Nonprofit regulation in Illinois
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Nonprofit regulation in Illinois involves a complex set of rules that governnonprofit organizations and charitable giving throughout the state. Major issues surrounding nonprofit regulation nationwide include the following:
- contribution limits,
- donor disclosure, and
- the redefinition ofissue advocacy.
Illinois is one of39 states that require charitable organizations, and those intending to solicit on their behalf,to register with the state in order to solicit contributions, whether they are an Illinois organization or based out-of-state. In Illinois, a number of groups and organizations are exempt from registration. Unusually, religious groups, which are exempt in most states, must apply for exemption in Illinois.[1]
Illinois is one of32 states that allows registrants to use either theUnified Registration Statement (URS) or the state registration form.[2] Only seven states requiring registration do not accept the URS.
- Note: The following is not a how-to guide in managing an organization's registration and reporting requirements, but rather an attempt to share information about the relative degree of regulation governing nonprofit charitable activity at the individual state level. The information on this page was last updated in early 2015.
Background
According to theFoundation Center, there are over1.5 million nonprofit organizations in the United States.[5]Section 501 of the U.S. tax code outlines which types of nonprofit organizations may be granted tax exempt status by the Internal Revenue Service. The section of this code that provides for exemption is section 501(a), which states that organizations are exempt from some federal income taxes if they fall under sections501(c) or 501(d), or under section 401(a).[6]
Organizations classified as501(c)(3) are nonprofitcharitable, religious and educational organizations. These include organizations like the Red Cross and Habitat for Humanity as well as theAmerican Civil Liberties Union and theLucy Burns Institute, which provide, as defined in the federal code, “instruction of the public on subjects useful to the individual and beneficial to the community.”[7] Organizations granted501(c)(4) status arepolitical education organizations, and can engage in political lobbying. This includes donations to political committees that support or oppose ballot measures, bond issues, recalls or referenda. 501(c)(4) organizations can thus engage inissue advocacy, but they are not allowed to expressly advocate for the election or defeat of a particular candidate.
While theInternal Revenue Service designates eligible nonprofit charitable organizations with a federal tax-exempt status, individual states require their own level of regulation and reporting, particularly when organizations attempt to solicit fundraising contributions. The amount of regulation required differs by state, as does the degree to which state regulations protect the privacy of individual donors. Three states, for instance, require annual copies ofIRS Form 990 (schedule B), which lists individual contributors who contribute over a specified amount. Research shows that attempts to make contributions more transparent has an unintended negative effect on the number of contributors who give, as well as the amount.[4]
Governing agencies
TheIllinois Attorney General is the agency in the state that oversees rules governing donor solicitation and registration.
See law:225 Illinois Compiled Statutes sections 460/0.01 to 460/23 (Solicitation for Charity Act)
Registration requirements
Any nonprofit group or organization located in Illinois, unless exempt, must register with theIllinois Attorney General. Any non-exempt nonprofit, in any state, intending to solicit in Illinois must also register, along with anyone intending to solicit in Illinois on behalf of a nonprofit. Non-exempt nonprofits might include traditional charitable organizations like the Red Cross or Habitat for Humanity, educational or policy organizations like theAmerican Civil Liberties Union, orissue advocacy groups like theLeague of Conservation Voters.
Exemptions
A large number of groups are exempt from registering in Illinois. Religious organizations are exempt, but unlike in many states must apply for exemption first.
The following groups are exempt from registering:[1]
- Small organizations with annual contributions of less than $15,000
- Religious groups (who must obtain explicitly obtain exemption by filing two forms:Illinois Form CO-3, Religious Organization Exemption Form, andForm CO-1, Charitable Organization Registration Statement)
- Educational groups; also, libraries that file annual financial reports with a state agency
- Membership organizations
- Appeals for single individuals
- Political organizations
- Any charitable group getting money from a duly registered community chest or united fund is exempt,assuming it does not get $4,000 or more from other sources during any 12-month period ending on June 30th
- Veterans' groups chartered under federal law,assuming they file all mandated financial reports
The following groups are exemptif they have volunteer fundraising help:
- Volunteer firefighters
- Nonprofit nurseries for infants awaiting adoption
- Local parent-teacher groups
- Any boys' club affiliated with the Boys' Club of America
Procedures
Nonprofits registering in Illinois can use either theUnified Registration Statement (URS) form or thestate form.[1]
Documents
The following documents are required along with your registration form:[1]
- Articles of incorporation
- Bylaws
- IRS Form 990 along withIllinois Charitable Organization Annual Report (Form AG990-IL) for the last 3 years; if the organization is younger, submit aForm CO-2 (Charitable Organization Financial Information form
- IRS determination letter,or IRS Form 1024 or 1024 if determination is pending
- All contracts with professional fundraisers
- Certificate of authority to do business from theIllinois Secretary of State
Signature and fee
Two signatures are required. One must be from the president and the other from either the Chief Financial Officer or another authorized officer (these must be two different people). Notarization is not required. The registration is $15.[1]
Filing procedures
Registration materials must be mailed to:[1]
Office of the Illinois Attorney General
Charitable Trust Bureau
100 West Randolph Street, 11th Floor
Chicago, Illinois 60601
Renewal
Registration never expires; there is no need to renew.[8][1]
Financial reporting
Registered organizations must file a financial report each year. It is due within six months after the end of an organization's fiscal year. There is a $100 late fee.
The financial report must include theIRS Form 990; a completedIllinois Form AG990-IL; an audited financial statement if the organization received more than $300,000 (or if it had a paid fundraising solicitor and received more than $25,000; a completedIllinois Form IFC, Report of Individual Fundraising Campaign, if it used a paid fundraiser.[1]
Extensions
Sixty-day extensions are available by filing a request in writing before the due date. Additional two-and-a-half month extensions are also available, with good reason.[1]
Fee
There is a $15 fee for submitting annual report.[1]
Recent news
This section links to a Google news search for the term "Illinois + donor + privacy"
See also
External links
Footnotes
- ↑1.01.11.21.31.41.51.61.71.81.9Fishman, S. & Barrett, R. (2012).Nonprofit Fundraising Registration: The 50 State Guide. NOLO.
- ↑"Multistate Filing Form," accessed December 17, 2014
- ↑Guidestar, Fundraising: What Laws Apply?" accessed February 18, 2015
- ↑4.04.1London School of Economics, "Campaign finance laws that make small donations public may lead to fewer people contributing and to smaller donations," January 7, 2015
- ↑Foundation Center, "Frequently Asked Questions," accessed December 17, 2014
- ↑Cornell University Law School, "26 U.S. Code § 501 - Exemption from tax on corporations, certain trusts, etc," accessed January 13, 2015
- ↑Cornell University Law School, "26 CFR 1.501(c)(3)-1 - Organizations organized and operated for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals," accessed January 13, 2014
- ↑Nolo, "Nonprofit Fundraising Registration Rules for Illinois," accessed January 26, 2015
