Hawai‘i nonprofits that solicit donations must now register

Related story: Do nonprofits that get grants but don't fundraise need to register?

By Steven L.F. Ho

Beginning in 2009, Hawai‘i charitable organizations will be required to register and file annual financial reports with the Department of the Attorney General.  Hawai‘i’s new charity registration law applies for organizations that:

• Are exempt from income tax under Section 501(c)(3) of the Internal Revenue Code or is otherwise organized for charitable, educational, scientific, civic or other eleemosynary purposes
• Are not religious organizations, parent-teacher associations, educational institutions with curricula approved by a governmental agency or accrediting body, hospitals or governmental units or instrumentalities
• Solicit and receive more than $25,000 in contributions annually or compensate any person primarily to conduct solicitations

Beginning on Jan. 1, 2009, organizations that meet the above criteria will be required to:

• Register with the AG prior to soliciting any contributions in Hawai‘i
• File annual financial reports with the AG within eight months after the end of their fiscal years or before they file their Forms 990 with the Internal Revenue Service
• Submit audited financial statements to the AG if their gross revenue exceeds $500,000 or if their organization is otherwise required by a governmental agency or third party to have audited financial statements
• Pay to the AG an annual filing fee, ranging from $10 to $750, depending on the amount of the organization’s gross income.

Click here to see Act 174, which was signed into law by Governor Lingle on June 13.

The form to be used for the initial registration will be the Unified Registration Statement developed by the National Association of State Charity Officials.  Organizations that file a Form 990 or 990EZ with the Internal Revenue Service can file those returns as their annual financial reports. 

In addition to the charity registration requirements, the new law prohibits charitable organizations from using the services of an unregistered professional solicitor or fundraising counsel. 

Professional solicitors and fundraising counsel include any person compensated for soliciting contributions on behalf of a charitable organization other than a volunteer, officer or employee not paid based on a percentage of the contributions raised. They also include any person other than a volunteer, officer or employee who is compensated for managing, advising or consulting with respect to the solicitation of contributions for a charitable organization. 

As a result of the new law, it is important that charitable organizations:

1. be cognizant of whether any persons are or will be providing services as professional solicitors or fundraising counsel, and
2. verify that those persons are properly registered with the Attorney General before using their services.

Steven L.F. Ho is an attorney with the Honolulu firm Torkildson Katz Fonseca Moore & Hetherington and a member of the HANO Board of Directors.