On January 18, 2022, Governor Murphy signed into law P.L.2021, c.381, which amends both the New Jersey Charitable Registration and Investigation Act (CRIA) and the New Jersey Nonprofit Corporation Act. The law went into effect immediately.
The amendments to the CRIA make two key changes to New Jersey’s reporting requirements for charitable organizations (organizations) in an effort to reduce the financial burden on them in connection with an independent audit of their financial statements.
The amendments raise the gross revenue threshold that determines if an organization must file financial statements that have been audited by an independent certified public accountant with the Charitable Registration and Investigation Section of the New Jersey Division of Consumer Affairs (Section). The new threshold is gross revenue in excess of $1,000,000 during an organization’s most recently completed fiscal year. The prior threshold was $500,000. An organization that brings in more than $25,000 in annual gross revenue but less than $1,000,000 can submit a financial statement certified by its president or other authorized officer.
The amendments also change the way an organization should calculate gross revenue to determine if it meets the threshold. “Gross revenue” is already defined in the Section’s Charitable Fundraising Regulations. The amendments clarify that, for the purposes of determining whether it must submit independently audited financial statements, an organization should include only “monetary donations” in its gross revenue calculation and omit “non-monetary donations” that are directly related to the organization’s stated purpose or mission, “including food for food pantries or food banks, supplies for shelters, and such other forms of in-kind contributions as may be permitted by the [New Jersey] Attorney General.” Hopefully, the Section will quickly issue guidance on the types of “non-monetary donations” that can be excluded from the calculation of gross revenue.
Organizations should be aware of an important caveat here. The amended law makes clear that an organization can carve out non-monetary donations from its gross revenue calculation specifically for the purpose of determining if it needs to file audited financial statements. However, an organization must still report the value of its non-monetary donations. The amendments state that “annual financial reports and statements [filed with the Section] shall include a summary of all non-monetary in-kind contributions and the value attributed to those contributions.” An organization might also need to include the value of non-monetary donations in its revenue calculations for other purposes.
These amendments apply to organizations that have initial registrations or annual renewal registrations originally due to the Section on or after January 18, 2022. They do not apply to organizations that have a filing extension for registrations due before January 18, 2022.
An additional amendment to the CRIA provides a grace period and waiver of late fees or penalties for organizations that have to file charitable registration reports during the State of Emergency declared by Governor Murphy in March 2020 and for up to 180 days after the conclusion of the State of Emergency. The State of Emergency is still in effect.
To learn more about the charitable registration requirements applicable to New Jersey nonprofits, please see our article here.
New Jersey Nonprofit Corporation Act Amendments
The amendments to the New Jersey Nonprofit Corporation Act provide a grace period and waive late fees or penalties for organizations that have to file annual corporate reports during the State of Emergency and for up to 180 days after the conclusion of the State of Emergency.
To learn more about tax and filing considerations for small New Jersey nonprofits, please see our article here.
If you have questions about any of the topics discussed above, please contact Alexandra Kilduff, Esq., in our Parsippany office, at email@example.com or 973-240-6955 ext. 305.
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