Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 235-S.F.No. 579
An act relating to commerce; regulating charitable
organizations; regulating filing statement;
appropriating money; amending Minnesota Statutes 1994,
sections 309.501, subdivision 1; 309.52, subdivisions
2 and 7; 309.53, subdivisions 1, 2, 3, and 8; 309.531,
subdivisions 1 and 4; 309.54, subdivision 1; 309.556,
subdivision 1; 501B.36; 501B.37, subdivision 2, and by
adding a subdivision; and 501B.38; repealing Minnesota
Statutes 1994, section 309.53, subdivision 1a.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1994, section 309.501,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] (a) As used in this section,
the following terms have the meanings given them.
(b) "Registered combined charitable organization" means a
federated funding organization:
(1) which is tax exempt under section 501(c)3 of the
Internal Revenue Code of 1986, as amended through December 31,
1992 (hereinafter "Internal Revenue Code"), and to which
contributions are deductible under section 170 of the Internal
Revenue Code;
(2) which exists for purposes other than solely
fundraising;
(3) which secures funds for distribution to 14 or more
affiliated agencies in a single, annual consolidated effort;
(4) which is governed either by a local, independent,
voluntary board of directors which represents the broad
interests of the public and 90 percent of the directors of the
governing board live or work in the community or surrounding
area or, if the charitable agencies are solely educational
institutions which meet the requirements of paragraph (c), by a
national board of directors that has a local advisory board
composed of members who live or work in the community or
surrounding area;
(5) which distributes at least 70 percent of its total
campaign income and revenue, plus donor designated amounts
raised to its affiliated agencies and to the designated agencies
it supports and expends no more than 30 percent of its total
income and revenue, plus donor designated amounts raised for
management and general costs and fund raising costs;
(6) which distributes at least 70 percent of its total
campaign income and revenue to affiliated agencies and
designated agencies that are incorporated in Minnesota or
headquartered in the service area in which the state employee
combined charitable campaign takes place or, if the charitable
agencies are solely educational institutions which meet the
requirements of paragraph (c), distributes at least 70 percent
of the state employee combined charitable campaign income and
revenue directly to Minnesota residents using established
eligibility criteria;
(7) and each designated or affiliated agency supported by
the recipient institution devotes substantially all of its
activities directly to providing health, welfare, social, or
other human services to individuals;
(8) and each designated or affiliated agency supported by
the recipient institution with funds contributed by state
employees through the combined charitable campaign provides all
or substantially all of its health, welfare, social, or other
human services, in the community and surrounding area in which
the state employee combined charitable campaign takes place;
(9) and each charitable agency is affiliated with no more
than one registered combined charitable organization within the
registered combined charitable organization's service area in
the state's employee combined charitable campaign; and
(10) which has been registered with the commissioner of
employee relations in accordance with this section.
Registered combined charitable organization includes a
charitable organization organized by Minnesota state employees
and their exclusive representatives for the purpose of providing
grants to nonprofit agencies providing Minnesota residents with
food or shelter if the charitable organization meets the
requirements of clauses (1), (4), and (5).
(c) "Affiliated agency" means a charitable agency that is
represented by a federation and has an ongoing relationship with
that federation which involves a review and monitoring process
to ensure financial, managerial, and programmatic responsibility.
(d) "Charitable agency" means a governmental agency or an
organization (1) which is tax exempt under section 501(c)3 of
the Internal Revenue Code; (2) to which contributions are
deductible under section 170 of the Internal Revenue Code; and
(3) which is in compliance with the provisions of this chapter.
(e) "State employees combined charitable campaign" means
the annual state campaign whereby a state employee may designate
that the employee's contribution to a registered combined
charitable organization may be deducted from the pay of the
employee for each pay period.
Sec. 2. Minnesota Statutes 1994, section 309.52,
subdivision 2, is amended to read:
Subd. 2. The first registration statement filed by a
charitable organization shall include a registration fee of $25
if the organization raised or expended, exclusive of the direct
cost of prizes given to the public by the charitable
organization in connection with lawful gambling conducted in
compliance with chapter 349, more than $25,000 during the
previous 12-month period, and a financial statement of the
organization's operation for its most recent 12 months period
immediately preceding the filing of the first registration
statement.
