The following guidelines provide background information on the most common types of filings and the related exemptions in Pennsylvania.
This state regulates charities under both the Solicitation of Funds for Charitable Purposes Act and the Institutions of Purely Public Charity Act. The Solicitation of Funds Act focuses on the act of soliciting charitable contributions whereas the Institutions Act focuses on qualifying for state tax exemptions.
In this state, organizations are generally required to register prior to soliciting for donations under the Solicitation of Funds for Charitable Purposes Act. The Act broadly defines solicitation and does not specify a minimum level of solicitation that triggers the registration requirement. However, state law does provide an exemption for organizations that: (1) receive less than $25,000 annually and (2) do not pay a professional fundraiser. The statute does not specify whether the $25,000 maximum applies to solicitations only within Pennsylvania or solicitations from any source.
Religious Exclusion under Solicitation of Funds for Charitable Purposes Act
The Solicitation of Funds for Charitable Purposes Act has a narrow religious exclusion, meaning that certain religious organizations are not subject to the Act at all. Religious organizations must apply to confirm the exclusion applies; the religious organization exclusion is not automatic.
In order to qualify for the religious organization exclusion, the organization must: (1) be tax-exempt under the Internal Revenue Code, (2) no part of the organization’s net income can inure to the direct benefit of any individual, and (3) the organization’s conduct must be primarily supported by government grants or contracts, funds solicited from its own membership, congregation, or previous donors, and fees charged for services rendered.
Religious organizations applying for exclusion must file a BCO-9 Form.
Exemptions under the Solicitation of Funds for Charitable Purposes Act
Charitable organizations which are not excluded from the Act may still be exempt from the registration requirements of the Solicitation of Funds for Charitable Purposes Act under 10 P.S. § 162.6.
Exempt organizations do not have to register but must still comply with the other provisions of the Solicitation of Funds for Charitable Purposes Act (e.g. must keep true fiscal records as to its activities; may not utilize any unfair or deceptive acts or practices or engage in any fraudulent conduct which creates a likelihood of confusion or of misunderstanding, etc.).
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. This state has an online filing system and using that system may be more efficient than completing and mailing the URS manually.
Additionally, information from the state-specific initial online registration can be used to auto-populate online annual reports, saving an organization time in the future.
Some states require organizations to appoint a “registered agent” in the state as part of the organization’s charitable registration. This state does not currently have this requirement.
This state requires organizations to include specific statements whenever the organization is requesting donations (also called “charitable solicitation”).
Below is sample language to use with charitable solicitations in this state:
This request is made by *ORG*, located at *ADDRESS*, in support of its mission to
*PURPOSE*. Inquiries, including requests for a copy of financial statements, regarding *ORG* can be directed to *EMAIL*. The official registration and financial information of *ORG* may be obtained from the Pennsylvania Department of State by calling toll free, within Pennsylvania, 1-800-732-0999. Registration does not imply endorsement.
Religious organizations excluded from the scope of the Solicitation of Funds for Charitable Purposes Act generally are not required to include this statement, but including some similar language regarding the organization’s legal name and its contact information is often a best practice to build trust with donors and state regulators.
Depending on the type and volume of activities an organization has in this state, the organization may also need to register as an out-of-state business (sometimes called a “foreign business”) with the secretary of state or another state agency. These foreign business registration requirements are separate from the charitable registration. Not every out-of-state organization needs to register. An attorney can assist the organization in determining whether its connections with this state are significant enough to trigger the foreign business registration requirement. Examples of activities that might trigger this requirement include having employees physically located in the state, conducting programs in the state, and having an office in the state.
In this state, organizations that have received recognition of federal income tax exemption under IRC Sec. 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. Consult with an accountant or attorney to confirm. It is also important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. Information about sales and use tax exemption is available and the application itself, the Form REV 72, are available from the Pennsylvania Department of Revenue. An accountant or attorney can provide specific guidance regarding your organization’s eligibility for these exemptions.
Repealed in 2016
Exemptions from Institutions of Purely Public Charity Act
In addition to registering under the Solicitation of Funds for Charitable Purposes Act, organizations are generally further required to file an Institutions of Purely PublicCharity Statement under the Institutions of Purely Public Charity Act.
This Act provides a narrow religious exemption for “bona fide duly constituted religious institutions and such separate groups or corporations which form an integral part of a religious institution and are exempt from filing an annual IRS 990 Return.”
The Act also provides a narrow exemption for organizations which receive less than $25,000 in contributions per year and do not have program revenue of $5,000,000 or more.
Foreign Registration Statement: https://www.dos.pa.gov/BusinessCharities/Business/RegistrationForms/Do cuments/Updated%202017%20Registration%20Forms/Foreign%20Associations/15-412%20Foreign%20Registration%20Statement.pdf
Online Registration: https://www.dos.pa.gov/BusinessCharities/Charities/RegistrationForms/Pa ges/default.aspx
Exclusions and Exemptions Chart: https://www.dos.pa.gov/BusinessCharities/Charities/RegistrationForms/Pa-ges/Exclusions-and-Exemptions-Chart.aspx
Request for Approval of Exemption/Exclusion Form: https://www.dos.pa.gov/BusinessCharities/Chari-ties/Resources/Documents/BCO-9,%20approval%20of%20exemption%20exclusion,%203- 2018%20final.pdf
Information for Purely Public Charities: https://www.dos.pa.gov/BusinessCharities/Charities/Resources/Pages/Inf-ormation-for-Purely-Public-Charities.aspx
General Information for Charitable Organizations: https://www.dos.pa.gov/BusinessCharities/Charities/Resources/Pages/Information-for-Charitable-Organizations.aspx
Wally Zimolong, Esquire
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.