Legal Compliance Checklist for North Carolina Nonprofits

Have you Who has to do it How and when to do it

Filed your articles of

incorporation?

• All NC nonprots must le articles of incorpora-

tion with the NC Secretary of State to operate as a

nonprot corporation.

• Any individual (incorporator) can le the articles.

• File with the NC Secretary of State Business Registration

Division, www.sosnc.gov/divisions/business_registration.

• Then adopt bylaws and related governance policies at

your initial board meeting.

• It is a good practice for nonprot boards and key staff

to review articles of incorporation and bylaws regularly

to be certain they are consistent with each other, with

state laws, and with the organization’s actual practices.

Updated your regis-

tered agent’s name,

phone number, and

physical addresses

with the NC Secre-

tary of State?

• Any nonprot incorporated (or authorized as a for-

eign nonprot) in North Carolina that has changed

its principal ofce address, registered ofce ad-

dress, or registered agent.

• Note: If your nonprot is registered as a foreign

corporation in other states, you may need to le

annual reports in those states. Currently, North

Carolina is one of the few states that does not

require nonprot corporations to le annual

reports. Legislation was introduced in 2017 that

would require nonprots to le simple, online, no-

fee annual reports, beginning in 2020. The General

Assembly could consider similar legislation in 2019.

If this legislation is enacted, the Center will provide

more information to help nonprots comply with

any new ling requirements.

• File a Change of Registered Ofce/Agent or Change

of Ofce Address form at any time. To get the form or

check what is on le now, contact the NC Secretary of

State, www.sosnc.gov/divisions/business_registration.

Made sure that your

board members

understand their

duciary duties?

• All nonprots.

• Every nonprot board member is a duciary of the

organization and has duties of care, loyalty, and

obedience.

• Part 3 of the North Carolina Center for Nonprots’

Guidebook for Boards of Directors of North Carolina

Nonprots explains the duties and liabilities of board

members (free for members at www.ncnonprots.org/

resources/guidebook-boards-directors-north-carolina-

nonprots). Share it with your board.

Filed IRS Form 1023

to apply for federal

corporate tax

exemption and

made it available

to the public?

• All nonprots with gross receipts of $5,000 or

more that want to receive tax-deductible grants or

contributions.

• Churches, their integrated auxiliaries, and conven-

tions or associations of churches do not have to

apply. See IRS Publication 1828 (www.irs.gov/pub/

irs-pdf/p1828.pdf) for more.

• Many organizations with annual gross receipts of

$50,000 or less and total assets of $250,000 or less

may le the online Form 1023-EZ.

• Make your form available for review by anyone who

requests it.

• Download the form at www.irs.gov/pub/irs-pdf/f1023.pdf

and instructions at www.irs.gov/pub/irs-pdf/i1023.pdf.

• Download Form 1023-EZ at www.irs.gov/pub/irs-pdf/

f1023ez.pdf and instructions at www.irs.gov/pub/irs-pdf/

i1023ez.pdf. The form must be led electronically at

www.pay.gov.

• File within 27 months of incorporation for retroactive

recognition of tax exemption.

Filed Form 990,

990-EZ, or 990-N

(e-Postcard) and

made your forms for

the past three years

publicly available?

• Nonprots with $50,000 or less in annual gross

receipts must le a Form 990-N (e-Postcard). Very

small nonprots with budgets under $5,000 do need

to le, even if they are not required to le Form 1023.

• Nonprots with annual gross receipts of more than

$50,000 or with an average of more than $50,000

over the past three years must le a 990 or 990-EZ.

• File the form each year by the 15

day of the 5

month

after your scal year ends (e.g., Nov. 15 if your year ends

June 30).

• Large nonprots (over $10 million in assets) and private

foundations must le electronically if you le at least

250 tax returns per year. Congress is considering leg-

islation requiring all tax-exempt nonprots to le their

990s electronically, but would have a two-year hardship

delay for small nonprots with annual budgets below

$200,000 and less than $500,000 in assets.

