What You’ll Learn
If you’re a nonprofit in Massachusetts, or you’re a nonprofit considering fundraising or other activities in Massachusetts, you must understand the requirements that Massachusetts has established for nonprofits operating in the state.
How can you become familiar with these laws? Where should you start?
Start here. This state profile includes the basic requirements nonprofits must consider. Reading the profile and implementing appropriate compliance measures will help you prepare your organization for success in Massachusetts.
Getting to Know the State Nonprofit Corporation Law
*Important primarily for nonprofits incorporated in Massachusetts
Emma Woodhouse, handsome, clever, and rich, with a comfortable home and happy disposition, seemed to unite some of the best blessings of existence; and had lived nearly twenty-one years in the world with very little to distress or vex her. She was the youngest of the two daughters of a most affectionate, indulgent father; and had, in consequence of her sister’s marriage, been mistress of his house from a very early period. Her mother had died too long ago for her to have more than an indistinct remembrance of her caresses; and her place had been supplied by an excellent woman as governess, who had fallen little short of a mother in affection.
- Emma, Jane Austen
When reading a novel, we get to know a fictional character by the author’s description. The author tells us about the character’s appearance, purpose, actions, mannerisms, and values.
Nonprofit corporations are something like fictional characters.
We learn how a nonprofit will look and act and make decisions not by reading a novel, but by reading the state law (called the nonprofit corporation act) and the rules the nonprofit makes for itself (called the bylaws and articles of incorporation). The law and the organization’s own rules tell us the organization’s name, purpose, way of acting, and method of making decisions.
To get to know your own nonprofit, be sure to review the sections below.
State Nonprofit Corporation Law
Conflict Transactions: Not applicable, but see IRS requirements; Need to review the basic best practices for conflicted transactions? See Bylaws Module 14: Conflicts of Interest.
For Religious Nonprofits
Nonprofit Religious Corporation Act: Massachusetts’ nonprofit corporation law mentions the option for nonprofit corporations to incorporate for religious purposes. However, the law lacks both: (a) specific provisions to protect the right of nonprofits incorporated for religious purposes to self-government in internal affairs and (b) an option to incorporate expressly as a nonprofit religious corporation. Mass. Gen. Laws Ann. ch. 180; Confused about what it means to be a religious nonprofit corporation? See our whitepaper “Why a Religious Corporation?”
Reliance on Religious Guidance in Governance: Massachusetts law permits a director, in the fulfillment of the director’s fiduciary duties, to rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter, but does not expressly allow a director to rely on guidance from religious figures within his or her faith tradition. Mass. Gen. Laws Ann. ch. 180 § 6C:
Understanding Religious Liberty in this State
*Important for all nonprofits doing business in Massachusetts, whether incorporated in Massachusetts or elsewhere
The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.
- Our Lady of Guadalupe School v. Morrisey-Berru, 140 S. Ct. 2049 (2020).
Sometimes, the state or local government (like the city or county) makes laws that could conflict with your organization’s free exercise of religion or its sincerely-held religious beliefs.
For example, a law might require employers not to make faith-based distinctions between job candidates. If your organization’s mission is to pass on the teachings of your faith, you will need to make faith-based distinctions in evaluating candidates because their faith commitments will impact their abilities to partner in your mission and witness the faith to your program participants.
So what do you need to do? Be aware of the laws listed below. If any of the laws impact your organization—for example, if you are an employer or a facility open to the public—learn more about how you can protect yourself by reviewing Napa Legal’s religious liberty resources. Talk to an attorney if you have specific concerns.
Religious Liberty Protections
State Religious Freedom Restoration Act: Massachusetts has not enacted a RFRA and has enacted nondiscrimination laws that conflict with the beliefs of many religious organizations. Not sure what a “religious freedom restoration act” is? Click here to learn the fundamentals.
State Constitutional Protection of Free Exercise: The Massachusetts Constitution has been interpreted by the Massachusetts Supreme Court to provide stronger protections for religious free exercise or worship than the federal First Amendment. Massachusetts Const. Amend. Art. Article XLVI, Sec. 1; See also Attorney General v. Desilets, 418 Mass. 316, 636 NE.2d 233 (1994).
