1. Are all nonprofits charities?
All charities are nonprofits, but not all nonprofits are charities. Generally, any organization that has received a tax-exemption from the IRS under section 501(c)(3) of the Internal Revenue Code is a charitable organization obligated to use its assets for charitable purposes. Donations to 501(c)(3) organizations may be itemized as deductions for charitable contributions on donors' federal income tax returns. By contrast, trade associations, homeowners associations, civic leagues and other nonprofits, while tax-exempt with the IRS, are not charities and contributions are generally not deductible.
2. What are the principal charity laws that the Attorney General administers?
While there are numerous statutes that may apply to entities with a charitable purpose, there are three major Michigan laws that affect most charities:
For example, most Michigan charities soliciting or receiving $25,000 in a 12-month period or employing anyone with fundraising duties must register to solicit under the Charitable Organizations and Solicitations Act. Michigan charities registered to solicit would be automatically registered under the Supervision of Trustees for Charitable Purposes Act. Those organizations not required to register under the Charitable Organizations and Solicitations Act, i.e., those charities that do not solicit, would need to register only under the Supervision of Trustees for Charitable Purposes Act. Out-of-state charities soliciting donations, but without assets in Michigan, only need to register under the Charitable Organizations and Solicitations Act.
If a Michigan charity dissolves, the Attorney General must approve the distribution of those assets to other charities with a like charitable purpose under the Dissolution Act. All assets, once donated to charities, remain charitable assets, even upon dissolution.
The Attorney General also administers the Public Safety Solicitation Act, MCL 14.301 et seq., which covers police, firefighter and other safety organizations most of which are not charities, but which solicit from the public.
3. What does it mean if a charity is registered to solicit in Michigan?
When the Charitable Trust section registers a charity it means the charity submitted all information required under the Charitable Organizations and Solicitations Act (MCL 400.271 et seq.), including:
For submissions on or after January 1, 2015, charities that receive over $275,000 in contributions during the reported year must also provide financial statements reviewed by a certified public accountant; while charities that receive over $525,000 in contributions during the reported year must provide audited financial statements. See MCL 400.273(2)(j) and 400.273(3)(a).
The existence of a registration does not mean that the Attorney General endorses a charity, or vouches for the accuracy of the factual representations on financial statements and the registration application. For example, the Charitable Trust section does not affirmatively determine that:
4. Do I have to register if I am raising funds for an individual or family in need?
Funds are sometimes raised for an individual's medical bills, for the family of a firefighter who died in the line of duty, or some other need that affects an individual or small group of people. While it is commendable to help individuals in need, the Charitable Organizations and Solicitations Act specifically exempts this type of solicitation from registration when no one is paid for fundraising and all contributions, after any costs of solicitation, are turned over to the named beneficiary.
Organizations and persons that raise funds for specific individuals or families in need are unlikely to qualify for charitable, tax-exempt status or state that contributions are tax deductible. Under the law, a tax exempt charity must provide a public benefit (not a benefit to an identifiable person or persons).
5. Can I raise money for a favorite charity?
The Charitable Organizations and Solicitations Act provides that you may not solicit on behalf of a charitable organization without first obtaining written permission of the charity, and you may not represent or imply that you have a sponsorship, approval, affiliation, status, or other connection with a charity that you do not have. Thus, it is best to contact the charity to find out how you may volunteer for them or learn what procedures and safeguards they require in any solicitation effort on their behalf.
Additionally, if you do receive funds on behalf of a charity, it is best to have checks made out directly to the charity. There may be tax consequences for you if funds are held by you personally. You may not represent that all of the donation will go to the charity if you subtract any fundraising expenses. If you receive any compensation, you may need to become licensed as a Professional Fundraiser.
6. How do I start a charity?
Starting and running a charity is not a simple undertaking. Charities must comply with state, federal, and sometimes local, laws. Examples of issues and filings include:
Further, if you hold a raffle, have paid directors or employees, or solicit contributions outside of Michigan, more regulation and reporting are required.
You should be aware that most of your governmental filings will be publicly available. This transparency allows donors to educate themselves on the programs and effectiveness of an organization.
Information on starting a nonprofit is available through the Michigan Nonprofit Association. Michigan’s Department of Licensing and Regulatory Affairs (LARA) also has information on their requirements at their website.
