By Susan M. Green, Esquire
Many fundraisers are held by individuals who are seeking to help a friend or stranger in need, but who do not have experience with the stringent requirements that the law places on such efforts. The following provides a brief overview of such requirements in New Jersey and Pennsylvania.
New Jersey and Pennsylvania Statutory Requirements for Registration
The New Jersey Charitable Registration and Investigation Act (N.J.S.A. §45:17A-18 through -40) defines a charitable organization as “any person determined by the federal Internal Revenue Service to be a tax exempt organization pursuant to section 501(c)(3)…or any person who is, or holds himself out to be, established for any benevolent, philanthropic, human, social welfare, public health, or other eleemosynary purpose, or for the benefit of law enforcement personnel, firefighters or other persons who protect the public safety, or any person who in any manner employs a charitable appeal as the basis of any solicitation, or an appeal which has a tendency to suggest there is a charitable purpose to any such solicitation.” N.J.S.A. §45:17A-20.
Similarly, the Pennsylvania Solicitation of Funds for Charitable Purposes Act (10 Pa.C.S. §162.1 through .22) defines a charitable organization as “any person granted tax exempt status under section 501(c)(3)…or any person who is or holds himself out to be established for any charitable purpose or any person who in any manner employs a charitable appeal as the basis of any solicitation or an appeal which has a tendency to suggest there is a charitable purpose to any solicitation.” 10 Pa.C.S. §162.3.
Unless a charitable organization is exempt from registration requirements, that organization must file a registration statement with the Attorney General in New Jersey. Exempt entities include religious institutions and charitable organizations that receive gross contributions that do not exceed $10,000 in a fiscal year if all of the functions of the organization are carried on by “volunteers, members, officers or persons who are not compensated for soliciting contributions.” N.J.S.A. §45:17A-26. Short form registration is required for charitable organizations that receive gross contributions less than $25,000 in a fiscal year and if all functions are carried out by those individuals described above. Short form registration will also be required for people who request contributions for relief of a specified individual if all of the contributions, with no deductions, are turned over to the named beneficiary. N.J.S.A. §45:17A-25. Other organizations are required to file long form registration, which is more complex. N.J.S.A. §45:17A-24.
In Pennsylvania, charitable organizations that receive contributions of $25,000 or less annually and that do not compensate solicitors are exempt from registration requirements. 10 Pa.C.S. §162.6. Short form registration is required in Pennsylvania in a number of situations, including but not limited to:
1. An individual or charitable organization that accepts contributions for a specific individual if all of the contributions, without any deductions, are given to the beneficiary and held in trust subject to 20 Pa.C.S. §71.
2. Charitable organizations whose fundraising activities are carried on by volunteers, officers, members or permanent employees and that do not receive contributions in excess of $25,000 in a fiscal year, if no part of the assets or income inures to the benefit of or is paid to any officer or member, professional fundraising counsel, professional solicitor or commercial coventurer.
3. Charitable organizations described in number 2 above which do not receive contributions in excess of $100,000 in a fiscal year if no part of the assets or income inures to the benefit of or is paid to a professional solicitor. 10 Pa.C.S. §162.7.
Other organizations will be required to file long form registration.
In both New Jersey and Pennsylvania, an independent paid fundraiser or paid solicitor is an individual who is compensated for requesting contributions on behalf of a charitable organization. This does not include an employee, a bona fide salaried officer, or a volunteer, nor does it include an accountant, attorney or banker who advises a person to make a charitable contribution. N.J.S.A. §45:17A-20; 10 Pa.C.S. §162.3.
Registration Fees and Penalties
Registration fees in New Jersey and Pennsylvania are typically nominal and increase based on the amount of funds that a registering organization or individual grosses annually. N.J.S.A. §45:17A-40; 10 Pa.C.S. §162.5(p).
In both states, after notice and the opportunity for a hearing, penalties may be assessed for reasons of a false filing, violations of the Acts, engaging in dishonesty, conviction of a criminal offense in connection with activities regulated under the Act, refusal to produce records, etc. In New Jersey, a civil penalty of $20,000 will be assessed for each further violation of the Act. N.J.S.A. §45:17A-33. In Pennsylvania, remedies include revocation of tax exempt status or the issuance of a cease and desist order. Civil fines cannot exceed $1,000 for each act of wrongdoing, and additional penalties of $100 per day may be charged as long as the violation continues. Criminal penalties may also be assessed, if necessary. 10 Pa.C.S. §162.17-.19.
Susan M. Green is a New Jersey estate planning attorney with The Begley Law Group. To contact a New Jersey estate planning, special needs planning, or elder law attorney, call 1.800.533.7227 or visit http://www.begleylawyer.com.