Charitable Organization Requirements
Professional Fundraiser Requirements
Registering a Charitable Trust
Estates with Charitable Remainders
Charitable Remainder Trusts
Dissolutions, Mergers, Conversions and Withdrawals
Public Safety Organizations and Their Fundraisers

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Administration and Enforcement of Statutes

The Charitable Trust Section is charged with the administration and enforcement of four Michigan Statutes.  Those statutes regulate charitable organizations, police and fire organizations, professional fundraisers that solicit donations and plan campaigns in Michigan, and charitable organizations that hold charitable assets in Michigan.  Each statute is discussed separately below with a summary of who is subject to the law and what the organization or fundraiser must do to comply. 

Charitable organizations that either have offices in Michigan or wish to solicit or receive contributions in Michigan and that have not previously filed with the Charitable Trust Section should submit an Initial Application/Registration.  Some organizations are exempt from licensing or registration requirements.  Exemptions must be approved by the Attorney General Charitable Trust Section. Organizations may submit the Request for Exemption to receive a determination regarding licensure and/or registration.

The Charitable Trust Section also must approve dissolutions of charitable purpose organizations incorporated in Michigan.  An organization established for a charitable purpose must obtain a letter of approval to submit to the Department of Energy, Labor & Economic Growth, Corporation Division before the organization can be properly dissolved.

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Charitable Organization Requirements

The Charitable Organizations and Solicitations Act, 1975 PA 169, as amended, MCL 400.271 et seq., MSA 3.240(1) et seq. requires an organization to obtain a charitable solicitation license if it solicits or receives contributions in excess of $8,000 in Michigan or if it compensates any person for fundraising services, including employees or independent contractors. COSA also requires professional fundraisers to be licensed and bonded before soliciting, planning, or carrying out a solicitation campaign in Michigan on behalf of a charitable organization. 

Under COSA, some organizations are exempt from licensing requirements.  Exemptions must be approved by the Charitable Trust Section-not presumed by the organization. If you believe your organization qualifies for an exemption, submit the Request for Exemption.  

Charitable organizations that have never filed with the Charitable Trust Section must submit the Initial Application/Registration along with requested attachments including those shown below: 

·         Out-of-state corporations are to submit copies of the articles of incorporation along with all amendments and bylaws. Copies must show evidence that the documents were filed with the appropriate state agency.  Michigan corporations must submit bylaws.   

·         Unincorporated entities should submit constitutions, bylaws, or other organizing documents.   

·         Organizations with tax exempt status from the Internal Revenue Service (IRS) should provide a copy of the IRS determination letter.  (More information about obtaining tax exempt status from the IRS is available at their website.) 

·         Organizations that have had financial activity should provide a recent financial accounting.

Alternatively, organizations that solicit in more than one state may file the Unified Registration Statement (URS) that is accepted by many states.  When filing the URS, it is important to respond appropriately to state-specific requirements, such as a Michigan resident agent.  If filing a 990-EZ, also submit a completed Michigan Supplement to IRS Form 990-EZ if gross receipts are $100,000 or more.  

The charitable solicitation license expires each year approximately six (6) months after the close of the organization's fiscal year.  An expiration date is stated on the license sent to each organization when issued.  To renew, the organization should submit a Renewal Application - License to Solicit Donations at least thirty (30) days prior to the expiration date, along with required attachments.

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Professional Fundraiser Requirements

Any professional fundraisers used by the organization must also be licensed under 1975 PA 169. To become licensed the fundraiser needs to file a properly completed Application for License of Professional Fundraiser prior to solicitations. The fundraiser must also obtain a $10,000 bond and submit the Uniform Professional Fundraiser Surety Bond form, accompanied by a power of attorney form properly signed by the surety. The fundraiser must also submit a Professional Fundraiser Contract Summary Sheet for every contract entered into with a charitable or religious organization. Individual solicitors hired to make phone calls or to solicit door-to-door are required to be registered through the filing of Registration of Professional Solicitor forms for each individual. The professional fundraiser license expires each year on June 30; to renew the license an Application should be submitted thirty (30) days prior to that expiration date, along with a bond continuation certificate.

Professional fundraisers who handle funds should also note that a Campaign Financial Statement will be due in the Charitable Trust Section ninety (90) days following the end of each campaign, or yearly if the campaign is ongoing.

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Registering a Charitable Trust

The Supervision of Trustees for Charitable Purposes Act, 1961 PA 101, MCL 14.251, et seq., MSA 26.1200(1) et seq . mandates that every charitable trust must register with the Attorney General. A charitable trust is broadly defined to include every person or legal entity which holds property for a charitable purpose. There are exemptions for religious organizations, governmental agencies, educational institutions, amateur theater, band and orchestra organizations and hospitals.  If you believe your organization qualifies for an exemption, submit the Request for Exemption. The Rules and Regulations for Charitable Trusts, R14.11 et seq of the Michigan Administrative Code discuss in greater detail the requirements of registering and providing information to the Attorney General.
 

Registration is accomplished in two ways.  Michigan organizations that are licensed to solicit are automatically registered.  All other entities should submit two forms--the Registration Statement and Inventory. To maintain an up-to-date charitable trust registration, financial accountings must be filed with the Charitable Trust Section six (6) months following the end of each fiscal year.  The accounting may be filed by sending a copy of the accounting with the IRS, the organization's certified audit, or, if a corporate trustee, an annual financial statement.  For organizations that do not have an accounting already, an IRS 990-EZ may be downloaded from the IRS website. Or, click here to prepare and e-file a form 990 or 990-EZ to the IRS and Charitable Trust Section.   

