Frequently Asked Questions from Charitable Organizations
- Becoming a Charity in Connecticut
- Renewals and Filings for Active Connecticut Charities
- Operating a Registered Charity in Connecticut
Application for initial registration is available by paper or online application on Department of Consumer Protection website at www.ct.gov/dcp. There is an annual $50.00 registration fee for full charities and no cost to a charity qualifying as exempt from financial requirements. Applicants for a full charity registration are required to submit a financial report of the organization’s most recent fiscal year, if completed, as well as information about the organization, its personnel, and its purposes. A charity qualifying for an exemption is not required to file a financial report. You can check the status of your registration at any time on the Department of Consumer Protection website at www.elicense.ct.gov.
Do I have to register with Public Charities first or get my 501(c)(3) status with the IRS first?
An organization that wishes to solicit charitable funds in Connecticut is not required to be a 501(c)(3) or incorporated as a non-stock corporation prior to registration with Public Charities. Charities MUST register with Public Charities BEFORE any type of solicitation in Connecticut. Some charities need to start soliciting in order to raise funds to pay the IRS application fee and any other costs associated with becoming a 501(c)(3) IRS-recognized charity.
Do I need to incorporate?
Although a charity does not need to incorporate, there may be advantages in doing so. We urge you to seek professional advice. In Connecticut, organizations incorporate through the Secretary of the State, 165 Capitol Ave, Ste 1000, Hartford, CT 06115. Website: https://portal.ct.gov/sots.
How do I obtain tax exempt status from the federal government?
If an organization seeks exemption from federal income tax, the organization must apply to the Internal Revenue Service. Information about this can be obtained from the IRS at www.irs.gov. We urge you to seek professional advice. Registering as a charity with Connecticut DOES NOT make donations to your organization tax-deductible. If a charity does solicit before obtaining this status, the charity should not misrepresent its tax-deductible status.
What financial information is required with the initial registration application?
A copy of an Internal Revenue Service Form 990, Form 990N, Form 990-EZ, or Form 990-PF(whichever is appropriate for the organization), for its most recently completed fiscal year end is required. If an organization files a Form 990N, it must complete a Form 990 or 990EZ for state purposes. If the organization is newly organized and has not yet completed its initial fiscal year, a financial report will not be required. The organization will have to include a financial report when and if it renews its registration.
Please note, organizations qualifying for exemption from financial requirements will not be required to submit a 990 as part of their application unless they are claiming that their organization receives less than $50,000 in contributions annually.
Why is the annual registration less than 12 months?
Registrations always expire on the last day of the eleventh month following the end of the organization’s fiscal year-end. This means your initial registration period may be less than 12 months, but it may also be more than 12 months. All timely renewals will be given the full 12-month time.
My organization is located outside the State of Connecticut and our only contact is via the internet, so do we need to register?
A set of principles devised during a meeting of Charities officials in Charleston, South Carolina, called the Charleston Principles, addresses the issue of internet solicitation. The State of Connecticut has not legislatively adopted the Charleston Principles, but we do abide by them. Pursuant to the Charleston Principles, if an organization is located in CT and only solicits via the internet (donate button on website) it needs to register in CT. If an organization is located outside of CT and only solicits via the internet (donate button on website), it does not need to register. This assumes that a resident of Connecticut just happens across the out of state organization's website on their own accord; the organization did not direct the resident to the website. For instance, a Connecticut resident wants to help dolphins and searches the internet for a group that helps dolphins. If the organization that the resident chooses is located outside of CT, the organization does not need to be registered in the state, just because someone in Connecticut happened upon its website. However, if the out-of-state charity decides to contact this Connecticut resident for another donation, or otherwise solicits a resident of Connecticut, it will need to register before doing so.
Does my organization/private foundation/client need to file a Form 990PF with Public Charities?
Per Internal Revenue Services’ instructions for private foundations filing the Form 990PF, the IRS requires that a foundation which files a 990PF with the IRS also file a copy with the State Attorney General’s office in the State in which it is located. (Thus, if a foundation is located in Connecticut, it needs to send a copy of its Form 990PF to: Connecticut Attorney General's Office, Special Litigation – Charities Unit, 165 Capitol Ave, Hartford, CT 06106). This is an IRS rule that is not part of the Connecticut Solicitation Act, and further information can be obtained from the Attorney General’s office. If the foundation solicits funds or charitable contributions, or if it is a privately-funded foundation and solicits funds from the public, it should be registered with Public Charities and also send a copy of the Form 990PF to the Attorney General's office per IRS instructions. If it is strictly privately-funded it only needs to file with the Attorney General's Office.
Does my group qualify for a religious exemption? Any duly organized religious corporation, institution or society may apply for an exemption. The organization may be requested to submit additional information that the Department may require to substantiate this exemption.
Renewals and Filings for Active Connecticut Charities
Is an IRS 990 form required for the renewal registration application?
All registered charities are required to file an annual 990 with the IRS. Charities will confirm their 990 filing through attestation as part of their renewal. Copies of the 990 are not required with the renewal, however, they must be retained by the charity for 3 years in the event they are selected for audit by this department.
Do I need to file an audit?
All registered charities that have gross revenue exceeding $500,000 (excluding grants or fees from government agencies and revenue from trusts held by a trustee, usually a bank, for the benefit of the organization), must have an independent audit completed. Charities will confirm audit completion through attestation as part of their renewal. Copies of the independent audit are not required with the renewal, however, they must be retained by the charity for 3 years in the event they are selected for audit by this department.
