New Jersey Charities Registration Raises Mandatory Audit Threshold For Not-For-Profits

New Jersey Charities Registration Raises Mandatory Audit Threshold For Not-For-Profits

The New Jersey Division of Consumer Affairs (NJDCA) has approved amended regulations that will increase the mandatory audit threshold for charities under the “Charitable Registration and Investigation Act.”
The New Jersey Charitable Registration and Investigation Act requires most organizations to register and file annual financial reports with the NJDCA, Charities Registration Section. Groups that raise less than $10,000 in a year are exempt, provided that fundraising is conducted by persons who are not compensated for soliciting contributions. Religious organizations, certain libraries and schools are exempt as well if specific conditions are met.

The amended regulations, published in the February 22, 2011 New Jersey Register, include a provision that raises the audit threshold from $250,000 in gross revenue to $500,000. The rule adoption means that any organization with less than $500,000 in gross revenue in its most recently completed fiscal year will no longer have to submit an independent audit in order to satisfy the requirements of New Jersey’s fundraising statute. However, the Attorney General reserves the right to request an audit. These amended regulations are effective for closing dates February 28, 2011 and after.

Under the new regulations, if an organization had gross revenues of $500,000 or more in the most recently completed fiscal year, the financial report must be accompanied by an independent audit.

Under the new regulations, if an organization had gross revenues of $500,000 or more in the most recently completed fiscal year, the financial report must be accompanied by an independent audit. If an organization filing had gross revenues between $25,000 and $500,000, the financial report must be certified by the organization’s president or other authorized officer of its governing board. Smaller organizations that are eligible to file a short-form registration statement (including most with contributions of less than $25,000 in a year if fundraising is conducted by persons who are not compensated for soliciting contributions) must file a financial report on forms supplied by the Attorney General.

Not-for-profits need to be aware that regardless of the change to the audit threshold by NJDCA, an audit may still be required to satisfy financing, contractual or other regulatory requirements. Organizations may also want to consider an audit or review to demonstrate strong governance through accountability and transparency.
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