State of the Nonprofit Regulatory Environment in PENNSYLVANIA

Table of contents

• 1 Bifurcation of charitable regulatory body
• 2 Notice, Filing or Review of Transactions
• 3 Notice or Action for Dissolutions
• 4 Notice, Oversight or Filing of Hospital Conversions
• 5 Audits
• 6 Registration Law
• 7 Exemptions from Registering for Specific Organization Types
• 8 Defined remedies
• 9 Oversight of professional fundraisers

1 Bifurcation of charitable regulatory body

Bifurcated Regulatory Structure

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Yes - PA Solicitation of Funds for Charitable Purposes Act, 10 P. S. § 162.1 et seq

Registration Office

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

BIFURCD-REGIOF-NS

REGULATORY BODY: Not Specific

NOTES: Pennsylvania Department of State http://www.dos.pa.gov/BusinessCharities/Charities/RegistrationForms/Pages/default.aspx#.VkS-jHYUXcs

2 Notice, Filing or Review of Transactions

Sale of Assets

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

REPORTS-ASSETS-AG

REGULATORY BODY: Attorney General

NOTES: Pa. Orphan Court Rules 5.5

REPORTS-ASSETS-OT

REGULATORY BODY: Other

NOTES: Pa. O.C. Rule 5.5

Mergers

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

REPORTS-MERGER-AG

REGULATORY BODY: Attorney General

NOTES: Pa. O.C. Rule 5.5 (Not in statute)

PA Code § 5927

REGULATORY BODY: Other

STATUTE TEXT: ss 5927. Filing of articles of merger or consolidation (Repealed). 2014 Repeal. Section 5927 was repealed October 22, 2014, P.L.2640, No.172, effective July 1, 2015.

NOTES: File with Dept. of State 15 Pa.C.S.A. § 5927; Pa. O.C. Rule 5.5

Certificate of Amendments

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

REPORTS-AMMEND-AG

REGULATORY BODY: Attorney General

NOTES: No

PA Code § 5916

REGULATORY BODY: Other

STATUTE TEXT: ss 5916. Filing and effectiveness of articles of amendment. (a) Filing.–The articles of amendment of a nonprofit corporation shall be filed in the Department of State. See section 134 (relating to docketing statement). (b) Effectiveness.–Upon the filing of the articles of amendment in the department or upon the effective date specified in the articles of amendment, whichever is later, the amendment shall become effective and the articles of incorporation shall be deemed to be amended accordingly. An amendment shall not affect any existing cause of action in favor of or against the corporation, or any pending action or proceeding to which the corporation is a party, or the existing rights of persons other than members or, except as otherwise provided by order, if any, obtained pursuant to section 5547(b) (relating to nondiversion of certain property) divert any property subject to such section from the purpose or purposes to which it was committed. If the corporate name is changed by the amendment, an action brought by or against the corporation under its former name shall not be abated for that reason. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 reenacted and amended the entire section.

NOTES: File with Dept. of State 15 Pa.C.S.A. § 5916

Does the state require annual financial reporting by charitable organizations in addition to filing a copy of the 990 with the regulator (if filing 990 is required)?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.5

3 Notice or Action for Dissolutions

Voluntary Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

DISSOLV-VOLUNT-AG

REGULATORY BODY: Attorney General

NOTES: Pa. O.C. Rule 5.5 (Not in statute)

PA Code § 7740.3

REGULATORY BODY: Other

STATUTE TEXT:

NOTES: Pa. Orphan Court has juridiction 20 Pa.C.S.A. § 7740.3

Judicial Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 7740.3

REGULATORY BODY: Attorney General

STATUTE TEXT:

NOTES: 20 Pa.C.S.A. § 7740.3

PA Code § 7740.3

REGULATORY BODY: Other

STATUTE TEXT:

