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Massachusetts Law Changes That Will Impact Public Charities

August 10, 2010

Kevin Fontana, CPA, MSA
Tax Supervisor
BlumShapiro

On July 19, 2010, Chapter 165 of the Acts of 2010: An Act Further Regulating Public Charities, was signed by Governor Deval Patrick.  This legislation amends several of the Massachusetts General Laws impacting public charities.  Below is a brief summary of the changes.

New Registration fees

Chapter 12 of the Massachusetts General Laws is amended to require any public charity wishing to register with the Commonwealth to begin engaging in charitable work or fundraising efforts in Massachusetts to pay an initial, one-time registration fee of $100, along with filing copies of its charter, articles of organization, bylaws, etc. with the Division of Public Charities.  This registration fee becomes effective on January 1, 2011.

Increased Form PC Annual Filing Fees and Penalties for Failure to File

Chapter 12 is also amended to require additional tiers for the annual filing fee that is paid with the Form PC filing.  The new legislation does not impact the filing fee tiers already in place for those public charities with less than $1,000,000 of gross support and revenue.  However, for those larger organizations who are currently paying a $250 annual filing fee, the following tier system will now be in effect: 

For gross support and revenue that is:

  • more than $1,000,000, and up to $10,000,000, the annual filing fee is increased to $500,
  • more than $10,000,000, and up to $100,000,000, the annual filing fee is increased to $1,000, and
  • more than $100,000,000, the annual filing fee is increased to $2,000.

This new filing fee tier is effective for fiscal years ending on or after December 31, 2010.

In addition, the penalties under Chapter 12 for failure to file the Form PC have been increased significantly.  Previously, the failure to file resulted in a $500 civil penalty.  Effective January 1, 2011, an organization that fails to file a Form PC will receive a written notice from the Division of Public Charities, requesting that a complete report be filed within 30 days of the date the notice is mailed.  If a complete report is not filed within the 30 day period, a civil penalty will be assessed in the amount of up to $50 per day, until a complete report is filed, subject to a maximum penalty of $10,000 (per report).  The new legislation also permits the above-noted penalty to be assessed against a responsible officer of the organization (i.e. the president, treasurer, or any other person authorized in its bylaws, articles, charter, etc., to sign such documents/filings on behalf of the charity), if such person is found to have neglected or refused to comply with the requirements of the new laws after receipt of the notice.

Increased Fundraising Registration Fees and Penalties for Fundraising Violations

The annual fees required under Chapter 68 are also increased, effective
January 1, 2011, as follows: 

  • for professional solicitors, from $300 to $1,000,
  • for professional fundraising counsel, from $200 to $400, and
  • for commercial co-venturers, from $50 to $200.

The bonding requirement for commercial co-venturers and professional solicitors has also increased, from $10,000 to $25,000 (also effective January 1, 2011).

In addition to existing penalties for fundraising violations, civil penalties may be assessed on 1.) charitable organizations in the amount of up to $50 per day, up to a $10,000 maximum (and these may be assessed against responsible officers, if such persons are found to have neglected or refused to comply with the requirements of the new laws after receipt of notice from the Division of Public Charities), and 2.) professional fundraising counsels, commercial co-venturers, and professional solicitors in the amount of up to $500 per day, up to a maximum of $25,000. 

Changes to Dissolution Procedures

The new legislation also changes the manner in which a public charity can dissolve.  If the organization has no assets remaining and wishes to dissolve, effective January 1, 2011, it should now file a petition with the Division of Public Charities.  However, if the organization does have assets remaining, then petition for dissolution must still be made to the Massachusetts Supreme Judicial Court.

 

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