Sec. 3. Minnesota Statutes 1994, section 309.52,
subdivision 7, is amended to read:
Subd. 7. In no event shall the registration of a
charitable organization continue in effect after the date such
organization should have filed, but has failed to file an annual
report, including the payment of all required fees, in
accordance with the requirements of section 309.53, and such
organization, if in default under such section, shall not be
eligible to file a new registration statement until it shall
have filed the required annual report with the attorney general.
Sec. 4. Minnesota Statutes 1994, section 309.53,
subdivision 1, is amended to read:
Subdivision 1. Except as otherwise provided in subdivision
1a, Every charitable organization that is required to file or
that files a registration statement pursuant to section 309.52
shall file an annual report with the attorney general upon forms
provided by the attorney general or on forms identical thereto
on or before June 30 of each year if its books are kept on a
calendar year basis, or within six months after the close of its
fiscal year if its books are kept on a fiscal year basis. For
cause shown the attorney general may extend the time for filing
the annual report for a period not to exceed three months.
Sec. 5. Minnesota Statutes 1994, section 309.53,
subdivision 2, is amended to read:
Subd. 2. Such annual report shall include a financial
statement covering the immediately preceding 12-month period of
operation, and shall be executed by any two duly constituted
officers of the charitable organization, who and shall
acknowledge that it was be executed pursuant to resolution of
the board of directors or trustees, or if there be no such
board, then by its managing group which has approved the content
of the annual report. This Except as provided in section
309.55, subdivision 1, the annual report shall also include a
copy of any all tax return or information returns,
including all schedules and amendments, submitted by the
charitable organization to the Internal Revenue Service for the
period covered by the annual report except any schedules of
contributors to the organization.
A charitable organization which files the annual report
required under this subdivision with the attorney general is not
required to file the tax return with the commissioner of
revenue. An organization which fails to file the tax return
annual report on or before the date required or allowed under
this section is subject to the penalties imposed by the
commissioner of revenue as set forth in sections 289A.60,
subdivision 9, and 289A.63, subdivision 1 shall pay a late fee
of $50. This late fee shall be in addition to all other fees,
costs, and penalties which may be imposed pursuant to this
section or section 309.57.
Sec. 6. Minnesota Statutes 1994, section 309.53,
subdivision 3, is amended to read:
Subd. 3. The financial statement shall include a balance
sheet, statement of income and expense, and statement of
functional expenses, shall be consistent with forms furnished by
the attorney general, and shall be prepared in accordance with
generally accepted accounting principles so as to make a full
disclosure of the following, including necessary allocations
between each item and the basis of such allocations:
(a) total receipts and total income from all sources;
(b) cost of management and general;
(c) cost of fund raising;
(d) cost of public education;
(e) funds or properties transferred out of state, with
explanation as to recipient and purpose;
(f) total net amount disbursed or dedicated within this
state, broken down into total amounts disbursed or dedicated for
each major purpose, charitable or otherwise;
(g) names of professional fund raisers used during the
accounting year and the financial compensation or profit
resulting to each professional fund raiser.; and
(h) a list of the five highest paid directors, officers,
and employees of the organization that receive total
compensation of more than $50,000, together with the total
compensation paid to each. Total compensation shall include
salaries, fees, bonuses, fringe benefits, severance payments,
and deferred compensation paid by the charitable organization
and all related organizations as that term is defined by section
317A.011, subdivision 18. On July 1, 1997, and thereafter, the
charitable organization shall begin disclosure of the total
compensation of the five highest paid directors, officers, and
employees of any related organization if the related
organization receives funds from the charitable organization.
Unless otherwise required by this subdivision, the
financial statement need not be certified.
A financial statement of a charitable organization which
has solicited from the public within or outside this state total
contributions received total revenue in excess of
$100,000 $350,000 for the 12 months of operation covered by the
statement shall be accompanied by an audited financial statement
prepared in accordance with generally accepted accounting
principles that has been examined by an independent certified
public accountant for the purpose of expressing an opinion. In
preparing the audit the certified public accountant shall take
into consideration capital, endowment or other reserve funds, if
any, controlled by the charitable organization.
