Nonprofit regulation in Arkansas

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Nonprofit regulation in Arkansas involves a complex set of rules that govern nonprofit organizations and charitable giving throughout the state. Major issues surrounding nonprofit regulation nationwide include the following:

• contribution limits,
• donor disclosure, and
• the redefinition of issue advocacy.

Arkansas is one of 39 states that require charitable organizations, and those intending to solicit on their behalf, to register with the state in order to solicit contributions, whether they are an Arkansas organization or based out-of-state. In Arkansas a number of groups and organizations are exempt from registration. Exempt groups, however, must apply for their exemption by filing the Exempt Organization Verification form.

Arkansas is one of 32 states that allows registrants to use either the Unified Registration Statement (URS) or the state registration form. Only seven states requiring registration do not accept the URS.

According to Guidestar, an organization that reports on nonprofit companies, regulation of nonprofit activity protects donors and organizations from potential fraud and helps "to maintain trust in the [nonprofit] sector." According to the London School of Economics, nonprofit disclosure requirements can create privacy concerns among potential donors, thereby having an unintended negative impact on donor participation.

Note: The following is not a how-to guide in managing an organization's registration and reporting requirements, but rather an attempt to share information about the relative degree of regulation governing nonprofit charitable activity at the individual state level. The information on this page was last updated in early 2015.

Background

IRS building in Washington, D.C.

According to the Foundation Center, there are over 1.5 million nonprofit organizations in the United States. Section 501 of the U.S. tax code outlines which types of nonprofit organizations may be granted tax exempt status by the Internal Revenue Service. The section of this code that provides for exemption is section 501(a), which states that organizations are exempt from some federal income taxes if they fall under sections 501(c) or 501(d), or under section 401(a).

Organizations classified as 501(c)(3) are nonprofit charitable, religious and educational organizations. These include organizations like the Red Cross and Habitat for Humanity as well as the American Civil Liberties Union and the Lucy Burns Institute, which provide, as defined in the federal code, “instruction of the public on subjects useful to the individual and beneficial to the community.” Organizations granted 501(c)(4) status are political education organizations, and can engage in political lobbying. This includes donations to political committees that support or oppose ballot measures, bond issues, recalls or referenda. 501(c)(4) organizations can thus engage in issue advocacy, but they are not allowed to expressly advocate for the election or defeat of a particular candidate.

While the Internal Revenue Service designates eligible nonprofit charitable organizations with a federal tax exempt status, individual states require their own level of regulation and reporting, particularly when organizations attempt to solicit fundraising contributions. The amount of regulation required differs by state, as does the degree to which state regulations protect the privacy of individual donors. Three states, for instance, require annual copies of IRS Form 990 (schedule B), which lists individual contributors who contribute over a specified amount. Research shows that attempts to make contributions more transparent has an unintended negative effect on the number of contributors who give, as well as the amount.

Governing agencies

The Arkansas Attorney General is the office in the state that oversees rules governing donor solicitation and registration.

See law: Arkansas Code Annotated § 4-28-401 through 416

Registration requirements

Seal of Arkansas

Any nonprofit group or organization located in Arkansas, unless exempt, must register with the Attorney General. Any non-exempt nonprofit, in any state, intending to solicit in Arkansas must also register, along with anyone intending to solicit in Arkansas on behalf of a nonprofit. Non-exempt nonprofits might include traditional charitable organizations like the Red Cross or Habitat for Humanity, educational or policy organizations like the American Civil Liberties Union, or issue advocacy groups like the League of Conservation Voters.

Exemptions

A number of groups are exempt from registering in Arkansas. Any group, however, that is exempt must file for exemption.

The following groups are exempt from registering:

• Any group not intending to raise $25,000 in a year, if they have only unpaid fundraising volunteers.
• Religious organizations
• Educational organizations
• Any candidate, political party or committee required to file information with the Federal Election Commission or any state election commission
• Government organizations
• Nonprofit hospitals, licensed by any state
• Any individual who solicits solely for an exempt organization is exempt
• Chapters or branches of other organizations are exempt, provided the parent organization files a consolidated finance report (these chapter organizations do not need to apply for an exemption)

Procedures

Nonprofits registering in Arkansas can use either the Unified Registration Statement (URS) form or the state form. Any nonprofit using the URS, however, must also file the state Consent for Service form.

Documents

The following documents are required along with your registration form:

• IRS determination letter
• Articles of incorporation
• Most recent IRS Form 990, or the "Annual Report of Charitable Organization" form
• If revenue exceeds $500,000, an audit report conducted by a Certified Public Accountant
• If located outside of Arkansas, a "Consent of Service" form
• All contracts with paid fundraisers

Signature and fee

A signature is required by anyone authorized to sign for the organization.

There is no fee to register.

Filing procedures

Registration materials must be mailed to:

Office of the Attorney General, Consumer Protection Division
Attn: Charitable Registration
323 Center Street, Suite 200
Little Rock, AR 72201

Renewal

Registration is valid for one year and must be renewed by the anniversary of an organization's initial registration. To renew, an organization must file the "Charitable Organization Application for Registration" form along with the following supplemental forms and information:

• All fundraising contracts
• A "Consent for Service" form
• Organization's most recent IRS Form 990
• An audit, conducted by a Certified Public Accountant, if the organization received more than $500,000 during the year

There is no fee to renew.

Financial reporting

By May 15 each year, organizations must file a copy of their most recent IRS Form 990 or 990-EZ with the Arkansas Attorney General. If the organization is not required to file IRS Form 990, they must instead file a "Charitable Organization Annual Report."

Extensions

Extensions may be granted for up to six months, if requested in writing.

Fee

There is no fee to submit the annual financial report documents.

Recent news

This section links to a Google news search for the term "Arkansas + donor + privacy"

Arkansas Donor Privacy News Feed

See also

• Arkansas
• Arkansas Attorney General
• IRS code, section 501
• Nonprofit organization

External links

• Arkansas Attorney General, Consumer Protection Division