Legal Compliance Checklist

for North Carolina Nonprofits

Created by the North Carolina Center for Nonprofits and updated annually, the legal compliance checklist outlines laws that affect North Carolina

nonprofits’ governance, finances, advocacy, human resources, and fundraising. This checklist is not intended to give legal advice and should not

be relied on without your attorney’s counsel. It is primarily a compliance tool for IRS Section 501(c)(3) public charities incorporated and operated

in North Carolina. Private foundations and nonprots classied as tax-exempt under other Internal Revenue Code sections may be subject to

different rules and regulations.

connued

Have you Who has to do it How and when to do it

connued

Filed Form 990,

990-EZ, or 990-N

(e-Postcard) and

made your forms for

the past three years

publicly available?

• Nonprots with annual gross receipts under

$200,000 and total assets under $500,000 can le

Form 990-EZ.

• All supporting or controlling organizations must le

Form 990 or 990-EZ.

• Nonprots that fail to le their 990, 990-EZ, or

990-N for three consecutive years will automati-

cally lose their tax-exempt status.

• Churches, their integrated auxiliaries, and conven-

tions or associations of churches don’t have to le.

• Get forms at www.irs.gov/charities-non-prots/current-

form-990-series-forms-and-instructions and www.irs.gov/

charities-non-prots/annual-electronic-ling-requirement-

for-small-exempt-organizations-form-990-n-e-postcard.

• You must make your forms available for review by any-

one who requests them. You must provide immediately

for in-person requests or within 30 days for written

requests. You may charge a reasonable copying fee and

postage, if any. Alternately, post your three most recent

forms on your website or GuideStar.

• For what to le, see www.irs.gov/charities-non-prots/

form-990-series-which-forms-do-exempt-organizations-

le-ling-phase-in.

• Ask the IRS (877-829-5500) or your CPA for details.

• State law now requires nonprots that receive $5,000

or more in federal, state, or local grants or loans to

make their Forms 990, 990-EZ, or 990-N available to

the public. Comply by posting it on your website or

GuideStar. These nonprots must also give anyone who

asks a basic statement about the amount of public funds

received and how they were used.

Adopted and adhered

to policies on con-

icts of interest, gift

acceptance, Form

990 review, whistle-

blower protection,

and document reten-

tion and destruction?

• Most nonprots.

• On Part VI of Form 990, nonprots may be required

to indicate whether they have these policies in

place.

• On Part VI of Form 990, nonprots are also asked

whether ofcers, directors, trustees, and key em-

ployees are required to disclose annually interests

that could give rise to conicts.

• See the Center’s website for sample policies on conicts

of interest (www.ncnonprots.org/resources/sample-

conict-interest-policy), gift acceptance (www.ncnonprof

its.org/resources/gift-acceptance-policies), whistleblower

protection (www.ncnonprots.org/resources/sample-

whistleblower-policy), and document retention and

destruction (www.ncnonprots.org/resources/document-

retention-and-destruction-policy).

Used comparability

data to determine

executive compensa-

tion?

• Nonprots with paid employees.

• On Form 990, nonprots are required to indicate

whether they used comparability data to determine

salaries and benets.

• The Center will release a new report on salaries and

benets in NC nonprots this fall.

Reported and paid

tax on Unrelated

Business Income

(UBIT) and made

your Form 990-T for

the past three years

publicly available?

• Any nonprot with unrelated business income of

$1,000 or more.

• Effective January 1, 2018, tax-exempt nonprots

are also required to pay UBIT on the expenses they

incur to pay for employees’ parking or mass transit

expenses. Note that nonprots are not required to

pay North Carolina corporate income tax on these

parking or transportation expenses.

• See IRS Publication 598, Tax on Unrelated Busi-

ness Income of Exempt Organizations (www.irs.gov/

pub/irs-pdf/p598.pdf). Ask the IRS (877-829-5500,

www.irs.gov/charities-non-prots/unrelated-business-

income-dened) or your CPA for details.

• File IRS Form 990-T (www.irs.gov/pub/irs-pdf/f990t.pdf)

each year by the 15

day of the 5

month after your

scal year ends (e.g., Nov. 15 if your year ends June 30).

• File Form CD-405 with the NC Department of Revenue

by the 15

day of the 5

month after your scal year

ends and pay any applicable state corporate income tax.

• The Center and other nonprots have asked the IRS to

delay implementation of the new UBIT on parking and

transportation benets until the IRS issues clear guid-

ance addressing several unanswered questions about

this new tax.

• See www.ncnonprots.org/content/new-tax-transportation-

and-parking-benets-problematic-nonprots.

Stayed nonpartisan?

• Under federal tax law, all 501(c)(3) nonprots are

prohibited from supporting or opposing candidates

for ofce or political parties. This means that non-

prots can’t endorse candidates, contribute money

in partisan elections, or coordinate activities with

political campaigns.

• Note: Despite media coverage about efforts by

Congress and the President to repeal or weaken the

so-called Johnson Amendment, the law on nonprot

nonpartisanship has not changed this year. Regardless

of potential changes to the law – or changes that

prevent the IRS from enforcing it – the best practice

for all 501(c)(3) nonprots is to steer clear of parti-

san politics. The Center will provide nonprots with

any information about changes to the law regarding

nonprot nonpartisanship.

• Be certain your staff and board understand that they

may not suggest or imply that they are speaking on

behalf of your nonprot when they engage in personal

political activities.

• Nonprots can (and should) engage in a wide range of

nonpartisan election-related activities, including voter

registration, voter education, and get-out-the-vote ef-

forts (www.nonprotvote.org).

• For more on what nonprots can and can’t do during an

election year, see https://bit.ly/2vTCjPW.

• For more on the nonpartisanship requirement and why

it matters for charitable nonprots, see www.ncnonprof

its.org/public-policy/why-weakening-johnson-amendment-

would-be-devastating-nonprots.

Have you Who has to do it How and when to do it

Elected 501(h) status

to have clearer and

more generous limits

on your lobbying

than if you stay with

the default option of

“insubstantial part

test”?

• Any charitable nonprot (other than a house of

worship and integrated auxiliaries of houses of wor-

ship) that lobbies can choose to elect 501(h) status.

Under 501(h), nonprots can use for lobbying up to

20% of the rst $500,000 of their exempt purpose

expenditures. For larger organizations, this limit

increases on a sliding scale up to $1 million.

• Nonprots that do not take the 501(h) election must

be prepared to demonstrate that lobbying is an

“insubstantial” part of their activites.

• Complete the simple one-page IRS Form 5768 (www.irs.

gov/pub/irs-pdf/f5768.pdf) once; the election will apply

for the current and subsequent tax years. See www.

councilofnonprots.org/nonprot-advocacy/501h-election.

• Note that advocacy for or against ballot measures, such

as state constitutional amendments and bond initiatives

(www.ncnonprots.org/content/501c3-advocacy-state-

constitutional-amendments), is direct lobbying. A non-

prot’s expenditures advocating for or against ballot

measures are included as direct lobbying expenses for

the 501(h) expenditure test. For a nonprot not taking

the 501(h) election, ballot measure advocacy activities

are included in the “insubstantial” part determination.

Provided donors with

letters of acknowl-

edgment for “quid

pro quo” gifts of $75

or more and all gifts

of $250 or more?

• Every nonprot that provides goods or services to

donors in exchange for contributions above $75.

Your nonprot must disclose the value of the goods

or services received by the donor. Only the remain-

ing amount is tax-deductible.

• The US Tax Court has denied a donor’s signicant

tax deduction in part because the nonprot didn’t

follow these rules!

• See IRS Publication 1771 (www.irs.gov/pub/irs-pdf/

p1771.pdf) for gift acknowledgement guidelines.

• Donors are responsible for obtaining written gift

acknowledgments for contributions of $250 or more,

but it is a good practice for nonprots to send timely

acknowledgements for all contributions.

Applied for a state

charitable solicita-

tion license, renewed

it every year, and

included the required

disclosure statement

on your fundraising

materials and donor

acknowledgement

letters?

• Most nonprots must contact the Secretary of State

each year. Generally, any nonprot that receives

$25,000 or more a year in private grants and contri-

butions is required to have a charitable solicitation

license.

• If you receive less than $25,000, you may be eligible

to apply annually to become exempt from requir-

ing the license. Government grants and contracts,

fees for services, and other earned or investment

revenues are not included.

• Nonprot churches, hospitals, YMCAs, YWCAs, and

schools are generally exempt. For other statutory

exemptions to this requirement, contact the Chari-

table Solicitation Licensing Section (www.sosnc.gov/

csl) or see www.ncnonprots.org/resources/charitable-

solicitation-faqs.

• Apply at any time, and renew annually by the 15

day

of the 5

month after your scal year ends. Contact the

Charitable Solicitation Licensing Section, NC Secretary

of State, www.sosnc.gov/csl. Online ling is available, but

not required.

• A Unied Registration Statement is acceptable if you

also complete the NC Addendum (www.multistateling.

org).

• Check requirements if you solicit funds in other states.

For more, see www.councilofnonprots.org/tools-resources/

charitable-solicitation-registration. The National Associa-

tion of State Charity Ofcials (NASCO) is working on

developing a single portal that may simplify mulit-state

ling for nonprots that solicit funds in more than one

state.

• Conspicuously display (in at least 9-point bold type) this

disclosure statement on every printed solicitation, writ-

ten conrmation, receipt, and contribution reminder:

Financial information about this organization and

a copy of its license are available from the Charita-

ble Solicitation Licensing Section at 888-830-4989.

The license is not an endorsement by the State.

Conrmed that any

contract fundraisers

or fundraising con-

sultants are licensed?

• Any nonprot that uses a contractor to solicit

contributions or to advise or assist in fundraising-

related activities. Note: All contracts with solicitors

and fundraising consultants are led with the NC

Secretary of State and available to the public.

• Check the registry of licensed solicitors and fundraising

consultants at www.sosnc.gov/search/index/csl.

• Have at least two ofcials of your nonprot (including at

least one board member) sign all contracts with solici-

tors and fundraising consultants.

Requested state

corporate income

and franchise tax

exemption?

• To be exempt from corporate taxes, all North

Carolina nonprots must request these state tax

exemptions from the NC Department of Revenue.

• Send a request to the NC Department of Revenue with

a brief description of your charitable purposes and dis-

solution provision.

• Enclose copies of your articles of incorporation, certi-

ed copy of bylaws, and IRS determination letter.

• Sent the request to NC Department of Revenue,

Corporate Income and Franchise Tax Department,

PO Box 871, Raleigh, NC 27602.

Applied for exemp-

tion from local

property taxes?

• Most nonprots owning real or personal property

(buildings, land, or property such as ofce equip-

ment) used wholly and exclusively for tax-exempt

purposes.

• Apply with your local county tax assessor. Call your lo-

cal county tax ofce for details. You may appeal the local

board’s decision to the State Property Tax Commission.

• Notify the county assessor of any change in the use of

your nonprot’s property.

connued

Have you Who has to do it How and when to do it

connued

Applied for exemp-

tion from local

property taxes?

• Let the Center know if your request for property tax

exemption is unreasonably denied by your county as-

sessor.

Applied for refunds

of state and local

sales and use taxes

that you have paid?

• Any qualifying nonprot that wants refunds of sales

tax it pays on purchases in NC.

• Qualifying nonprots include all 501(c)(3)s except

those properly classied with NTEE codes of Com-

munity Improvement and Capacity Building, Public

and Societal Benet, or Mutual and Membership

Benet organizations (http://nccs.urban.org/classica

tion/NTEE.cfm).

• Now applies to purchases made directly by the or-

ganization and through staff reimbursement (other

than reimbursement for travel expenses).

• Refunds are capped at $45 million per year (total of

state and local sales taxes paid) per nonprot, starting

July 1, 2014.

• Apply for an Account ID number from the Central Ex-

amination Division, NC Department of Revenue. Details

at https://les.nc.gov/ncdor/documents/faq/e585_faq.pdf.

• File Form E-585 semi-annually for refunds: by Oct. 15

for taxes paid Jan.-June; by April 15 for taxes paid July-

Dec.

• If the Internal Revenue Service misclassies your non-

prot’s NTEE code, you may appeal and request refunds

from the NC Department of Revenue based on the

proper classication.

Collected sales tax

on items you sell and

remitted these funds

to the State?

• Any nonprot selling retail items like books, videos,

t-shirts, concessions, webinars, and e-publications.

• Sales are exempt if (a) conducted only once a year to

raise funds and if all products are delivered within

60 days after the solicitation; or (b) proceeds are

given to the State of NC or a state agency (e.g., public

schools). Note: This exemption doesn’t apply to

sales tax on admission charges.

• A nonprot charging admission for entertainment

activities, including live performances or live events

for the purpose of entertainment, motion pictures,

museums, cultural sites, gardens, exhibits, shows,

and similar attractions. Educational, recreational,

and many fundraising events done by nonprots are

not subject to this tax.

• Admission fees are exempt if they are tax-deduct-

ible contributions, including any tax-deductible

portion of membership fees that would otherwise

be subject to the tax.

• Admission fees are also exempt if they are: (a) events

sponsored by elementary or secondary schools; or

(b) sponsored by “volunteer only” nonprots that do

not pay salary or other compensation to individuals

and that do not compensate anyone for performing

in, placing in, or producing the event.

• Register with the NC Department of Revenue for a

Certicate of Registration.

• File Form E-500 and pay the tax quarterly or monthly,

depending on your volume of sales.

• If your nonprot has collected taxes in more than one

county, also le E-536 (Schedule of County Sales and

Use Taxes). The county rate you charge is based on the

delivery location. The tax rate differs by county

(www.ncdor.gov/taxes/sales-and-use-tax).

Properly classied all

employees and inde-

pendent contractors?

• Any nonprot with paid staff, consultants, or con-

tractors. The US Department of Labor (DOL), IRS,

and NC Department of Revenue can impose penal-

ties for improper classication of consultants and

contractors who are really employees.

• See IRS Publication 1779 (www.irs.gov/pub/irs-pdf/

p1779.pdf) to nd specic criteria for classifying em-

ployees vs. contractors.

• Note: In June 2017, DOL withdrew an Administrator’s

Interpretation from 2015 that described the standards

for assessing whether a worker is an employee or an

independent contractor. However, DOL notes that:

“Removal of the administrator interpretation does not

change the legal responsibilities of employers under

the Fair Labor Standards Act, as reected in the De-

partment’s long-standing regulations and case law. The

Department will continue to fully and fairly enforce

all laws within its jurisdiction including the Fair Labor

Standards Act.” The DOL fact sheet describing factors

employers should consider in assessing whether work-

ers are employees or independent contractors is avail-

able at www.dol.gov/whd/regs/compliance/whdfs13.pdf.

• Note: On July 13, 2018, DOL issued its rst Field

Assistance Bulletin (www.dol.gov/whd/FieldBulletins/

fab2018_4.htm) providing guidance on independent

connued

Have you Who has to do it How and when to do it

connued

Properly classied all

employees and inde-

pendent contractors?

contractor status in a particular industry (home care

workers) that indicates DOL will look at a “totality of

circumstances” balancing test in determining whether

workers are employees or independent contractors.

Properly classied all

employees as either

exempt or non-

exempt from the Fair

Labor Standards Act

and paid overtime

where appropriate?

• All nonprots and foundations with paid employees.

• Under the Fair Labor Standards Act (FLSA) and the

NC Wage and Hour Act, you must provide overtime

pay to all workers unless they are specically ex-

empted from coverage. See p. 20-22 of the Center’s

Employment Law for North Carolina Nonprots, free

for members at www.ncnonprots.org/sites/default/

les/resource_attachments/employment_law.pdf.

• Note: In late 2016, a federal court stopped the

US DOL regulations that would have signicantly

increased the salary threshold for exempt employ-

ees. Had these regulations taken effect, many more

nonprot employees would have been eligible for

overtime pay when they worked more than 40

hours in a work week. DOL is scheduled to release

new regulations to increase the salary threshold in

early 2019. The Center will keep nonprots posted

on developments related to future overtime rules.

• Employees are exempt from the overtime pay require-

ments of FLSA if they are paid at least the minimum

salary level, are paid on a salary basis, and exercise

job duties that are classied as exempt (i.e. executive,

administrative, or professional). The minimum salary

threshold is currently $23,660 per year ($455 per

week). Highly compensated employees with salaries

of at least $100,000 per year are also exempt from

overtime pay requirements if they regularly perform at

least some of the job duties of executive, administrative,

or professional employees.

• Change an employee’s status any time during the year.

• Pay non-exempt staff 1.5 times their usual hourly pay

rate for any time they work more than 40 hours in one

work week.

Followed all

state and federal

employment laws

including: ling I-9,

W-2, and W-4 forms;

withholding tax;

paying employment

taxes; and putting

up posters?

• Any nonprot with paid employees, whether part-

time or full-time.

• Your nonprot must pay Social Security and Medi-

care taxes for all employees.

• State law requires nonprots with 25 or more em-

ployees to use the federal E-Verify system to check

the immigration status of new employees.

• Contact the US Department of Labor, www.dol.gov, or

NC Department of Labor, www.labor.nc.gov.

• Download free employment posters at www.labor.nc.gov/

safety-and-health/publications. You do not need to buy

these posters!

• See the Center’s Employment Law for North Carolina Non-

prots, free for members at https://bit.ly/2OsVYxL.

• For more on withholding and paying federal employ-

ment taxes, see www.irs.gov/charities-non-prots/employ

ment-taxes-for-exempt-organizations.

• Effective September 18, 2017, employers must use a

new form for I-9 lings. For more information, see

www.uscis.gov/i-9-central/handbook-employers-m-274.

Applied for an

Unemployment Tax

Number and paid

State Unemployment

Tax?

• Nonprots generally pay state unemployment insur-

ance (UI) taxes.

• Nonprots that have employed four or more people

for any part of 20 different weeks in the current or

previous calendar year.

• Nonprots have the option of electing to reimburse

the state for unemployment claims instead of paying

UI taxes. Nonprots electing to reimburse must

maintain 1% of their total payroll in an escrow ac-

count with the NC Department of Commerce.

• Changes to State Unemployment Tax laws went into

effect June 30, 2013. See https://des.nc.gov/Portal

Common/Content/pdf/HB4/Memo-on-HB4-Changes-

to-UI.pdf.

• Apply before hiring employees.

• Contact the Division of Employment Security (DES) of

the NC Department of Commerce, http://des.nc.gov.

• The Center’s unemployment tax savings program

for members has already saved nonprots almost

$9 million. For details, see First Nonprot Group at

www.ncnonprots.org/services/money-saving-partnerships

and contact Joe Poretto (312-239-8388, jporetto@

rstnonprot.com).

• Starting in 2016, DES is charging benets paid to em-

ployers’ unemployment insurance accounts quarterly

instead of annually. For nonprots that pay UI tax,

benets will be applied to accounts quarterly instead of

annually, but the UI tax rate will still be calculated annu-

ally. For nonprots that elect to reimburse rather than

pay UI taxes, reconciliation of accounts will still be done

annually, but DES will send a quarterly list of charges to

help nonprots budget better for UI charges on their

accounts.

• Effective April 27, 2017, nonprots that elect to reim-

burse the state for unemployment claims may apply

for a refund if they erroneously remit more than the

required 1% of payroll to the state.

• Because unemployment benets are lower in North

Carolina than in other states, electing to reimburse

may be a more cost-effective approach for many North

Carolina nonprots.

Have you Who has to do it How and when to do it

Obtained workers’

compensation insur-

ance?

• Any incorporated nonprot with three or more

employees and/or corporate ofcers. Effective

October 22, 2015, nonprots are no longer

required to provide workers’ compensation for

uncompensated board ofcers.

• Contact the NC Industrial Commission, 800-688-8349,

www.ic.nc.gov.

• For more, see www.ncnonprots.org/public-policy/

workers-compensation-good-nonprot-employees-and-

employers.

Properly compensat-

ed your paid interns?

• Charitable nonprots can use volunteer interns as

long as they are unpaid and not provided a stipend.

• If a 501(c)(3) nonprot chooses to pay its interns,

these interns may be classied as employees who

are subject to minimum wage and overtime pay

requirements under the Fair Labor Standards Act. If

a nonprot pays an intern a stipend lower than the

minimum wage of $7.25 per hour, it must be certain

that the internship satises the “economic realities”

test that the relationship is not employment.

• In January 2018, the US Department of Labor released

guidance with a seven-factor test to determine whether

paid interns are classied as employees who are subject

to the minimum wage requirements of the Fair Labor

Standards Act (www.dol.gov/whd/regs/compliance/

whdfs71.pdf).

• See the National Council of Nonprots’ resource on

nonprot interns at www.councilofnonprots.org/tools-

resources/interns-employee-or-volunteer.

Created a plan

document for your

employee retirement

plan and electroni-

cally led a Form

5500?

• Nonprots with 403(b) plans and other retire-

ment plans subject to the Employment Retirement

Income Security Act (ERISA).

• You must le Form 5500 electronically. It is due seven

months after your plan’s year-end date. See www.dol.

gov/agencies/ebsa/employers-and-advisers/plan-adminis

tration-and-compliance/reporting-and-ling/form-5500.

• Those at your nonprot responsible for signing your

Form 5500 need to register on the Department of

Labor’s EFAST2 website, www.efast.dol.gov.

• If your nonprot has a 403(b) plan, you must have a

written plan document. See www.irs.gov/retirement-

plans/irc-403b-tax-sheltered-annuity-plans.

Followed state laws

for rafes and bingo

events?

• Any nonprot that offers a rafe or bingo game as a

fundraising event.

• Nonprots may conduct up to four rafes per year

as fundraising events. The maximum cash prize for

any rafe is $250,000, and nonprots may rafe real

property valued at up to $500,000. At least 90% of the

net proceeds of the rafe must be used for a nonprot’s

mission-related purposes, and none of the net proceeds

can be used to pay a person to conduct a rafe or to rent

a space where the rafe is conducted. Nonprots are

not required to have a license to conduct rafes. See

www.ncnonprots.org/resources/rafes-101.

• Effective October 1, 2018, nonprots may also offer al-

cohol in the manufacturer’s original closed container as

a prize for a rafe or auction, as long as the nonprot has

obtained a special one-time alcohol permit for the event

• Note: In North Carolina, it is currently illegal for

nonprots to offer casino nights or game nights as

fundraising events. The law prohibiting these types

of fundraising events are not consistently enforced in

many parts of the state. In 2017, Governor Roy Cooper

vetoed legislation that would have allowed nonprots

to conduct casino nights as fundraisers in all parts of

the state east of I-26. The General Assembly could try

to pass similar legislation in 2019.

• Nonprots conducting bingo games are required to get

an annual license from the NC Department of Public

Safety (www2.ncdps.gov). The annual fee for a nonprot

bingo license is $200.

• Nonprots must le IRS Form W-2G on rafe prizes of

$600 or more where the payout is at least 300 times

the amount of the wager, and must withhold 25% taxes

on rafe prizes of $5,000 or more. Rafe tickets are not

deductible as charitable contributions. For more, see

www.irs.gov/pub/irs-tege/notice_1340.pdf.

Have you Who has to do it How and when to do it

Studied current

reporting require-

ments for any funds

that your nonprot

receives through the

State?

• Any nonprot that receives state grant funds or

federal grant funds that pass through a state gov-

ernment agency.

• Any nonprot receiving state grants and/or appropria-

tions must provide certication to its granting agency

that its state funds were used for the purposes for

which they were awarded and must provide an account-

ing of all state funds it receives, uses, holds, or spends.

• Any nonprot receiving $25,000 or more in state

grants and/or appropriations must report to its granting

agency on its activities and accomplishments, including

reporting on any relevant performance measures.

• Any nonprot receiving $500,000 or more in state

grants and/or appropriations must have a single or

program-specic audit prepared in accordance with

Generally Accepted Governmental Auditing Standards

(also known as a Yellow Book Audit).

• Beginning on July 1, 2016, nonprots receiving state

grants and/or appropriations must submit reports

directly to their granting agencies, not to the NC Ofce

of State Budget and Management.

• Nonprots receiving appropriations or grants in the

state budget for FY2018-19 – including those receiv-

ing one-time earmarks – must report the following in-

formation to the NC General Assembly and NC Ofce

of State Budget and Management by June 30, 2019:

a. A description of how the state funds were used, in-

cluding outcomes and specic deliverables achieved;

b. The amount of state funds received and spent during

the scal year;

c. The amount of state funds spent on administrative

expenses and on salaries and benets during the

scal year; and

d. For each employee, the amount of state funds used

to fund her or his annual salary.

