unpunished!

February 2012


In Maine, charitable organizations and associated people or groups who solicit funds from the public are subject to government regulations.  Many readers are familiar with the need for most charitable organizations to annually file a Form 990 or 990-PF.  However, Maine’s Charitable Solicitations Act requires that most charities engaged in fundraising also comply with additional guidelines—or else suffer harsh penalties.  Thus, for those involved with charities and fundraising, it is important to note the following rules.

Registration is required

A “charitable organization” is any person or entity that either (1) holds itself out to have a charitable purpose or (2) solicits funds from the public for a charitable purpose.  (Please note that, for the purposes of this Act, religious organizations are exempt.)  If you or organizations with which you’re involved are fundraising in the State of Maine, you or the organization must register with the state in order to legally solicit contributions.  Registration involves completing an application with information such as the charitable organization’s purpose, plans for the sought contributions, its IRS Determination letter, and other basic information about the entity and its associates.  Registration costs $50, and is due annually by November 30 to allow legal solicitations from December 1 through the following November 30.

Certain organizations are deemed exempt by the Charitable Solicitations Act.  Exempt organizations include: (1) organizations where solicitations are conducted by members solely within the membership group; (2) those soliciting on behalf of a specific, named person; (3) organizations that receive less than $10,000 per year or that receive contributions from 10 people or fewer per year; (4) educational institutions approved by the Department of Education; and (5) nonprofit and charitable hospitals.  Please note that although the above organizations are exempt, an annual registration for exemption is still required every year by November 30. 

Additional filings

Charitable organizations also are required to file an “Annual Fundraising Activity Report” each year by September 30 to report activity of the prior calendar year.  These reports must include information about contributions and also about the solicitors by whom the fundraising was accomplished.  Charitable organizations that hire professional fundraisers or “co-venture” with a for-profit organization while soliciting contributions should note that there are additional requirements imposed.  Failure to file this form may result in various consequences, such as suspension of a license or civil penalties.

More information

Applications and further information can be found on Maine’s official website or by calling the Maine Department of Professional and Financial Regulation at (207) 624-8624.  Also, while the purpose of this article is to explain requirements in Maine, please note that organizations conducting solicitations in other states may be subject to similar requirements imposed there.  For instance, New Hampshire and Massachusetts require registration in order to legally solicit contributions.  For application information, please visit the states’ websites, some of which are listed below: 

Maine: http://www.maine.gov/portal/index.html
New Hampshire: http://doj.nh.gov/charitable-trusts/charities.htm
Massachusetts: http://www.mass.gov/portal/

Conclusion

Anyone overseeing fundraising for a charitable organization should become familiar with Maine’s Charitable Solicitations Act and its mandatory registration and activity reports.  Failure to do so could be embarrassing at best, and accompanied by penalties and other discipline as well.  If you would like to discuss this matter further, please contact Drew Cheney or your BNN advisor at 1-800-244-7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

IRS CIRCULAR 230 DISCLOSURE:
Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.  Please contact us if you wish to have formal written advice on this matter.