New Charitable Solicitation Law Goes Into Effect August 1
The most recent legislative session brought some much-needed changes to the Maine Charitable Solicitations Act that will simplify or eliminate filing requirements for certain nonprofits and fundraising consultants. These changes will go into effect August 1, 2014.
The following summary is reprinted with permission from the Maine Nonprofit Law E-Bulletin produced in May 2014 by Robert H. Levin, Attorney at Law. We have also updated our Fundraising and Charitable Solicitation Guidelines, which provides a comprehensive overview of how nonprofits can comply with the law.
In early April, the Maine Legislature passed (and the Governor did not veto!) a bill that simplifies the Maine Charitable Solicitations Act. L.D. 1799, passed into law as 2013 P.L. c. 539, streamlines the Act in three principal ways:
(1) The bill eliminates all filing requirements for “professional fund-raising counsel” such as independent consultants hired by charitable organizations to assist with capital campaigns or other fundraising programs.
Eliminating this category from the statute will significantly reduce paperwork for both the consultants and the charities that hire them. At the same time, charities will have slightly more responsibility to make sure they are hiring a reputable and proficient consultant, as they can no longer look to see whether someone has been licensed or disciplined by the Maine Department of Professional and Financial Regulation. Note that “professional solicitors,” i.e., those who solicit contributions from the public on behalf of a charitable organization, must still be licensed.
(2) The bill eliminates registration and annual filing requirement for organizations that qualify as exempt from the annual registration requirement.
The most common exemptions are if solicitations are conducted primarily within their membership or if contributions from the public (not including foundation or government grants) are $35,000 or below or from 35 persons or fewer during a calendar year. (Note that these exemption thresholds were raised by the Maine Legislature in 2013, up from $10,000 and 10 persons.)
The small downside of eliminating the registration and annual exemption filing is that an organization should have an internal way of tracking contributions to confirm that it remains exempt from one year to the next, or else a growing organization could find itself out of compliance if it exceeds the $35,000/35 person threshold or no longer solicits primarily within its membership.
(3) The bill eliminates the requirement that charitable organizations submit an IRS determination letter along with their initial registration application. Due to the time delays from the IRS in issuing determination letters, many new organizations were tripped up by this requirement. It was also a problem for certain 501(c)(4) social welfare organizations that were never required to obtain an IRS determination letter.
Coming on top of 2013 amendments to the Charitable Solicitations Act, this bill further streamlines and simplifies the statute. Although L.D. 1799 as originally submitted would have eliminated all filing requirements for charitable organizations and not just for fund-raising counsel, the Legislature backed off that sweeping change and instead went for more these more limited, but still helpful, amendments.