Hugh Jones on Act 174, Hawaii's

new nonprofit registration law

Recently, HANO interviewed Hugh R. Jones, Hawaii Supervising Deputy Attorney General, Tax Division, the state official charged with monitoring Hawaii's charities. Jones provided information on Act 174, a law that went into effect in July requiring nonprofit organizations to register with the AG’s office, beginning in January 2009. 

Q: What is Act 174?  How does it affect my organization?

A: Act 174 requires charitable organizations that solicit contributions from the public to register with the AG's office and to submit a copy of their IRS Form 990 or 990EZ annually when it is filed with the IRS. The annual filing fee is paid at the time that the registered charitable organization submits their Form 990 to the State. There are also exemptions to the registration requirement (see below). 

Act 174 also adopted other amendments to the State's existing charitable solicitation law, for example requiring professional solicitors to submit information concerning gross national and Hawaii-based contributions received in their financial reports that must be filed within 90 days after the end of any charitable solicitation campaign.

Q: Why are nonprofits required to register with the Hawaii AG's office?

A: The Legislature determined that requiring soliciting charities to register with the State and provide basic operational and financial information to the public through registration would protect good charities from sham charities and allow the public, donors and funders to make informed decisions about making contributions. 

Registration also promotes greater transparency, and helps prevent "look alike" charities from preying on charities with similar missions or names, and provides the public with information about the registered charity's fundraisers, if any. 

Registration also assists state regulators in investigating complaints about charitable solicitation fraud.  When state regulators receive a report of a suspicious solicitation, it is usually through registration that we can find out who is likely making the solicitation, where they are making it from, who the principals are, what other organizations they are involved with, roughly what they do with the money they raise, and whether they are conscientious about registering and supplying the required information.  Investigators use all of this information to get to the bottom of a suspicious matter.

Q:  Are all nonprofits required to register with the AG’s office?

A: No.  Only charities that solicit contributions must register.  Contributions do not include grants from government agencies and other 501(c)(3) organizations thus, generally speaking organizations like private or corporate foundations and charitable trusts will not have to register. There are also exemptions in the law for accredited educational institutions, licensed hospitals, duly organized religious corporations or organizations, government agencies and instrumentalities, and any charity that normally receives less than $25,000 in annual revenue annually.

Q: What will your office do with the information?

A: The registration forms and annual Form 990 filings will be made available to the public through the Attorney General's Website and will be publicly searchable by name of charity and by keywords, among other search abilities.  The filings will also be used to investigate complaints concerning charitable solicitation practices and fraud.

Q: How do I register with the AG’s office?

A: Charities will register with the AG electronically through an Internet site that is being developed (there is already online filing for the Form 990). Charities will register by submitting the Unified Registration Statement (URS) used in 34 states.  It contains 22 questions.

Q: What is the deadline to register?

A: The registration law is effective Jan. 1, 2009.  The AG expects that the electronic registration system will be available by Jan. 1, 2009 and if it is not operational, we will be granting a blanket extension of time for charities to register.

Q: How much will my organization be expected to pay for the registration?

A: Registration fees are imposed on a sliding scale based on the registered charities gross receipts.