Sec. 7. Minnesota Statutes 1994, section 309.53,
subdivision 8, is amended to read:
Subd. 8. A reregistration fee of $25 shall be paid by
every charitable organization submitting the annual report
required by this section if the organization raised or expended,
exclusive of the direct cost of prizes given to the public by
the charitable organization in connection with lawful gambling
conducted in compliance with chapter 349, more than $25,000
during the previous 12-month period.
Sec. 8. Minnesota Statutes 1994, section 309.531,
subdivision 1, is amended to read:
Subdivision 1. No person shall act as a professional fund
raiser unless registered with the attorney general. The
registration statement must be in writing, under oath, in the
form prescribed by the attorney general and must be accompanied
by an application a registration fee of $200. Each registration
is effective for a period of not more than 12 months from the
date of issuance, and in any event expires on July April 30 next
following the date of issuance registration. The registration
may be renewed for additional one-year periods on application
and payment of the fee all required fees. A professional fund
raiser failing to register on the date required by this section
or failing to file the financial report required by this section
on or before the date provided shall pay a late fee of $300.
This late fee shall be in addition to all other fees, costs, and
penalties which may be imposed pursuant to this section or
section 309.57.
Sec. 9. Minnesota Statutes 1994, section 309.531,
subdivision 4, is amended to read:
Subd. 4. Within 90 days after a solicitation campaign has
been completed, and on 90 days following the anniversary of the
commencement of a solicitation campaign lasting more than one
year, the professional fund raiser who solicited contributions
in this state in conjunction with a charitable organization
shall file with the attorney general a financial report for the
campaign, including gross revenue and an itemization of all
expenses incurred. The report shall be completed on a form
prescribed by the attorney general. The report shall be signed
by an authorized official of the professional fund raiser and an
authorized official from the charitable organization and they
shall certify, under oath, that it is true to the best of their
knowledge.
Sec. 10. Minnesota Statutes 1994, section 309.54,
subdivision 1, is amended to read:
Subdivision 1. Registration statements, annual reports,
and other documents required to be filed shall become public
records in the office of the attorney general. Investigative
data obtained by the attorney general in anticipation of or in
connection with litigation or an administration proceeding are
nonpublic data under section 13.02, subdivision 9.
Sec. 11. Minnesota Statutes 1994, section 309.556,
subdivision 1, is amended to read:
Subdivision 1. [IDENTITY OF ORGANIZATION; PERCENTAGE OF
DEDUCTIBILITY; DESCRIPTION OF PROGRAM.] Prior to orally
requesting a contribution or contemporaneously with a written
request for a contribution, the following information shall be
clearly disclosed:
(a) the name and location by city and state of each
charitable organization on behalf of which the solicitation is
made;
(b) The percentage of the contribution which may be
deducted as a charitable contribution under both federal and
state income tax laws the tax deductibility of the contribution;
and
(c) a description of the charitable program for which the
solicitation campaign is being carried out; and, if different, a
description of the programs and activities of the organization
on whose behalf the solicitation campaign is being carried out.
If the solicitation is made by direct personal contact, the
required information shall also be disclosed prominently on a
written document which shall be exhibited to the person
solicited. If the solicitation is made by radio, television,
letter, telephone, or any other means not involving direct
personal contact, the required information shall be clearly
disclosed in the solicitation.
Sec. 12. Minnesota Statutes 1994, section 501B.36, is
amended to read:
501B.36 [REGISTRATION AND REPORTING.]
