General Administration and Enforcement Statutes

Charitable Organization Requirements
Professional Fund Raiser Requirements
Registering a Charitable Trust
Estates with Charitable Remainders
Charitable Remainder Trusts
Dissolutions, Mergers, Conversions and Withdrawals
Public Safety Organizations and Their Fund Raisers

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Administration and Enforcement of Statutes

The Charitable Trust Section is charged with the administration and enforcement of four Michigan statutes.   Those statutes regulate charitable organizations, police and fire organizations, professional fund raisers that solicit donations in Michigan and charitable organizations that hold charitable assets in Michigan.   Each statute is discussed separately below with a summary of who is subject to the law and what the organization or the fund raiser must do to comply.

Charitable organizations that either have offices in Michigan or wish to solicit or receive contributions in Michigan should submit an Initial Charitable Trust/Charitable Solicitation Questionnaire either online or by mail to the Charitable Trust Section so a determination can be made whether a charitable solicitation license is required or if the organization must be registered as a charitable trust.   While some organizations are exempt from the licensing or registration requirements, the exemption must be granted by the Attorney General's Charitable Trust Section.   It is not a determination to be made by the organization.

The Charitable Trust Section also must approve dissolutions of charitable purpose organizations incorporated in Michigan.   Any organization established for a charitable purpose must obtain a letter of approval to submit to the Department of Labor and Economic Growth, Corporation Division before the organization can be deemed dissolved.

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Charitable Organization Requirements

The Charitable Organizations and Solicitations Act, 1975 PA 169, as amended, MCL 400.271 et seq., MSA 3.240(1) et seq. requires an organization to obtain a charitable solicitation license if it solicits or receives contributions in Michigan in excess of $8,000 or if it compensates any person for fund raising services, including employees or independent contractors. Under section 13 of the Act, some organizations are exempt from licensing requirements. The determination of whether any one of those exemptions applies is to be made by the Charitable Trust Section, not presumed by the organization. The same statute also requires professional fund raisers to be licensed and bonded before soliciting on behalf of a charitable organization or a religious organization.

To obtain a determination whether a license or registration is required, charitable organizations must file an Initial Charitable Trust/Charitable Solicitation Questionnaire either online or by mail, along with all requested attachments. The attachments must include copies of creating documents. Incorporated entities are required to submit copies of their articles of incorporation, including all amendments and certificates of assumed or fictitious names. Submitted copies must show evidence that the documents were properly filed with the appropriate state agency. In Michigan, that agency is the Department of Labor and Economic Growth, Corporation Division. A constitution and/or bylaws must be submitted by unincorporated entities and by corporations if those documents exist. If the organization has received tax exempt status from the IRS, a copy of that determination letter should be included. (More information about obtaining tax exempt status from the IRS is available at their website.) A recent financial accounting should be sent along with the Questionnaire for those organizations that have had financial activity. If it is determined that a charitable solicitation license is required, then the organization will need to submit a properly completed Application for License to Solicit Donations.   Alternatively, organizations that solicit in more than one state may file the Unified Registration Statement that is accepted by many states.

The charitable solicitation license expires each year either six (6) or seven (7) months following the end of the organization's fiscal year. The expiration date is stated on the license sent to each organization at the time it is issued. To renew the license, the organization should submit an Application at least thirty (30) days prior to the expiration date, along with all necessary attachments.

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Professional Fund Raiser Requirements

Any professional fund raisers used by the organization must also be licensed under 1975 PA 169. To become licensed the fund raiser needs to file a properly completed Application for License of Professional Fund Raiser prior to solicitations. The fund raiser must also obtain a $10,000 bond and submit the Uniform Professional Fund Raiser Surety Bond form, accompanied by a power of attorney form properly signed by the surety. The fund raiser must also submit a Professional Fund Raiser Contract Summary Sheet for every contract entered into with a charitable or religious organization. Individual solicitors hired to make phone calls or to solicit door-to-door are required to be registered through the filing of Registration of Professional Solicitor forms for each individual. The professional fund raiser license expires each year on June 30; to renew the license an Application should be submitted thirty (30) days prior to that expiration date, along with a bond continuation certificate.

Professional fund raisers who handle funds should also note that a Campaign Financial Statement will be due in the Charitable Trust Section ninety (90) days following the end of each campaign, or yearly if the campaign is ongoing.

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Registering a Charitable Trust

The Supervision of Trustees for Charitable Purposes Act, 1961 PA 101, MCL 14.251, et seq., MSA 26.1200(1) et seq. mandates that every charitable trust must register with the Attorney General. A charitable trust is broadly defined to include every person or legal entity which holds property for a charitable purpose. There are exemptions for religious organizations, governmental agencies, educational institutions, amateur theater, band and orchestra organizations and hospitals. The Rules and Regulations for Charitable Trusts, R14.11 et seq of the Michigan Administrative Code discuss in greater detail the requirements of registering and providing information to the Attorney General.

Registration is accomplished by submitting two forms, the Registration Statement and the Inventory. To maintain an up-to-date charitable trust registration, financial accountings must be filed with the Charitable Trust Section six (6) months following the end of each fiscal year. The accounting may be filed by sending a copy of the accounting that was filed with the IRS, the organization's certified audit, or, if a corporate trustee, an annual financial statement. For organizations that do not have an accounting already, an IRS 990EZ may be downloaded from the IRS website. Or click here to prepare and e-file a form 990 or 990-EZ to the IRS and Charitable Trust Section. If an organization has gross receipts less than $25,000 during their fiscal year and holds assets valued at all times during their fiscal year less than $100,000, they may qualify to have the financial accounting requirement waived. The CT Annual Report Waiver Statement may be submitted only after the organization has at least one financial accounting on file with the Charitable Trust Section. The Waiver Statement may be obtained by calling the Charitable Trust Section. If any questions arise, however, the Attorney General reserves the right to request the financial accountings for any years for which the requirement has been waived.

