New Florida Laws Impose Stricter Guidelines for Fundraisers
Amid increased government scrutiny and recognizing the need for utmost accountability, nonprofit organizations must closely manage both their finances and their public profiles as they comply with a broad range of laws enacted to control and monitor their charitable activities. With different states currently revisiting the guidelines and laws surrounding charitable solicitation, the pressures related to compliance are now even greater. Most recently, Florida lawmakers moved to pass legislation aimed at curbing fraud in the charitable sector after a joint investigation
by the Center for Investigative Reporting and the Tampa Bay Times exposed considerable waste and abuse by Florida charities.
The legislation, effective July 1, 2014, requires organizations in Florida, as well as organizations soliciting from Florida citizens, to comply with new rules to restrain bad actors and prevent abuse when soliciting charitable contributions. We encourage all nonprofits to educate themselves of the full scope and impact of this new legislation, but we’ve outlined below several of its most significant changes:
- Prescribed charitable solicitation disclosures are mandated for any website used to solicit contributions from within Florida, including a link to the Florida Department of Agriculture’s website, where information on nonprofit organization filings can be found.
- Conflict of interest policies are now mandatory in Florida, with directors, officers and trustees required to certify compliance on an annual basis.
- Annual financial reporting is more stringent for many organizations requiring specific levels of attestation by an independent public accounting firm, depending upon annual contribution levels. Where Form 990 is submitted in lieu of financial statements, it must be prepared by a certified public accountant or other such qualified professional.
- Parent organizations are required to submit a federal Form 990 for each chapter, branch or affiliate with the consolidated financial statement (for each entity that is required to file one under federal law).
- Organizations providing disaster relief must submit quarterly financial reports detailing receipts and disbursements where contributions for a specific disaster are at least $50,000.
- Violations of the charitable solicitation law can result in a “final disqualification order” for organizations, which can strip them of their eligibility for a Florida sales tax exemption.
As Florida cracks down on charitable solicitation, nonprofits throughout the U.S. should take note. As more states and the federal government increase their focus on reining in misguided and fraudulent charitable practices, it may only be a matter of time before organizations with activities in other states are impacted by similar legislation.