Nonprofit registration bill advances in the House

On March 13, the House Committees on Judiciary and Consumer Protection and Commerce recommended passage with amendments of SB 3171 SD2, a bill that would require nonprofits that receive donations to register with the Attorney General’s office, file annual financial statements and pay registration fees.

The bill now goes to the House Finance Committee, but has not yet been scheduled for a hearing.

Religious organizations, PTAs, private schools, hospitals, government agencies and nonprofits with less than $25,000 in annual contributions would be exempt. All others would be required to file a Uniform Registration Statement adopted by many other states.

The bill would give the AG additional enforcement powers, such as to issue subpoenas and hold hearings, and create four new positions: two deputy AGs, an auditor and a legal assistant.

The AG's original proposal has been amended to extend the deadline for filing annual financial reports to at least eight months after the close of the tax year. This would permit nonprofits that have their books audited after the April Internal Revenue Service deadlines to continue to do so. Addition three-month extensions can be granted.

A second change would keep sensitive registration data from being public, such as bank account information and residential addresses of board members.

Although out-of-state organizations wishing to seek donations in Hawai‘i would be required to register beginning in August 2008, Hawaii-based nonprofits that already receive donations would have until Dec. 31 to register.

SB 3171 SD2 also has a higher threshold for required financial audits than originally proposed. Nonprofits with annual revenues of $1 million or more would be required to file audited financial statements annually with the state; the original revenue threshold was $500,000.

Annual registration fees would range from $10 for agencies with revenues below $25,000 to $750 for those with revenues exceeding $5 million.