7. What are some of the concerns the Charitable Trust Section has in overseeing charitable organizations and assets?
Statements and promises made on behalf of charities must be accurate and not misleading. These representations may appear in reports to the Charitable Trust Section, on the IRS Form 990, in publications by the organization, or in solicitation material. Accordingly, if the Charitable Trust Section receives information questioning statements by a charity regarding its operations and activities, we may require a charity to demonstrate that the statements are true.
Free speech protections in the United States Constitution prohibit requirements that charities spend a minimal percentage of a donor's contributions on a charitable purpose. Schaumburg v. Citizens for Better Env't, 444 U.S. 620 (1980). In the Schaumburg case, the U.S. Supreme Court invalidated a law requiring applicants for solicitation permits to spend at least 75% of receipts for charitable purposes that did not include salaries and administrative expenses.). Unfortunately, some charities spend most of their funds on fundraising and administrative costs rather than their claimed charitable program.
If the Charitable Trust Section suspects that very little or no actual charitable activity is taking place, or that a charity has inaccurately reported that money was spent on providing charitable services, we may request documents or otherwise investigate an organization's operations and activities. In cases of fraud, the Attorney General may bring enforcement actions to enjoin a charity, and recover money wrongfully obtained. The charity may also be the subject of civil and criminal penalties. For recent enforcement actions, see the “Recent News” section on the charitable trust website.
8. Where do I send my correspondence regarding charities?
Correspondence can be emailed, mailed, or faxed to the following:Department of Attorney General
Overnight/Registered/Certified correspondence:525 W. Ottawa - 3rd Floor
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9. How can I tell if a charity is legitimate?
The word "legitimate" can have several meanings in this context. It may simply mean a charity is properly incorporated, or that it is registered with the Attorney General, has a tax exemption from the IRS, spends its funds on its charitable purpose, or that it is effective in accomplishing its charitable goals.
To learn if a charity or public safety organization is authorized to solicit in Michigan, visit AGCharitySearch. However, inclusion on AGCharitySearch does not mean that the Charitable Trust Section has verified the accuracy of any information provided. Some charities may be exempt from registration requirements and will not be listed on the website. If you are solicited by a charity that is not listed, call the Charitable Trust Section at 517-335-7571.
You may search for charities using one or more factors such as name, purpose, or geographic area. Reports provide contact information, the organization's purpose statement, and financial information including assets, revenue, and expenditures for fundraising, administration, and the charitable program.
10. What are some tips to follow when making a donation?
Read the brochure "Giving Wisely to Charity" on the Attorney General's website.
11. How do I determine if a charity is registered to solicit donations in Michigan?
You may search a list of registered charities on our website for registration status and financial and expenditure information. You may also contact the Charitable Trust Section at 517-335-7571.
12. Why is someone other than the charity calling me for a donation to that charity?
You are probably being called by a professional fundraiser. Professional fundraisers are for-profit individuals or companies that enter into a contract with a charity to conduct a phone or mail campaign. While charities usually pay a substantial amount of the donation to the professional fundraiser, some charities believe that this is the best or only way to solicit for their cause.
Professional fundraisers can retain any amount of the solicited funds consistent with the contract with the charity. Some professional fundraisers will retain 85-90% or more of the funds. The U. S. Supreme Court has ruled that states cannot regulate the amount fundraisers receive. Professional fundraisers are prohibited from misleading you about the amount of donations they retain.
Professional fundraisers soliciting in Michigan should identify themselves when they call and must be licensed and bonded. You can check a professional fundraiser's license status online or by contacting the Charitable Trust Section at 517-335-7571.
13. What should I consider when I am asked to contribute to a police, fire fighter, or other public safety organization?
Police and fire fighter groups that solicit in Michigan are required to register with the Attorney General. Most of the police and fire fighter groups are not charities and donations are not tax deductible. These public safety groups often hire professional fundraisers who may take up to 90% of your contribution as their fee. To learn more about these groups and their solicitations, see the Attorney General's Consumer Alert, Police and Fire Solicitations - What You Should Know. If you have questions, complaints, or would like financial information about a public safety organization, call the Charitable Trust Section at 800-769-4515. Consult the Public Safety Organizations Act, MCL 14301 et seq., for legal requirements.
