Submission Date:
Question:
Are incorporated "Friends", who do not receive over $50 thousand, do not have paid staff, and are only able to provide the funds to the library, required to register [with the New York Attorney General] and submit the CHAR500 form?
Answer:
When one considers becoming a "Friend" of a library, several activities spring to mind:
Parties
Craft fairs
A charity auction
But being a "Friend" is not all book sales and giant thermometers. Get out your Excel spreadsheets and prepare to take good notes; for a "Friends" group, raising "charitable" money[1] comes with detailed record-keeping and government oversight.
The "CHAR-500"[2] referenced in the question, an annual filing required of many not-for-profit organizations in New York State, is a major part of state oversight.[3]
A companion requirement—also referenced by the member—is that a not-for-profit register with the New York State Attorney General's Office.
But does every not-for-profit in New York State have to fulfill these requirements?
The answer, which does depend on some of the factors listed in the question, is:
"No. BUT—."
Let's review.
There are several factors that can exempt a not-for-profit operating in New York State from having to register and file the CHAR500.
Of relevance to the member's question is Article 7-A of New York State's Executive Law, which provides:
§ 172-a. Certain persons[4] exempted.
...
2. The following persons shall not be required to register with the attorney general:
...
(d) Any charitable organization which solicits or receives gross contributions of less than twenty-five thousand dollars during a fiscal year of such organization, provided none of its fund raising is carried on by professional fund raisers or fund raising counsel. However, if the gross contributions received by such charitable organization during any fiscal year of such organization shall be in excess of twenty-five thousand dollars, it shall within thirty days after the date it shall have received gross contributions in excess of twenty-five thousand dollars register with the attorney general as required by section one hundred seventy-two of this article.
So, the member is right to point out the relevance of the Friends' annual income (although the trigger amount is $25,000.00, not $50,000.00).
That said, it is important to keep in mind that the reporting requirements of a not-for-profit are not just governed by the Executive Law.[5] Further, even the Executive Law comes with exceptions: if the organization is using a professional fund-raiser, they will need to register (no matter how much money they take in).
Trying to figure out what to do? For Friends, this is a good one to confirm with both your attorney and accountant, but in general, it is important to remember the difference between registering, which per Executive Law 172 and 7s-a is triggered when the $25,000 dollar annual income threshold is reached, and annual filing, which per Executive Law 172-b (2-s) is triggered either by registration, or when the first $25,000 dollar annual income is reached, after which a filing is due even in years with smaller income.
Despite this exemption for annual revenue of under $25k, many organizations will register and file the CHAR500 registration because: 1) they aspire to raise more than $25k; 2) they know that potential donors often use the Charities Bureau registration to conduct "due diligence" on potential donees;[6] 3) it is a way to model transparency (and inspire trust).
But to answer the question, in this instance, unless a pro is being used... no, registration is not required.
Thank you for an important question.
[1] Meaning money being raised by a charity, for a charitable purpose.
[2] Which is what I would call my BBQ-themed bar for not-for-profit sector workers, if I were to go into the niche restaurant business.
[3] Found here as of March 14, 2023: https://www.charitiesnys.com/pdfs/statute_booklet.pdf.
[4] As used in this section of the Not-for-profit Corporation law, a "person" is a not-for-profit organization. I know, it's weird.
[5] The IRS allows certain charitable organizations with under 500K in assets and 200k in annual revenue to file an "EZ" form, rather that the full form 990. For more on that, visit the IRS at https://www.irs.gov/instructions/i990ez.
[6] That said, not filing when it is not required can signal a commitment to economy and conservation of resources.
Tag:
Friends of the Library, Fundraising, Budget, IRS, Non-profits