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Estates with Charitable Remainders

Section 4(c) of PA 101 requires that estates with residual charitable bequests must notify the Attorney General. Whenever a will is probated leaving a residuary bequest to a charitable organization or to a charitable trust, or when a will creates a testamentary trust with a charitable purpose, the Attorney General must be given notice. The notice should include a copy of the petition for commencement of proceedings and a copy of the last will and testament, including any codicil or trust agreement. If a trust is to continue in existence after probate proceedings are completed, then registration as a charitable trust will most likely be required. The Registration Statement and the Inventory would be required as described above. Also, if a living trust has been established naming a charity as a remainder interest, then notice must be given to the Attorney General, providing evidence that charitable assets have been properly distributed.

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Charitable Remainder Trusts

In a charitable remainder unitrust, one or more charities may be named as future beneficiaries, but the grantor or the heirs of the grantor receive income from the trust. Under section 3(c) of PA 101, such trusts do not need to be registered if all of the following are true:

There is no current charitable interest;

The charitable remainder beneficiaries have been irrevocably named;

No charitable remainder beneficiary is under the dominion or control of the grantor, testator, executor, trustee, or members of the grantor's or testator's family.

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Dissolutions, Mergers, Conversions and Withdrawals

Dissolution of Charitable Purpose Corporations, 1965 PA 169, MCL 450.251, et seq., MSA 21.290(1)et seq. provides that organizations established to hold property for charitable purposes, except for religious organizations, shall not be dissolved without first giving notice to, and obtaining the consent of, the Attorney General. The Charitable Trust Section administers this law. To obtain consent, organizations wishing to dissolve must file with the Charitable Trust Section a properly completed Dissolution Questionnaire, along with all requested attachments. Once the dissolution is approved by the Charitable Trust Section staff, a letter will be sent to the organization stating that the Attorney General has no objection to the dissolution. This letter should be submitted to the Department of Labor and Economic Growth, Corporation Division along with the Certificate of Dissolution. If it is clearly not a charitable purpose corporation, or if it is an ecclesiastical corporation, the organization need only submit a complete filed copy of the articles of incorporation for our review.

Since mergers and conversions involve the possible demise of an organization holding charitable assets or the transfer of charitable assets, the Charitable Trust Section also reviews those transactions. While there is no specific form to be completed, the following is a list of documents and information that are generally requested to allow the staff to properly review such transactions.

For Mergers:
 

A letter explaining the transaction;

A copy of the merger agreement;

A copy of the plan of merger;

Articles of incorporation on the non-survivor, if no previous file with the

    Attorney General;

IRS returns and financial statements, if any, for the two most recent

    years on the non-survivor if not already on file with the Attorney

    General;

Initial Charitable Trust / Charitable Solicitation Questionnaire if the survivor has not previously filed with the Charitable Trust Section.

For Conversions:
 

An explanation of why the organization incorporated as a nonprofit and

    why it will be converted to a for profit;

Current IRS status;

IRS returns for the last three years;

Audits for the past three years, if prepared;

Articles of incorporation, if not already on file with the Attorney

    General.

For Withdrawals:

Notice must also be provided to the Attorney General if a nonprofit charitable purpose corporation with authority to conduct affairs in Michigan intends to withdraw from the state. The following is generally requested to allow an adequate review of these situations:

A letter telling why the certificate of authority was necessary and why it

    is no longer necessary;

An inventory of all assets held in Michigan and their disposition upon

    withdrawal of the corporation;

The most recent financial statements and/or IRS return;

Articles of incorporation if not already on file with the Attorney General.

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Public Safety Organizations and Their Fund Raisers

The Public Safety Solicitation Act, 1992 PA 298, MCL 14.301et seq., MSA 3.240(31)et seq., was enacted by the Legislature to obtain some accountability from the many police and fire organizations that solicit from the public. Most of them do not fall within the requirements of the Charitable Organizations and Solicitations Act because most of them are not charitable organizations. Section 2(d) of PA 298 specifically defines a public safety organization, and section 3 specifies the information that must be provided to the Attorney General to properly register, a step that must be taken prior to solicitations. To register, the organization must complete the Public Safety Organization Registration Form and submit it to the Charitable Trust Section. If an organization does not fall within the definition of a public safety organization, they should contact the Charitable Trust Section for the procedure to follow.

The public safety registration expires each year six (6) months following the end of the organization's fiscal year. To renew the registration, the organization should submit a Public Safety Organization Registration Form thirty (30) days prior to the expiration date.

Public Act 298 also mandates the registration and bonding of all professional fund raisers operating on behalf of public safety organizations. Registration of fund raisers is also required prior to the initiation of solicitations. To register, the fund raiser must properly complete and submit a Public Safety Professional Fund Raiser Registration Form. For the first year of solicitations in Michigan the fund raiser must obtain a $25,000 bond which must be submitted on the Uniform Public Safety Professional Fund Raiser Surety Bond (Initial) form, along with a power of attorney form signed by the surety. After the first year of registration, the amount of the bond will be determined by contributions collected by the fund raiser the previous year as defined in section 4(8) of the Public Safety Solicitation Act. Renewal must include a properly completed Uniform Public Safety Professional Fund Raiser Surety Bond (Renewal) form.

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