14. I am on the FTC's Do Not Call list but I still get calls from politicians and charities. Why?
Calls on behalf of political organizations and charities are not covered by the FTC's Do Not Call list. However, if a third-party telemarketer is calling on behalf of a charity, you may request to not receive any more calls from, or on behalf of, that specific charity. For more information, see the Federal Trade Commission's Consumer Alert Q&A: The National Do Not Call Registry.
15. How do I complain about a charity?
Send your correspondence or submit an electronic complaint to:Department of Attorney General
16. If I file a complaint, what will happen to it?
That depends on the nature of the complaint. Usually, a copy of the complaint is sent to the charitable organization or fundraiser and they are asked to respond. A copy of the response is sent to the complainant. Complaints are a matter of public record, so don't include a name, address, phone number, email address, or other identifying information if you wish to remain anonymous.
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Charity, Professional Fundraiser, and Public Safety Questions
17. How do I know if my organization needs to be registered to solicit in Michigan?
Registration is typically required for all 501(c)(3) organizations that solicit or receive contributions in excess of $25,000 from Michigan per year. However, if an organization pays anyone, whether an employee of the organization or an outside contractor, for fundraising services, the charity needs to be registered even if it solicits or receives less than $25,000.
There are exemptions for some types of organizations. For example, churches, approved Michigan schools, and veterans' organizations chartered by the federal government, are exempt. The first step for a charity in determining whether it needs to register is to fill out the Request for Exemption Form available on the Attorney General's website on the Charitable Trust Section's homepage. The Request for Exemption Form indicates whether additional information or other forms are necessary.
18. What if my organization is not going to solicit funds, but only receive donations?
Registration will be required if the organization receives over $25,000 in donations because Section 3 of the Charitable Organizations and Solicitations Act includes the receipt of donations.
19. If an organization files an application to solicit with the Charitable Trust Section, how long will the organization have to wait until it is registered to solicit?
As long as the organization has submitted a complete and accurate registration statement, the registration is effective on the date the registration statement is received by the Attorney General. While you may not receive written confirmation of your registration for several weeks, you can check your filing status online. Within a few days of receipt of your registration statement, your registration status online will be listed as "pending." It will remain as "pending" until your registration (or license in the case of a professional fundraiser) confirmation is sent to you. Unless you have received a letter from our office asking for missing or inaccurate information, you may solicit while in pending status.
20. Once the organization is registered to solicit, is that all that is required?
The registration will expire one year and seven months after the end date of the financial report filed with your last registration form. The expiration date will be noted on your registration confirmation. At least thirty days prior to the expiration date on your registration confirmation, the organization must file a renewal form.
21. What if the organization's renewal application is going to be late?
The organization may have a 180 day extension. The request for an extension must be made in writing and received before the expiration date of your current registration. Send extension requests to:Department of Attorney General
Overnight/Registered/Certified correspondence:525 W. Ottawa - 3rd Floor
22. Does my entity also need to register as a charitable trust under the Supervision of Trustees for Charitable Purposes Act, MCL 14.251 et seq.?
Registration is required for any entity holding charitable assets in Michigan. This includes private foundations, charities, and trusts. Whenever a charity accepts a donation, it is held in trust for the purpose for which it was solicited or received. Michigan organizations which obtain a solicitation license are automatically registered as charitable trusts and don't need to complete separate forms.
23. What if the organization wants to raise money through a raffle, bingo, Millionaire party or poker game?
Registration with the Attorney General to solicit under the Charitable Organizations and Solicitations Act, or under the Supervision of Trustees for Charitable Purposes Act, is not sufficient to run this type of fundraising. You must also get a license from the Michigan Lottery's Charitable Gaming Division. You can obtain information on the Lottery's Charitable Gaming website or call 517-335-5780. Allow at least 8 weeks for application processing.
24. What do I need to do to get approval to dissolve a charity or merge with another charity?
All Michigan nonprofits must obtain the Attorney General's approval, or our letter stating that approval is not necessary, before submitting a Certificate of Dissolution to the Corporation Division of the Bureau of Commercial Services, Department of Licensing and Regulatory Affairs.
To obtain approval, a charitable organization should submit the Dissolution Questionnaire and the required attachments to the Attorney General's Charitable Trust Section.
