A new 2023 law (S.429) that makes three important reforms to the state charitable solicitation licensing statute:
- Making automatic extensions of charitable solicitation filings identical to those for IRS Form 990. The IRS currently allows nonprofits to receive an automatic six-month extension of their filing deadline for 990s. The North Carolina charitable solicitation statute only allows for a three-month automatic extension, and further extensions may be made at the discretion of the NC Secretary of State. Practically, this creates situations where some nonprofits are unable to file their charitable solicitation paperwork in a timely manner if their Forms 990 have not yet been completed. This change was effective as soon as the law was enacted on September 14, 2023.
- Exempting more small nonprofits from needing charitable solicitation licenses. Currently, nonprofits are exempt from having charitable solicitation licenses if they receive less than $25,000 in contributions per year (which generally includes foundation grants but not government grants and contracts) and do not pay compensation to fundraisers. The $25,000 threshold was established when the Internal Revenue Service (IRS) had a threshold of $25,000 in annual expenses for filing Form 990 (the annual information return for tax-exempt entities). Because the IRS threshold is now $50,000 (and organizations below that threshold now need to file the simple, online Form 990-N), some small nonprofits need to have charitable solicitation licenses – and spend significant time completing paperwork and preparing financial statements – even though they are exempt from basic filing requirements from the IRS. This change took effect on October 1, 2023.
- Counting charitable solicitation forms as timely filed if they are postmarked by the filing deadline. This change could help prevent nonprofits from being identified as out of compliance if there are mail delays. This change also took effect on October 1, 2023.
The Center advocated for this bill to be filed based on input from many nonprofits and from attorneys and accountants who work with nonprofit organizations. The Center is appreciative of the many nonprofits, attorneys, and accountants who provided input on the substance of the bill over the past five years and of the bill’s legislative champions, especially Rep. Brandon Lofton (D-Mecklenburg), Senator Tim Moffitt (R-Henderson), Senator Mike Woodard (D-Durham), and Representative Harry Warren (R-Rowan). Their combined efforts will help make the charitable solicitation licensing process a smoother experience for North Carolina nonprofits.