If an organization has gross receipts less than $25,000 during their fiscal year and holds assets valued at all times during their fiscal year less than $100,000, they may qualify to have the financial accounting requirement waived.  The CT Annual Report Waiver Statement may be submitted only after the organization has at least one financial accounting on file with the Charitable Trust Section.  The Waiver Statement may be obtained by calling the Charitable Trust Section. If any questions arise, however, the Attorney General reserves the right to request the financial accountings for any years for which the requirement has been waived.

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Estates with Charitable Remainders

Section 4(c) of PA 101 requires that estates with residual charitable bequests must notify the Attorney General. Whenever a will is probated leaving a residuary bequest to a charitable organization or to a charitable trust, or when a will creates a testamentary trust with a charitable purpose, the Attorney General must be given notice. The notice should include a copy of the petition for commencement of proceedings and a copy of the last will and testament, including any codicil or trust agreement. If a trust is to continue in existence after probate proceedings are completed, then registration as a charitable trust will most likely be required. The Registration Statement and the Inventory would be required as described above. Also, if a living trust has been established naming a charity as a remainder interest, then notice must be given to the Attorney General, providing evidence that charitable assets have been properly distributed.

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Charitable Remainder Trusts

In a charitable remainder unitrust, one or more charities may be named as future beneficiaries, but the grantor or the heirs of the grantor receive income from the trust. Under section 3(c) of PA 101, such trusts do not need to be registered if all of the following are true:

There is no current charitable interest;

The charitable remainder beneficiaries have been irrevocably named;

No charitable remainder beneficiary is under the dominion or control of the grantor, testator, executor, trustee, or members of the grantor's or testator's family.

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Dissolutions, Mergers, Conversions and Withdrawals

Dissolution of Charitable Purpose Corporations, 1965 PA 169, MCL 450.251, et seq., MSA 21.290(1)et seq . provides that organizations established to hold property for charitable purposes, except for religious organizations, shall not be dissolved without first giving notice to, and obtaining the consent of, the Attorney General. The Charitable Trust Section administers this law. To obtain consent, organizations wishing to dissolve must file with the Charitable Trust Section a properly completed Dissolution Questionnaire, along with all requested attachments. Once the dissolution is approved by the Charitable Trust Section staff, a letter will be sent to the organization stating that the Attorney General has no objection to the dissolution. This letter should be submitted to the Department of Labor and Economic Growth, Corporation Division along with the Certificate of Dissolution. If it is clearly not a charitable purpose corporation, or if it is an ecclesiastical corporation, the organization need only submit a complete filed copy of the articles of incorporation for our review.

Since mergers and conversions involve the possible demise of an organization holding charitable assets or the transfer of charitable assets, the Charitable Trust Section also reviews those transactions. While there is no specific form to be completed, the following is a list of documents and information that are generally requested to allow the staff to properly review such transactions.

For Mergers:
 

A letter explaining the transaction;

A copy of the merger agreement;

A copy of the plan of merger;

Articles of incorporation on the non-survivor, if no previous file with the

    Attorney General;

IRS returns and financial statements, if any, for the two most recent

    years on the non-survivor if not already on file with the Attorney

    General;

If the survivor is a Michigan charitable organization that has not previously filed with the Charitable Trust Section, it   should review the Request for Exemption form to determine if it is exempt from the licensing and registration requirements administered by this office.  If so, the Request for Exemption form should be filed.  If not, the survivor should file the necessary licensing and/or registration forms.

For Conversions:
 

An explanation of why the organization incorporated as a nonprofit and

    why it will be converted to a for profit;

Current IRS status;

IRS returns for the last three years;

Audits for the past three years, if prepared;

Articles of incorporation, if not already on file with the Attorney

    General.

For Withdrawals:

Notice must also be provided to the Attorney General if a nonprofit charitable purpose corporation with authority to conduct affairs in Michigan intends to withdraw from the state. The following is generally requested to allow an adequate review of these situations:

A letter telling why the certificate of authority was necessary and why it

    is no longer necessary;

An inventory of all assets held in Michigan and their disposition upon

    withdrawal of the corporation;

The most recent financial statements and/or IRS return;

Articles of incorporation if not already on file with the Attorney General.

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Public Safety Organizations and Their Fundraisers

The Public Safety Solicitation Act, 1992 PA 298, MCL 14.301et seq., MSA 3.240(31)et seq. , was enacted by the Legislature to obtain some accountability from the many police and fire organizations that solicit from the public. Most of them do not fall within the requirements of the Charitable Organizations and Solicitations Act because most of them are not charitable organizations. Section 2(d) of PA 298 specifically defines a public safety organization, and section 3 specifies the information that must be provided to the Attorney General to properly register, a step that must be taken prior to solicitations. To register, the organization must complete the Public Safety Organization Registration Form and submit it to the Charitable Trust Section. If an organization does not fall within the definition of a public safety organization, they should contact the Charitable Trust Section for the procedure to follow.

The public safety registration expires each year six (6) months following the end of the organization's fiscal year. To renew the registration, the organization should submit a Public Safety Organization Registration Form thirty (30) days prior to the expiration date.

Public Act 298 also mandates the registration and bonding of all professional fundraisers operating on behalf of public safety organizations. Registration of fundraisers is also required prior to the initiation of solicitations. To register, the fundraiser must properly complete and submit a Public Safety Professional Fundraiser Registration Form. For the first year of solicitations in Michigan the fundraiser must obtain a $25,000 bond which must be submitted on the Uniform Public Safety Professional Fundraiser Surety Bond (Initial) form, along with a power of attorney form signed by the surety. After the first year of registration, the amount of the bond will be determined by contributions collected by the fundraiser the previous year as defined in section 4(8) of the Public Safety Solicitation Act. Renewal must include a properly completed Uniform Public Safety Professional Fundraiser Surety Bond (Renewal) form.

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