If the organization is a non-charitable nonprofit or religious organization, it should submit a letter to the Attorney General's office explaining that the organization is dissolving and provide a copy of the organization's articles of incorporation.
Mergers are considered similar to dissolutions because at least one entity will cease to exist. However, the Dissolution Questionnaire is not necessary for these transactions. Charitable organizations wishing to merge or convert should send the Charitable Trust Section a complete explanation regarding the proposed transaction with supporting documentation such as articles of incorporation, plans of merger, and IRS returns and financial statements.
Similarly, Attorney General approval is required if a Michigan nonprofit corporation wishes to convert to a for-profit corporation. The organization should write to the Charitable Trust Section with an explanation regarding why they were incorporated as a nonprofit and now wish to convert. The organization should also explain its IRS status and provide copies of its last three IRS returns and audited financial statements, if prepared.
An out-of-state nonprofit corporation seeking to file a Certificate of Withdrawal should write to the Charitable Trust Section to explain its request. The letter should include an explanation of why the organization was required to have a certificate of authority, why it is no longer needed, and whether it held assets in Michigan. Supporting documentation such as articles of incorporation and IRS returns should also be provided.
25. What are professional fundraisers and do they need to obtain a license?
Michigan's Charitable Organizations and Solicitations Act, MCL400.271 et seq., defines a professional fundraiser as:
"…a person who plans, conducts, manages, or carries on a drive or campaign of soliciting contributions for or on behalf of a charitable organization, religious organization, or any other person in exchange for compensation or other consideration; or who engages in the business of or holds himself out as independently engaged in the business of soliciting contributions for such purposes…." MCL 400.272(f).
This includes consultants who help plan or manage a campaign as well as those entities that do phone or mail solicitation. It also includes any employee of the organization who is paid on the basis of the amount of funds raised. The term also includes anyone other than a charitable organization who owns or operates a clothing donation box if it is represented that the clothing or its proceeds will be donated to a charitable organization.
Professional fundraisers must be licensed and bonded in Michigan. MCL 400.287
If you have any questions about whether you need to be licensed as a professional fundraiser, contact the Attorney General's Charitable Trust Section at 517-335-7571.
26. What are public safety organizations and do they need to register?
A public safety organization means any group, organization, association, union or conference of current or former law enforcement officers, fire fighters, correctional officers, employees thereof, or other affiliated or associated entity that meet both of the following:
These organizations are required to register under the Public Safety Solicitation Act, MCL 14.301 et seq.
27. Where do I get forms for obtaining or renewing a registration to solicit/receive contributions, to act as a professional fundraiser, to register as a charitable trust or public safety organization, or to dissolve or merge my organization?
Forms are available online or by contacting the Charitable Trust Section at 517-335-7571.
28. What entities are considered charitable trusts under the Supervision of Trustees for Charitable Purposes Act, MCL 14.251 et seq.?
Any entity holding charitable assets in Michigan or incorporated in Michigan is considered a charitable trust under the Supervision of Trustees for Charitable Purposes Act. This includes private foundations and other charities, trusts with a current charitable interest (including lead trusts), and some charitable remainder trusts. These entities must register and submit annual financial reports. Charities and soliciting foundations registered to solicit under the Charitable Organizations and Solicitations Act do not need to register separately under the Supervision of Trustees for Charitable Purposes Act and their renewal solicitation registration serves as their annual financial reports.
29. Do I need to register my charitable remainder trust/unitrust?
Registration is required if the trust is irrevocable, yet the designated charitable beneficiary is contingent or may be changed by, or is under the control of, the grantor, testator, executor, trustee, or members of the grantor's or testator's family.
30. Is registration necessary for an estate/will/revocable trust with residual charitable bequests where the testator/grantor has passed away?
Yes. Under the Supervision of Trustees for Charitable Purposes Act, a charitable trustee must register a charitable trust within two months of receiving assets. Thus, for a revocable trust with charitable beneficiaries, a trustee has two months following the death of the grantor within which to register. After all distributions have been made, the Charitable Trust Section should be provided with a final accounting and receipts for distributions to the charitable beneficiaries in order to close our file.
31. How do I register a trust?
Forms are available online or by contacting the Charitable Trust Section at 517-335-7571.