Pennsylvania Nonprofit Alert: State Raises Audit Requirement Threshold

On December 22, 2017, Governor Tom Wolf signed two legislative measures that amend the Pennsylvania Solicitation of Funds for Charitable Purposes Act.

Act 71 of 2017, intended to align state audit requirements for financial reports with those under federal law, raises the threshold on the amount of annual contributions nonprofits are permitted to receive before being subject to an audit, review or compilation. Under the new law, financial statement requirements are as follows:

• Audit - $750,000 or more in gross annual contributions
• Review - $250,000 to less than $750,000 in gross annual contributions
• Compilation - $100,000 to less than $250,000 in gross annual contributions
• Optional for those that receive less than $100,000 in gross annual contributions

Pennsylvania Code defines annual gross contributions as total national contributions, not simply those received from within the state. To determine annual gross contributions, include: federated campaign contributions; the contribution portion of membership dues; all income from fundraising and gaming events; contributions from related organizations; and general contributions.

The second bill, Act 72 of 2017, provides that a nonprofit annual registration statement will be considered filed as timely if it is postmarked on or before the renewal date. Previously, the registration statement was only considered filed as timely if it was received by the Bureau of Charitable Organizations by the renewal date. The goal of the bill is to align the due date standard with nearly all other state filings and to eliminate unnecessary fines and penalties on nonprofit organizations.

Acts 71 and 72 are both effective February 20, 2018. For purposes of determining financial statement requirements, they will become effective for organizations with a year-end of March 31, 2017 or later. The annual registration statement postmark date standard becomes effective for filings due after February 20, 2018. For more information on the audit requirement thresholds, contact us.