State Blaine Amendment: The Massachusetts Constitution contains a Blaine Amendment that broadly restricts faith-based organizations’ freedom to participate in public benefit programs on the same terms as similarly situated secular institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes. Massachusetts Const. Amend. Art. XVIII, §2; Not sure what a Blaine Amendment is? Review the basics here.
Other Relevant State Laws and Regulations
Religious Freedom and Public Accommodation Laws: Massachusetts’ nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions. Mass. Gen. Laws ch. 272 § 98; Not sure what a public accommodation law is or what it means for your organization’s religious liberty? Learn the basics in this article which discusses the issue in the context of the case Fulton v. City of Philadelphia.
Protections for Religious Exercise in State of Emergency: Massachusetts law has no explicit constitutional or statutory protections for religious exercise during a time of emergency.
Key Employment Laws and Regulations
In addition to tracking with the protected classes in the federal anti-discrimination employment law, Title VII of the Civil Rights Act of 1964, Massachusetts prohibits employers from discriminating on the basis of race, color, religious creed, national origin, sex, gender identity, sexual orientation. An employer under state law is any person who has more than six employees for twenty or more weeks each year. There is a narrow religious exclusion that allows entities “operated, supervised or controlled by or in connection with a religious organization, and which limit membership, enrollment, admission, or participation to members of that religion” to “giv[e] preference in hiring or employment to members of the same religion” and “tak[e] action with respect to matters of employment, discipline, faith, internal organization, or ecclesiastical rule, custom, or law which are calculated by such organization to promote the religious principles for which it is established or maintained.” Local governments may also have employment-related regulations. An attorney can help you understand what requirements apply to your organization.
Religious Freedom for Faith-Based Employers: Mass. Gen. Laws ch. 151B § 1
Religious Freedom for Employees: Mass. Gen. Laws ch. 151B § 4
Conducting Activities or Programs in this State
Understanding the Business Registration Requirement
*Important primarily for nonprofits doing business in Massachusetts but incorporated elsewhere
If you are fundraising or conducting activities in this state, you must consider whether you need to register as a foreign nonprofit corporation. The state law requires entities that are “transacting business in the commonwealth” to register. An attorney can help you decide whether you need to register based on the type and volume of activities you have in this state.
Business Registration Statute
Fundraising and Charitable Registration in This State
How to Know (And What to D0) If You're Fundraising In This State
*Important for both Massachusetts and Foreign Nonprofits
Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.
This state generally requires organizations to register and obtain a specific certificate prior to soliciting for donations in the state. The registration requirement has a narrow religious exemption for groups, such as churches, that are exempt from filing the IRS Form 990. For these groups, the exemption is automatic. Depending on their activities in this state, other religious organizations that are not exempt from the IRS Form 990 requirement may need to complete a charitable registration, despite their religious identity.
Practioner’s Note: The state statutory exemption is for religious organizations generally (Mass. Gen. Laws ch. 68, Sec. 20) but the related administrative regulations narrow the exemption to IRS Form 990 non-filers only (940 C.M.R. 2.02(1)(a)).
This state has a broad definition of what constitutes solicitation and does not specify what minimum activity level triggers registration requirements.
This state does not specifically define a threshold level of contributions that trigger the registration requirement. However, state law does provide that organizations which are volunteer-run and either (1) receive less than $5,000 in contributions annually or (2) do not receive donations from more than ten persons annually are exempt from registration.
Certificates of Solicitation
A charitable organization must obtain a Certificate of Solicitation from the Attorney General’s Office before soliciting contributions in Massachusetts. The Certificate of Solicitation must be renewed on an annual basis. Exceptions exist for some religious organizations and for very small-scale solicitations without any professional fundraisers. The governing laws are found in Mass. Gen. Laws ch. 68, §§ 16 (governing solicitation on public ways) and 23 (governing solicitation disclosures). An easy-to-read summary of the process can be found here.
Massachusetts also requires “fund-raising counsel,” “commercial co-venturers,” and “professional solicitors” to register with the Commonwealth if they are acting on behalf of a charitable organization that is required to register. Mass. Gen. Laws ch. 68, § 24. Fees range from $200 to $1,000. Mass. Gen. Laws ch. 68, § 24. Contracts between the charitable organization and such persons must be written and disclosed to the Commonwealth. Mass. Gen. Laws ch. 68, § 22.
Massachusetts requires all public charities, except organizations that hold property for religious purposes or certain federally chartered organizations, to file a Form PC. More information can be found at in the Annual Charities Filings form instructions.
If You're Fundraising In Multiple States, Make Sure You Understand the URS
In this state, organizations that are required to register have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states. Using the URS, rather than a state-specific registration form, has pros and cons. The URS typically must be submitted by mail. Massachusetts has an online filing system and using that system may be more efficient than completing and mailing the URS manually.
Additionally, creating the online profile will save the organization time in preparing future annual reports, which are processed using the same system.
Evaluate Whether You'll Need a Registered Agent
Some states require organizations to appoint a “registered agent” in the state as part of the organization's charitable registration. Massachusetts does not currently have this requirement. However, a registered agent is needed for organizations that are required to complete the foreign business registration. See Mass. Gen. Laws ch. 156D § 15.03(a)(5).
Follow the Rules About Communicating with the Public
This state does not require organizations to post specific language when conducting charitable solicitations unless the organization is working with a professional fundraiser or commercial co-venturer. See Mass. Gen. Laws ch. 68, § 23.
Charitable Registration Statute
Charitable Registration Exemption Statute
Mass. Gen. Laws ch. 68, § 20; The registration requirement established in Mass. Gen. Laws ch. 12, § 8E does not include any apparent exemption for religious organizations. But Regulations adopted by the Director of the Division of Public Charities clarify that “[a]ny public charity exempt from filing reports … shall not be required to register under” that law.
Annual Report Requirement
Get Acquainted with State and Local Taxes and Exemptions
State and Local Taxes
*Important for all nonprofits doing business in Massachusetts, whether incorporated in Massachusetts or elsewhere
In this state, organizations that have received federal income tax exemption under IRC § 501(c)(3) are automatically exempt from state income tax. Some organizations may choose to send a copy of their IRS determination letter to the state department of revenue to indicate the organization’s position that it qualifies for the exemption. Note that, although an organization may be exempt, if it has unrelated business taxable income (“UBTI”) that is subject to federal taxation, that UBTI may be subject to state income tax (see Mass. Gen. Laws ch. 63, § 38Y)
It is also important to consider whether your organization might be eligible for sales and use tax or property tax exemptions. In this state, federal § 501(c)(3) status does not automatically provide an exemption from sales, use, and property taxes. More information about the sales and use tax exemptions and applications is available on the Massachusetts Department of Revenue website and in the Code of Massachusetts Regulations. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.
Corporate Income Tax Statute
Massachusetts imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status. Mass. Gen. Laws ch. 63, § 39
Corporate Franchise Tax Statute
Mass. Gen. Laws ch. 63, § 39 (subsection (b))
Massachusetts has a corporate excise tax that comprises a net income measure and either a property measure or a net worth measure. If these are less than the minimum corporate excise tax, then the minimum corporate excise tax is due.
Corporate Gross Receipts Tax: Not Applicable
What You Need to Know About Sales Tax
Sales and Use Tax: Massachusetts imposes a sales and use tax on religious organizations’ sales and provides no meaningful exemption. Massachusetts imposes a sales and use tax on religious organizations’ purchases but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ purchases upon application. Mass. Gen. Laws. Ch. 64H, §6(e); see also 830 CMR 64H.6.1(3)(d)
State Tax Treatment of Unrelated Business Income: Mass. Gen. Laws ch. 63, § 38Y
Property Tax: Massachusetts imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes. Mass. Gen. Laws Ann. ch. 59 § 5
State-Specific Special Requirements
This resource contains general educational information related to legal concepts, but this information does not constitute legal advice. Anyone seeking legal advice is strongly encouraged to consult with a licensed attorney regarding any of the matters discussed herein. Although licensed attorneys work with Napa Legal, Napa Legal is not a law firm and does not undertake legal representation on behalf of any clients. Further, no licensed attorney working with or on behalf of Napa Legal agrees to undertake legal representation on behalf of any client unless the terms of such representation are set forth in a separate, written representation agreement.
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**Please note that the following state profiles are forthcoming and will be published soon:Hawaii and Washington