The registration and reporting provisions of sections
501B.37 and 501B.38 apply to a charitable trust, or including an
organization with a charitable purpose, that has gross assets of
$25,000 or more at any time during the year, except that the
provisions do not apply to:
(1) a charitable trust administered by the United States or
a state, territory, or possession of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any of
their agencies or subdivisions;
(2) a religious association organized under chapter 315 or
chapter 317A;
(3) a charitable trust organized and operated exclusively
for religious purposes and administered by a religious
association organized under chapter 315 or 317A;
(4) an organization described in section 509(a)(3) of the
Internal Revenue Code of 1986 and operated, supervised, or
controlled by or in connection with one or more organizations
described in clauses (2) to (5); a pooled income fund as defined
in section 642(c)(5) of the Internal Revenue Code of 1986
maintained by an organization described in clauses (2) to (5);
or a charitable remainder annuity trust or unitrust, as defined
in section 664 of the Internal Revenue Code of 1986;
(5) a trust in which the only charitable interest is a
contingent interest for which no charitable deduction has been
allowed for Minnesota income, inheritance, or gift tax purposes
or a trust in which not all of the unexpired interests are
devoted to one or more charitable purposes and in which the only
charitable interest is an annuity or an income interest with
respect to which a charitable deduction is allowed the trust
under applicable Minnesota income tax laws;
(6) an organization subject registered with the attorney
general pursuant to sections 309.50 to 309.61 309.52 and 309.53;
(7) a trust for individual and charitable beneficiaries
that is described in section 4947(a)(2) of the Internal Revenue
Code of 1986, also known as a split-interest trust; or
(8) a charitable gift, bequest, or devise not held and
continued by a private express trust or corporation even though
the gift, bequest, or devise creates a fiduciary relationship,
unless there is no named charitable beneficiary in existence or
unless a named charitable beneficiary elects in a writing filed
with the attorney general and with the fiduciary to come within
the provisions of sections 501B.37 and 501B.38.
Sec. 13. Minnesota Statutes 1994, section 501B.37,
subdivision 2, is amended to read:
Subd. 2. [FILING OF INSTRUMENTS.] A charitable trust
subject to sections 501B.33 to 501B.45 must Except as otherwise
provided in section 501B.36, a charitable trust shall register
and file with the attorney general a copy of its articles of
incorporation or the instrument that created the charitable
trust, including any amendments, within three months after the
charitable trust first receives possession or control of
property authorized or required to be applied, either at present
or in the future, for charitable purposes.
Sec. 14. Minnesota Statutes 1994, section 501B.37, is
amended by adding a subdivision to read:
Subd. 3. [REGISTRATION FEE.] A $25 registration fee shall
be paid by every charitable trust filing the information
required by this section.
Sec. 15. Minnesota Statutes 1994, section 501B.38, is
amended to read:
501B.38 [INFORMATION FILING OF ANNUAL REPORTS.]
Subdivision 1. [REPORTS REQUIRED; DEADLINES; EXTENSIONS.]
A charitable trust subject to sections 501B.33 to 501B.45 must
file with the attorney general written reports containing any
information the trust is required to report under sections
6056(b), 6033, 6034, and 6056 of the Internal Revenue Code of
1986. a copy of its federal tax or information return, including
all schedules and amendments, submitted by the charitable trust
to the Internal Revenue Service for the period covered in the
trust's accounting year last completed. If the charitable trust
does not file a federal tax or information return, it shall file
a balance sheet and a statement of income and expenses for the
accounting year last completed.
Subd. 1a. [EXTENSIONS.] The reports information required
by this section must be filed annually on or before the 15th day
of the fifth month following the close of the charitable trust's
taxable year as established for federal tax purposes. The time
for filing may be extended by application to the attorney
general, but no extension may be for more than six three
months. A charitable trust that files the information required
under this subdivision with the attorney general is not required
to file the same information with the commissioner of revenue.
Subd. 2. [SUSPENSION OF FILING.] The attorney general may
suspend the filing requirements under subdivision 1 for a
particular charitable trust for a reasonable, specifically
designated time on written application of the trustee filed with
the attorney general. If the filing requirements are suspended,
the attorney general shall file in the register of charitable
trusts a written statement that the interests of the
beneficiaries will not be prejudiced by the suspension and that
annual reports are the information required by this section is
not required for proper supervision by the attorney general's
office.
Subd. 3. [FILING FEE.] A $25 filing fee shall be paid by
every charitable trust filing the information required by this
section.
Sec. 16. [APPROPRIATION.]
$75,000 for fiscal year 1996 and $75,000 for fiscal year
1997 is appropriated from the general fund to the attorney
general for the purpose of sections 1 to 15.
Sec. 17. [REPEALER.]
Minnesota Statutes 1994, section 309.53, subdivision 1a, is
repealed.
Presented to the governor May 30, 1995
Signed by the governor June 1, 1995, 1:58 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes