Charitable Compliance

11/7/06 Governor Signs Act 121 of 2006 to Raise Charitable Audit Threshold to $300,000. On October 27, 2006, Governor Rendell signed House Bill 632 (PN4757) into law raising the audit triggering threshold for charities that receive contributions from the prior $125,000 per year to a higher $300,000 per year. Now, charities that receive contributions of more than $300,000 per year are required to perform an audit by an independent certified public accountant or public accountant. In addition, charities receiving contributions of between $100,000 and $300,000 must perform a “review or audit”. Charities receiving contributions of between $50,000 and $100,000 must perform a “compilation, review or audit”, and audit requirements for annual contributions of below $50,000 are optional.

This bill enables smaller charities to direct more of their charitable dollars to programs and services, while preserving significant protections for the donor public. Act 121 will take effect after December 26, 2006 for all charities that operate on a fiscal calendar year ending on December 31. Charities with a reporting period not on the calendar year must wait until the next fiscal year to apply the new threshold.

PANO, our members and our peer organizations worked very hard to achieve the passage of this legislation. We are pleased and proud to share this good news with you. For the Bureau of Charitable Organizations go to http://www.dos.state.pa.us/char/cwp/view.asp?a=1092&q=434472

Gross Contributions	Type of Financial Statements Required
Less than $50,000	Internally Prepared *Compiled, Reviewed, or Audited (Optional)
$50,000 to less than $100,000	Compiled, Reviewed, or Audited
$100,000 to less than $300,000	Reviewed or Audited
$300,000 and over	Audited

10/27/06 Charitable Audit Threshold Bill, HB632 Signed by Governor Rendell on October 27! The bill, sponsored by Rep. Arthur D. Hershey (R-Chester), passed the House 194-2 and the Senate 50-0. This bill will take effect in 60 days. PANO and its members worked very hard on the passage of this legislation and are pleased to share this good news with you.

10/25/06 Deadline to Pass for Governor's Signature on Charitable Audit Threshold Bill- November 4. Last week, the Charitable Audit Threshold Bill, HB632 (PN4757) passed the Senate and was concurred to in the House. The deadline for the Governor’s signature will pass by November 4. This bill will increase the audit triggering threshold for all charitable nonprofits from the current $125,000 in annual contributions to $300,000. Charities raising more than $300,000 annually would be required to perform a professional audit. Charities raising less than $300,000, but more than $100,000 annually would be required to undergo a review, and charities raising less than $100,000 annually would be required to do a compilation. This bill would enable smaller charities to direct more of their charitable dollars to programs and services, while preserving significant protections for the donor public. For more information go to http://capwiz.com/pano/issues/bills/?bill=8854506.

10/18/06 CHARITABLE AUDIT THRESHOLD BILL PASSES STATE HOUSE AND SENATE; MOVES TO GOVERNOR FOR SIGNATURE. This afternoon, the Pennsylvania House of Representatives PASSED the Charitable Audit Threshold bill HB632 (PN4757) with PANO’s proposed amendment, by a vote of 194-2. This bill will raise the charitable audit triggering threshold for charities that solicit contributions, from the current $125,000 annually, to a higher $300,000 annually. The bill now moves to the Governor’s desk for his signature.

The Charitable Audit Threshold Bill will require a compilation for charities raising between $50,000 and $100,000, a review for charities raising between $100,000 and $300,000, and an audit for charities raising over $300,000 annually. Requiring some disclosure for organizations that fall below the $300,000 audit threshold will provide relief to smaller charities, while preserving a level of protection for the donor public.

Yesterday, October 17, the Pennsylvania Senate unanimously PASSED the HB632 (PN4757) with PANO’s proposed amendment. PANO’s amendment offered in the Senate by Senator Wayne Fontana (D- Allegheny) limits the use of compilations to charities raising less than $100,000 in annual contributions. An additional amendment refining the language on standard accounting principles was offered and adopted by Senator Patrick Brown (R- Lehigh, Northampton).

PANO wishes to thank our members, our peer organizations, legislators and staff, who helped to move this bill forward. So many of you have answered the call to action, and have contacted your legislators. Your participation and these results underscore the importance for all charities to exercise their advocacy rights. This bill is a shining example of what advocacy can achieve through participation and collaboration.

We wish to thank all who participated in this effort, but our work is not over. HB632 must still be signed by the Governor before it becomes law. We will continue to work toward the enactment of this bill before the end of this legislative session. PANO will provide updates as information becomes available, and we may request your participation if further action is needed.

10/11/06 Charitable Audit Threshold Bill on Senate Calendar for Monday October 16. HB632(PN3824) the Charitable Audit Threshold bill, is posted on the Senate Calendar for Monday October 16. If enacted, this bill would increase the audit triggering threshold for all charities from the current $125,000 in annual contributions to $300,000. PANO has proposed language that would require a compilation for charities raising between $50,000 and $100,000 annually; review for charities raising between $100,000 and $300,000; and an audit for charities raising above the $300,000 threshold. The amended bill would enable smaller charities to direct more of their charitable dollars to programs and services, while preserving a level of protection for the donor public.

9/27/06 Senate moves bill forward to raise Audit Threshold for charities. Yesterday, the Senate State Government Committee met to consider a laundry list of bills including HB 632 the Charitable Audit Threshold bill. The Committee considered the bill and unanimously reported the bill out of committee as committed (without amendment). HB 632 (PN 3824) will increases the audit triggering threshold for all charitable nonprofits from the current $125,000 in annual contributions to $300,000. PANO’s proposed amendment would require an intermediate level of scrutiny, requiring a review for charities raising between $100,000 and $300,000, and requiring a compilation for charities raising between $50,000 and $100,000 annually. Preserving some level of disclosure for organizations that do not meet the new $300,000 threshold, will help maintain the public trust.

HB 632 has appeared on the Senate Calendar for yesterday and today. A bill must appear on the Calendar three times before it can be voted on. The Senate is in session only two days next week., and three additional days before the November election. The bill may be referred to Appropriations for technical amendments.

PANO has promoted this bill with a coalition including the Association of Fundraising Professionals (AFP), the Pennsylvania Institute of Certified Public Accountants (PICPA) to enable smaller charities to direct more of their charitable dollars to programs and services, rather than to costly audits.

We continue to urge you to respond to PANO’s Action Alert if you have not done so already. Your support is crucial to the success or failure of this legislation. Help promote the passage of this bill, take action at http://givevoice.org/pano/home.html.

Charitable Compliance Issues