NOTES: 20 Pa.C.S.A. § 7740.3

Administrative Dissolutions

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

DISSOLV-ADMINI-AG

REGULATORY BODY: Attorney General

DISSOLV-ADMINI-OT

REGULATORY BODY: Other

4 Notice, Oversight or Filing of Hospital Conversions

Has Statute

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 5547

REGULATORY BODY: Not Specific

STATUTE TEXT: ss 5547. Authority to take and hold trust property.(a) General rule.–Every nonprofit corporation incorporated for a charitable purpose or purposes may take, receive and hold such real and personal property as may be given, devised to, or otherwise vested in such corporation, in trust, for the purpose or purposes set forth in its articles. The board of directors or other body of the corporation shall, as trustees of such property, be held to the same degree of responsibility and accountability as if not incorporated, unless a less degree or a particular degree of responsibility and accountability is prescribed in the trust instrument, or unless the board of directors or such other body remain under the control of the members of the corporation or third persons who retain the right to direct, and do direct, the actions of the board or other body as to the use of the trust property from time to time. (b) Nondiversion of certain property.–Property committed to charitable purposes shall not, by any proceeding under Chapter 59 (relating to fundamental changes) or otherwise, be diverted from the objects to which it was donated, granted or devised, unless and until the board of directors or other body obtains from the court an order under 20 Pa.C.S. Ch. 77 (relating to trusts) specifying the disposition of the property. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Oct. 27, 2010, P.L.837, No.85, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 amended subsec. (b). Cross References. Section 5547 is referred to in sections 202, 5548, 5549, 5746, 5916, 5930, 5976, 5989 of this title.

NOTES: 15 Pa.C.S.A. § 5547

Requires Notice or Oversight

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 5547

REGULATORY BODY: Attorney General

STATUTE TEXT: ss 5547. Authority to take and hold trust property.(a) General rule.–Every nonprofit corporation incorporated for a charitable purpose or purposes may take, receive and hold such real and personal property as may be given, devised to, or otherwise vested in such corporation, in trust, for the purpose or purposes set forth in its articles. The board of directors or other body of the corporation shall, as trustees of such property, be held to the same degree of responsibility and accountability as if not incorporated, unless a less degree or a particular degree of responsibility and accountability is prescribed in the trust instrument, or unless the board of directors or such other body remain under the control of the members of the corporation or third persons who retain the right to direct, and do direct, the actions of the board or other body as to the use of the trust property from time to time. (b) Nondiversion of certain property.–Property committed to charitable purposes shall not, by any proceeding under Chapter 59 (relating to fundamental changes) or otherwise, be diverted from the objects to which it was donated, granted or devised, unless and until the board of directors or other body obtains from the court an order under 20 Pa.C.S. Ch. 77 (relating to trusts) specifying the disposition of the property. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Oct. 27, 2010, P.L.837, No.85, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 amended subsec. (b). Cross References. Section 5547 is referred to in sections 202, 5548, 5549, 5746, 5916, 5930, 5976, 5989 of this title.

NOTES: 15 Pa.C.S.A. § 5547

HOSPCON-OVERSI-OT

REGULATORY BODY: Other

NOTES: No

Requires Filing

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

HOSPCON-FILING-OT

REGULATORY BODY: Other

NOTES: No

5 Audits

Requires Audit

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 Pa. Cons. Stat. §162.5 (f)

Audit Threshold

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

AUDITFI-THRESH-NS

REGULATORY BODY: Not Specific

NOTES: $300,000; $100,000 - $300,000 financial statement; $50,000 - $100,000 compilation, review or audit

6 Registration Law

Registration Law

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.1 et seq.

7 Exemptions from Registering for Specific Organization Types

Religious Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.3

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.3 (excludes religious org’s from definition of charitable org)

Small organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.6(a)(8)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.6(a)(8) ($25k)

Educational Institutions

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.6(a)(1)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.6(a)(1)

Governmental Organizations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-GOVMNT-NS

REGULATORY BODY: Not Specific

NOTES: NO

Hospitals

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.6(a)(2)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: All hospitals; 10 P.S. § 162.6(a)(2)

Veterans organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.6(a)(3)(i)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.6(a)(3)(i)

Foundations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-FNDYES-NS

REGULATORY BODY: Not Specific

NOTES: NO

Foundations that don’t solicit contributions

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-FNDNOS-NS

REGULATORY BODY: Not Specific

NOTES: NO

Charitable Trusts

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-CTRUST-NS

REGULATORY BODY: Not Specific

NOTES: NO

Parent-Teacher Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.6(a)(1)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.6(a)(1)

Reports to congress

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

PA Code § 162.6(a)(7)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 P.S. § 162.6(a)(7)

Non-soliciting

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-NONSOL-NS

REGULATORY BODY: Not Specific

NOTES: NO

Fraternal/ Membership

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-MEMFRA-NS

REGULATORY BODY: Not Specific

NOTES: NO

Political Orgs

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-POLITI-NS

REGULATORY BODY: Not Specific

NOTES: NO

Other

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

ORGTYPE-OTHTYP-NS

REGULATORY BODY: Not Specific

NOTES: Law enforcement (162.3), volunteer firefighters (3), libraries (4), nursing homes (5),

