Multi-State Compliance Matrix


What You’ll Learn

If you are a nonprofit in Michigan, or you are a nonprofit considering fundraising or other activities in Michigan, you must understand the requirements that Michigan 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 Michigan.  

Getting to Know the State Nonprofit Corporation Law


*Important primarily for nonprofits incorporated in Michigan

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

Corporate Governance

Conflict Transactions: Mich. Comp. Laws § 450.2545a Need to review the basic best practices for conflicted transactions? See Bylaws Module 14: Conflicts of Interest.

Director Standards of Conduct: Mich. Comp. Laws § 450.2541 Need a refresher on the role of directors? See Bylaws Module 6: Directors.

Members: Eligibility and Statutory Powers: Mich. Comp. Laws § 450.2304 Not sure what a “member” is? Need to review the basics? See Bylaws Module 5: Members.

Indemnification: Mich. Comp. Laws § 450.2561; Mich. Comp. Laws § 450.2562; Mich. Comp. Laws § 450.2563 Not sure what “indemnification” is? Need to review the basics? See Bylaws Module 8: Indemnification.

For Religious Nonprofits

Nonprofit Religious Corporation Act: Michigan’s nonprofit corporation law lacks: (a) specific provisions permitting the formation of nonprofit religious corporations; (b) specific protections for religious exercise at faith-based organizations, and (c) express acknowledgement of an option for nonprofits to incorporate for religious purposes. See Mich. Comp. § 450.2101 Confused about what it means to be a religious nonprofit corporation? See our whitepaper “Why a Religious Corporation?

Reliance on Religious Guidance in Governance: Michigan 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. Mich. Comp. Laws §  450.2541

Understanding Religious Liberty in this State

Case Study

*Important for all nonprofits doing business in Michigan, whether incorporated in Michigan 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: Michigan 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 Michigan Constitution has been interpreted by the Michigan Supreme Court to provide stronger protections for religious free exercise or worship than the federal First Amendment.

State Blaine Amendment: The Michigan 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 US Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes. State Constitution, Article VIII, Section 2 & 4. Not sure what a Blaine Amendment is? Review the basics here.

Other Relevant State Laws and Regulations

Michigan has a statewide public accommodation law that could impact religious organizations. In addition to understanding the state law, be sure you understand whether any local regulations apply to your organization.

Religious Freedom and Public Accommodation Laws: Michigan’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions. Mich. Comp. Laws § 37.2301. 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: Michigan law has no explicit constitutional or statutory protections for religious exercise during a time of emergency.

Key Employment Laws and Regulations

In addition to the federal anti-discrimination employment law, Title VII of the Civil Rights Act of 1964,  Michigan law prohibits employers from discriminating on the basis of age. An employer is any person who has more than twenty employees for twenty or more weeks each year. No religious exemptions apply to this requirement. Local governments may also have employment-related regulations. An attorney can help you understand what requirements apply to your organization.  

Employment Discrimination Laws and Regulations: Mich. Comp. Laws § 37.2201

Religious Freedom for Faith-Based Employers: Mich. Comp. Laws § 37.2202. Need to review the basics on religious freedom and employment matters? Walk through a self-audit of best practices here.

Religious Freedom for Employees: No statute present

Conducting Activities or Programs in this State

Understanding the Business Registration Requirement

*Important primarily for nonprofits doing business in Michigan 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. State law requires entities that are “conducting affairs” in Michigan 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 all nonprofits doing business in Michigan, whether incorporated in Michigan or elsewhere

Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.

This state generally requires organizations to register prior to soliciting donations. However, the registration requirement has a narrow religious exemption. According to current state agency guidance, the religious exemption primarily focuses on organizations that are exempt from filing the IRS Form 990. Religious organizations must apply to receive the exemption—it is not automatic.

This state has a broad definition of what constitutes solicitation and does not specify what minimum activity level triggers registration requirements.

However, organizations that: (1) receive less than $25,000 in total contributions annually, (2) make a copy of their financial statements available to the public, and (3) do not use a professional fundraiser are exempt from registration. Michigan’s law does not explain whether the total contribution calculation is for Michigan-source contributions or gross contributions received from all sources and states combined.

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, 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. Michigan has an online filing system. Using the e-filing 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

If you are fundraising in this state, you must consider completing a foreign not for profit registration and designating a registered agent in the state. This can be done through a commercial service or by appointing a Michigan-based person or entity who is a supporter of your organization. More information about this is included below.

Follow the Rules About Communicating with the Public

This state does not require organizations to post specific language when conducting charitable solicitations. Organizations are encouraged, at a minimum, to post their Michigan charitable registration number. While there is no requirement, posting the language is often a best practice to build trust with donors and state regulators. Below is sample language to use with charitable solicitations in this state:

*ORG* is based in *STATE*. The solicitation is made in support of *ORG*’s religious purpose to *PURPOSE*. Questions about *ORG* can be directed to *NAME* at *PHONE*. Upon request, *ORG* can provide: (1) the amount of this contribution which is deductible as a charitable contribution under federal income tax law; and (2) a written financial statement. *ORG*’s registration does not imply endorsement.

Charitable Registration Statute

Charitable Registration Exemption Statute

Annual Report Requirement

Mich. Comp. Laws § 400.277

Audit Requirements: As a condition of maintaining authorization to fundraise in the state, Michigan requires the submission of reviewed or audited financials for organizations with annual contributions of $500,000 or more. Mich. Comp. Laws § 400.273

Get Acquainted with State and Local Taxes and Exemptions

State and Local Taxes

*Important for all nonprofits doing business in Michigan, whether incorporated in Michigan 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 Mich. Comp. Laws § 206.625.

It is also important to consider whether your organization might be eligible for sales and use tax or property tax exemption. 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 Michigan Sales and Use Tax Resource website and in Michigan Administrative Code. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.

Corporate Income Tax Statute

Michigan imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status. Mich. Comp. Laws § 206.623(1)

Corporate Franchise Tax Statute

Not applicable

What You Need to Know About Sales Tax

Sales and Use Tax: Michigan imposes a sales and use tax on religious organizations’ sales and purchases and only provides limited exemptions for certain items. Mich. Comp. Laws § 205.51 — 205.78; See also State of Michigan Sales and Use Tax Resources

State Tax Treatment of Unrelated Business Income: Mich. Comp. Laws § 206.625; See Also Michigan Business Tax Guidebook; See also State of Michigan Business Tax Resources

State Sales and Use Tax and Required Registrations: See State of Michigan New Business Treasury Registration

Property Tax: Michigan imposes property tax and provides only fragmented property tax exemptions that include only a narrow subset of religious organizations. Mich. Comp. Laws § 211.7s

State-Specific Special Requirements


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Legal Disclaimer

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