Each state has laws requiring proper registration of charitable organizations, professional fundraisers and professional solicitors. The intent is to protect citizens by requiring full public disclosure of the identity of persons who solicit contributions from the public, the purposes for which such contributions are solicited and the manner in which they are actually used.
Last month the Donald J. Trump Foundation, a New York charity, made national headlines when New York’s Attorney General cited the charity for failure to file required registration with the State of New York. I wondered how the Foundation’s Certified Public Accountant that prepares the required federal filings could have missed the state requirement for so long. The Trump Foundation responded by saying that it no longer solicits or accepts public donations. No ruling has been issued yet as to the years when the charity illegally solicited public donations.
This attention-grabbing story triggered me to look at local charities here in Pennsylvania. It did not take long to find the answer. After checking only a handful of Pennsylvania charities, I concluded that some face similar non-compliance issues for failure to register and are likely not aware of their violations. Extrapolating on my results, I expect that hundreds or thousands of Pennsylvania charities that are not exempted from state filing have failed to file their required registration forms. The Pennsylvania statute includes a $25 per month late fee for these missing flings so it appears that many charitable organizations have a hidden financial liability as well.
I am not aware of any systematic effort by state government to enforce compliance under the law. But occasionally otherwise valid local charities are cited and fined by the state. This usually causes embarrassment and triggers necessary expense. The easy solution is to schedule a simple review of your organization’s documentation with an independent adviser.