8 Defined remedies

Dissolution

Regulatory Action: REMEDY

YES: A regulation is defined in the state

PA Code § 7740.3

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 20 Pa.C.S.A. § 7740.3

Removal of Board Members

Regulatory Action: REMEDY

YES: A regulation is defined in the state

PA Code § 5726

REGULATORY BODY: Not Specific

STATUTE TEXT: ss 5726. Removal of directors.(a) Removal by the members.– (1) Unless otherwise provided in a bylaw adopted by the members, the entire board of directors, or a class of the board where the board is classified with respect to the power to select directors, or any individual director of a nonprofit corporation may be removed from office without assigning any cause by the vote of members, or a class of members, entitled to elect directors, or the class of directors. In case the board or a class of the board or any one or more directors are so removed, new directors may be elected at the same meeting. (2) An individual director shall not be removed, unless the entire board or class of the board is removed, from the board of a corporation in which members are entitled to vote cumulatively for the board or a class of the board if sufficient votes are cast against the resolution for removal of the director which, if cumulatively voted at an annual or other regular election of directors, would be sufficient to elect one or more directors to the board or to the class. (b) Removal by the board.–Unless otherwise provided in a bylaw adopted by the members, the board of directors may declare vacant the office of a director who has been judicially declared of unsound mind or who has been convicted of an offense punishable by imprisonment for a term of more than one year, or for any other proper cause which the bylaws may specify, or if, within 60 days, or other time as the bylaws may specify, after notice of selection, a director does not accept the office either in writing or by attending a meeting of the board of directors and fulfill the other requirements of qualification as the bylaws may specify. (c) Removal by the court.–Upon application of any member or director, the court may remove from office any director in case of fraudulent or dishonest acts, or gross abuse of authority or discretion with reference to the corporation, or for any other proper cause, and may bar from office any director so removed for a period prescribed by the court. The corporation shall be made a party to the action and, as a prerequisite to the maintenance of an action under this subsection, a member shall comply with Subchapter G (relating to judicial supervision of corporate action). (d) Effect of reinstatement.–An act of the board done during the period when a director has been suspended or removed for cause shall not be impugned or invalidated if the suspension or removal is thereafter rescinded by the members or by the board or by the final judgment of a court. (July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5726 is referred to in section 5504 of this title.

NOTES: 15 Pa. Cons. Stat. Ann. § 5726; 71 Pa. Stat. Ann. § 732-204

PA Code § 732-204

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 15 Pa. Cons. Stat. Ann. § 5726; 71 Pa. Stat. Ann. § 732-204

9 Oversight of professional fundraisers

Does the state require registration by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.9

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 Pa. Stat. § 162.9

Does the state require registration by fundraising counsel?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.8

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 Pa. Stat. § 162.8; Registration Statement, BCO-150, see https://www.dos.pa.gov/BusinessCharities/Charities/RegistrationForms/Documents/Registration%20Forms/Professional%20Fundraising%20Counsel%20Forms/Registration%20Statement,%20BCO-150.pdf

Does the state oversee commercial-coventuring (e.g. by requiring that the co-venture be registered or by requiring that the charitable organization files the co-venture contract)?

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

FNDRAZE-VENTUR-NS

REGULATORY BODY: Not Specific

Does the state require the fundraisers to provide notice to the regulator before any solicitation campaign (in addition to annual registration and/or filing the contract)?

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

PA Code § 162.8

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Contract must be filed at least 10 days before any solicitation activity/campaign is to begin. 10 Pa. Stat. § 162.8; 10 Pa. Stat. § 162.9

PA Code § 162.9

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Contract must be filed at least 10 days before any solicitation activity/campaign is to begin. 10 Pa. Stat. § 162.8; 10 Pa. Stat. § 162.9

Does the state require specified disclosures to donors?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.13

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 Pa. Stat. § 162.13

Does the state require a copy of any contract between a charitable organization and a commercial fundraiser or fundraising counsel be filed with the regulator?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.8

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 Pa. Stat. § 162.8; 10 Pa. Stat. § 162.9

PA Code § 162.9

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: 10 Pa. Stat. § 162.8; 10 Pa. Stat. § 162.9

Does the state require annual financial reporting by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.9

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Must file financial report within 90 days after end of solicitation campaign or on anniversary of campaign lasting more than one year. 10 P.S. § 162.9

Does the state require bonding of professional fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

PA Code § 162.9

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: A professional solicitor shall, at the time of making application for registration and renewal of registration, file with and have approved by the department a bond, in the sum of twenty-five thousand ($25,000.00), or a greater amount as prescribed by the regulations of the department and which shall have one (1) or more sureties satisfactory to the department. 10 Pa. Stat. § 162.9

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