Nonprofit regulation in Hawaii
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Nonprofit regulation in Hawaii involves a complex set of rules that govern nonprofit organizations and charitable giving throughout the state. Major issues surrounding nonprofit regulation nationwide include the following:
- contribution limits,
- donor disclosure, and
- the redefinition of issue advocacy.
Hawaii is one of 39 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 a Hawaii organization or based out-of-state. In Hawaii a number of groups and organizations are exempt from registration. Registration is a one-time process, and is completed entirely online.[1][2]
Hawaii is one of 32 states that allows registrants to use either the Unified Registration Statement (URS) (if they are registering in more than one state) or the state registration form.[3] 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 the Foundation Center, there are over 1.5 million nonprofit organizations in the United States.[6] 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 sections 501(c) or 501(d), or under section 401(a).[7]
Organizations classified as 501(c)(3) are nonprofit charitable, religious and educational organizations. These include organizations like the Red Cross and Habitat for Humanity as well as the American Civil Liberties Union and the Lucy 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.”[8] Organizations granted 501(c)(4) status are political 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 in issue advocacy, but they are not allowed to expressly advocate for the election or defeat of a particular candidate.
While the Internal 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 of IRS 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.[5]
Governing agencies
The Hawaii Attorney General's Tax and Charities Divisions is the agency in the state that oversees rules governing donor solicitation and registration.
See law: Hawaii Revised Statutes sections 467B-1 through 467B-17
Registration requirements
Any nonprofit group or organization located in Hawaii, unless exempt, must register with the Hawaii Attorney General. Any non-exempt nonprofit, in any state, intending to solicit in Hawaii must also register, along with anyone intending to solicit in Hawaii 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 the American Civil Liberties Union, or issue advocacy groups like the League of Conservation Voters.
Exemptions
A number of groups are exempt from registering in Hawaii, including:[2]
- Any group not intending to raise $25,000 in a given year (organizations matching this description may have some paid staff doing fundraising, as long as those persons are not paid primarily for fundraising)
- Religious institutions
- Educational groups
- Membership organizations that solely solicit members
- Nonproft hospitals (though not the supporting organizations or foundations of the hospitals)
- Government entities
- Fundraisers (anyone who solicits or an exempt group)
- Any corporation created by an Act of Congress
Procedures
Nonprofits registering in Hawaii do so entirely online through the state system.[9][2]
Documents
Because registration occurs entirely online, it is possible an organization will need PDF versions of organizing documents and IRS correspondence regarding the tax status of the organization; the system will prompt registrants when these documents are needed, if at all.[2]
Signature and fee
Signatures of two authorized officers of the organization are required; each must create a unique profile through the online system and electronically sign.
There is no fee to register.[2]
Filing procedures
Registration takes place entirely online, and documents may be uploaded in PDF formats, so there is no need to mail forms or supplemental materials to any physical address.[2]
Renewal
Registration is a one-time process; there is no need to renew. Organizations are required, however, to update the Hawaii Attorney General each year with IRS Form 990 and an annual report.[2]
Financial reporting
Annual financial reporting requirements insist organizations submit IRS Form 990, in addition to a fee that is determined by contribution amounts the previous year. The scale ranges from $10 for organizations that received less than $25,000 to $600 for organizations that received $5 million or more. Additionally, organizations receiving over $500,000 must provide an audited financial statement.[2]
Extensions
Organizations can file for extension for up to 10 and a half months after their fiscal year ends.[2]
Recent news
This section links to a Google news search for the term "Hawaii + donor + privacy"
See also
External links
Footnotes
- ↑ The Unified Registered Statement, "Appendix of Cooperating States," accessed January 22, 2015
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 Fishman, 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
- ↑ 5.0 5.1 London 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
- ↑ Form 990 Online, "For charitable organizations that solicit contributions in Hawaii," accessed January 22, 2015