• Cities and counties may require nonprots receiving

grants or appropriations of $1,000 or more in any scal

year to have an audit.

• The NC State Auditor has the authority to audit any

nonprot receiving $1,000 or more in state funding in

any scal year.

Followed the federal

grant and contract

rules under the OMB

Uniform Guidance?

• Nonprots with federal grants or contracts − or

state or local grants or contracts that include federal

funds − with effective dates on or after December

26, 2014.

• Nonprots without a federally-approved indirect cost

rate can elect to be paid a de minimis rate of 10% of

modied total direct costs.

• Pass-through entities (state and local governments) are

required to recognize this de minimis rate of nonprots’

federally-negotiated rates.

• More costs (e.g. some program administration costs)

are treated as direct costs under the OMB Uniform

Guidance.

• The threshold for single audits has been raised to

$750,000.

• The OMB Uniform Guidance requires the use of consis-

tent, documented procurement processes for purchases

made with federal funds.

• For more information, see www.councilofnonprots.org/

omb-uniform-guidance.

Complied with

Uniform Prudent

Management of

Institutional Funds

Act (UPMIFA) to in-

vest and spend from

endowed and other

restricted funds?

• All nonprots holding funds with donor-imposed

restrictions.

• These rules do not apply to funds set aside for spe-

cic purposes by the board.

• Restrictions may be released for funds created more

than 10 years ago and with total assets less than

$100,000.

• Adopt a policy that requires the board to analyze statu-

tory “prudence factors” when investing and spending

from endowed and other restricted funds.

• Retain gift agreements creating endowed and other

restricted funds in your permanent records.

Have you Who has to do it How and when to do it

Registered with the

state as a lobbyist

principal or solicitor

(organizations) and

as a lobbyist (individ-

uals), as well as led

quarterly reports?

• Nonprot employees (but not volunteers) who

spend at least 5% of their time lobbying members

of the NC General Assembly or NC executive

branch ofcers in any 30-day period must register

as lobbyists. Any paid nonprot contractor who

lobbies must register as a lobbyist. Nonprots

compensating lobbyists need to register as “lobbyist

principals.”

• Nonprots that are not “lobbyist principals” but

that ask members of the general public to engage

in lobbying must register as solicitors if they spend

at least $3,000 in any 90-day period on this type of

solicitation.

• Lobbyists, principals, and solicitors must register

with the NC State Board of Elections and Ethics

Enforcement every year (within one day of starting to

lobby) and pay a $250 annual fee (separate fees for

lobbyists and principals). Principals must report total

compensation paid to lobbyists for actual lobbying and

related activities once a year on their nal reports.

Lobbyists, principals, and solicitors must le notarized

quarterly reports of their lobbying and solicitation

activities. All forms must be submitted electronically.

• Get forms at https://lobby.ncsbe.gov/lobbying. See a

summary of NC lobbying laws at www.ncnonprots.org/

resources/summary-north-carolina-lobbying-law.

• Note: In July 2018, lobbying registration and reporting

was transferred from the NC Secretary of State to the

NC State Board of Elections and Ethics Enforcement.

Filed for an assumed

business name cer-

ticate?

• Any nonprofit that operates under a name other

than the name identified in its articles of incorpora-

tion.

• Through November 30, 2017, any nonprot that oper-

ates using a name other than its legal name (e.g., the

name in its articles of incorporation) is required to le

for an assumed business name certicate with the reg-

ister of deeds in every county of NC where it conducts

business.

• Starting December 1, 2017, a nonprot that operates

using a name other than its legal name (e.g., the name

in its articles of incorporation) is required to le for an

assumed business name certicate with the register of

deeds in one NC county where it conducts business. Un-

der a new law passed in 2016, the NC Secretary of State

will maintain a statewide database of assumed business

names so nonprots will no longer need to le in more

than one county.

• All assumed name certicates issued under the current

law (Article 14 of Chapter 66 of the NC General Stat-

utes) will expire on December 1, 2022, so nonprots

with existing assumed business name certicates will

need to rele these under the new law (Article 14A of

Chapter 66 of the NC General Statutes) in one county to

continue to have an assumed business name certicate

after that date.

This compliance checklist is available for free for current Center members and for a fee for all others.