What kind of audit is required?
An audited financial statement is required by an independent public accountant, complete with the signed auditor’s report on the auditor’s letterhead. The auditor's opinion can relate to the IRS form or to a separate set of audited financial statements. Only an audit under generally accepted auditing standards fulfills the requirement, however, such statements may use a special purpose framework (formerly referred to as Other Comprehensive Basis of Accounting, or OCBOA) such as the cash basis or tax basis. If a special purpose framework is used, the organization must follow standards for special purpose framework reporting and follow the guidance for disclosure in generally accepted accounting principles and include any necessary note disclosure.
What is considered gross revenue?
It is very important to observe the distinction between gross receipts and gross revenue for purposes of the audit threshold. Gross revenue should be used for audit determination. Gross revenue means income of any kind from all sources, without deduction of any costs or expenses, including all amounts received as the result of any solicitation by a paid solicitor. For example, if $50,000 worth of raffle tickets are sold and the prizes cost the organization $30,000, the full $50,000 is counted toward gross revenue, not just the $20,000 the organization netted.
Can I request a waiver of the audit requirement?
Yes. A waiver can be granted provided the waiver request is in writing, on the charity’s letterhead, provides the reason for the request and is emailed to dcp.publiccharities@ct.gov prior to the expiration date of your registration. Waivers will not be granted for two consecutive renewal cycles.
Does a claim for exemption need to be re-filed?
No, a claim of exemption is only filed once, as long as the charity continues to qualify for the exemption. For example, if an organization claims an exemption using the $50,000 threshold exemption, and it goes over the limit 2 out of 3 years, it will need to register. If it then goes back under $50,000 threshold, it may reapply for exemption.
What is my charity’s renewal date?
A charity’s renewal date is determined by its fiscal year end. The registration renewal date is eleven (11) months after the organization’s fiscal year ends. For example, a fiscal year end of December of this year has a filing due by November of next year.
How much do I owe?
The registration renewal fee is $50. If the renewal is received after it has expired, a $25 per-month late fee is charged. The late fee is charged for every month or any portion of a month the report is late.
How do I change my organization’s fiscal year end?
If an organization has decided to change its fiscal year end, the change can be reported as part of their renewal submission. An IRS 990 filing for the short period confirming the fiscal year change may be required. The change in fiscal year end will change the registration’s annual expiration date. As a final option, an email requesting a fiscal year end change may be emailed to dcp.publiccharities@ct.gov.
How do I withdraw my charitable registration?
If an organization has decided to no longer solicit funds in the State of Connecticut, it may just allow its registration to expire. The organizations may also go to www.elicense.ct.gov and log into their account and submit an "Online Inactivation". As a final option, an email requesting a registration withdrawal may be emailed to dcp.publiccharities@ct.gov.
Operating a Registered Charity in Connecticut
How does my charitable organization become exempt from paying Connecticut tax on purchases?
State of Connecticut tax matters, including exemption from paying sales tax on products purchased by a charity, are handled by the Connecticut Department of Revenue Services, 450 Columbus Blvd, Ste 1, Hartford, CT 06103. Website: www.ct.gov/drs
My organization wants to hold a game of chance?
Registering with the Department of Consumer Protection to solicit funds, or claiming an exemption from registration, is unrelated to being permitted to conduct games of chance (i.e. raffles, Las Vegas nights). Connecticut law allows certain organizations to conduct games of chance, such as raffles, bazaars, and/or bingo nights. Permits are required. Inquiries and permit requirements regarding games of chance should be directed to the municipal offices in the town where the event is to be held.
My organization wants to hold an auction, do I need a permit for that?
The Solicitation Act does not regulate the type of fundraising an organization conducts. Fundraising can be anything from a lemonade stand to a raffle, to whatever creative idea an organization may have. The organization may need to contact their town, or the local or state police for more information regarding requirements or restrictions.
My charitable organization wants to hold an event and sell liquor?
As a charity, you can apply for a temporary liquor permit from this Department for your event. The proceeds of the event must be used to support the tax-exempt activities of the noncommercial entity. If no money is collected, the event must still support the mission of the entity (for example, raising awareness about the entity’s activities) Information and the application can be found at: https://portal.ct.gov/dcp/liquor-control-division/temporary-liquor-permits
I want to fundraise or hold a fundraiser for X charity, do I have to file anything with Public Charities?
No. For example, you own a for-profit restaurant and want to give half of all proceeds on Thursdays to X charity. In order to fundraise for an existing charity, the restaurant would need to have the charity’s WRITTEN permission to use its name. Most often, charities have development offices to assist volunteer fundraisers. Such a volunteer does not have to file anything on behalf of the charity, but he or she should make sure the charity is registered with Public Charities prior to any type of solicitation.
I want to run a charitable campaign at my for-profit business that will benefit a charity, do I have to file anything with Public Charities?
Yes. This practice is known as a Commercial Co-Venture. A written agreement between the for-profit business and the charity would have to be filed with this Department not less than 10 days prior to the start of the charitable sales promotion. The agreement and its terms should be signed and agreed to by the for-profit business and the charitable organization and should be emailed to dcp.charitiesenforcement@ct.gov .
What is an example of a Commercial Co-Venture?
I have a for-profit business selling skin creams, lotions, oils etc to the public. I would like to donate 15% of my overall sales to a Connecticut registered charity that raises money for skin disease prevention and cures. I would need a written agreement with the charity to use their name in any promotion.