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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 235-S.F.No. 579 
                  An act relating to commerce; regulating charitable 
                  organizations; regulating filing statement; 
                  appropriating money; amending Minnesota Statutes 1994, 
                  sections 309.501, subdivision 1; 309.52, subdivisions 
                  2 and 7; 309.53, subdivisions 1, 2, 3, and 8; 309.531, 
                  subdivisions 1 and 4; 309.54, subdivision 1; 309.556, 
                  subdivision 1; 501B.36; 501B.37, subdivision 2, and by 
                  adding a subdivision; and 501B.38; repealing Minnesota 
                  Statutes 1994, section 309.53, subdivision 1a. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 309.501, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
        the following terms have the meanings given them.  
           (b) "Registered combined charitable organization" means a 
        federated funding organization: 
           (1) which is tax exempt under section 501(c)3 of the 
        Internal Revenue Code of 1986, as amended through December 31, 
        1992 (hereinafter "Internal Revenue Code"), and to which 
        contributions are deductible under section 170 of the Internal 
        Revenue Code; 
           (2) which exists for purposes other than solely 
        fundraising; 
           (3) which secures funds for distribution to 14 or more 
        affiliated agencies in a single, annual consolidated effort; 
           (4) which is governed either by a local, independent, 
        voluntary board of directors which represents the broad 
        interests of the public and 90 percent of the directors of the 
        governing board live or work in the community or surrounding 
        area or, if the charitable agencies are solely educational 
        institutions which meet the requirements of paragraph (c), by a 
        national board of directors that has a local advisory board 
        composed of members who live or work in the community or 
        surrounding area; 
           (5) which distributes at least 70 percent of its total 
        campaign income and revenue, plus donor designated amounts 
        raised to its affiliated agencies and to the designated agencies 
        it supports and expends no more than 30 percent of its total 
        income and revenue, plus donor designated amounts raised for 
        management and general costs and fund raising costs; 
           (6) which distributes at least 70 percent of its total 
        campaign income and revenue to affiliated agencies and 
        designated agencies that are incorporated in Minnesota or 
        headquartered in the service area in which the state employee 
        combined charitable campaign takes place or, if the charitable 
        agencies are solely educational institutions which meet the 
        requirements of paragraph (c), distributes at least 70 percent 
        of the state employee combined charitable campaign income and 
        revenue directly to Minnesota residents using established 
        eligibility criteria; 
           (7) and each designated or affiliated agency supported by 
        the recipient institution devotes substantially all of its 
        activities directly to providing health, welfare, social, or 
        other human services to individuals; 
           (8) and each designated or affiliated agency supported by 
        the recipient institution with funds contributed by state 
        employees through the combined charitable campaign provides all 
        or substantially all of its health, welfare, social, or other 
        human services, in the community and surrounding area in which 
        the state employee combined charitable campaign takes place; 
           (9) and each charitable agency is affiliated with no more 
        than one registered combined charitable organization within the 
        registered combined charitable organization's service area in 
        the state's employee combined charitable campaign; and 
           (10) which has been registered with the commissioner of 
        employee relations in accordance with this section.  
           Registered combined charitable organization includes a 
        charitable organization organized by Minnesota state employees 
        and their exclusive representatives for the purpose of providing 
        grants to nonprofit agencies providing Minnesota residents with 
        food or shelter if the charitable organization meets the 
        requirements of clauses (1), (4), and (5). 
           (c) "Affiliated agency" means a charitable agency that is 
        represented by a federation and has an ongoing relationship with 
        that federation which involves a review and monitoring process 
        to ensure financial, managerial, and programmatic responsibility.
           (d) "Charitable agency" means a governmental agency or an 
        organization (1) which is tax exempt under section 501(c)3 of 
        the Internal Revenue Code; (2) to which contributions are 
        deductible under section 170 of the Internal Revenue Code; and 
        (3) which is in compliance with the provisions of this chapter. 
           (e) "State employees combined charitable campaign" means 
        the annual state campaign whereby a state employee may designate 
        that the employee's contribution to a registered combined 
        charitable organization may be deducted from the pay of the 
        employee for each pay period. 
           Sec. 2.  Minnesota Statutes 1994, section 309.52, 
        subdivision 2, is amended to read: 
           Subd. 2.  The first registration statement filed by a 
        charitable organization shall include a registration fee of $25 
        if the organization raised or expended, exclusive of the direct 
        cost of prizes given to the public by the charitable 
        organization in connection with lawful gambling conducted in 
        compliance with chapter 349, more than $25,000 during the 
        previous 12-month period, and a financial statement of the 
        organization's operation for its most recent 12 months period 
        immediately preceding the filing of the first registration 
        statement. 
           Sec. 3.  Minnesota Statutes 1994, section 309.52, 
        subdivision 7, is amended to read: 
           Subd. 7.  In no event shall the registration of a 
        charitable organization continue in effect after the date such 
        organization should have filed, but has failed to file an annual 
        report, including the payment of all required fees, in 
        accordance with the requirements of section 309.53, and such 
        organization, if in default under such section, shall not be 
        eligible to file a new registration statement until it shall 
        have filed the required annual report with the attorney general. 
           Sec. 4.  Minnesota Statutes 1994, section 309.53, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Except as otherwise provided in subdivision 
        1a, Every charitable organization that is required to file or 
        that files a registration statement pursuant to section 309.52 
        shall file an annual report with the attorney general upon forms 
        provided by the attorney general or on forms identical thereto 
        on or before June 30 of each year if its books are kept on a 
        calendar year basis, or within six months after the close of its 
        fiscal year if its books are kept on a fiscal year basis.  For 
        cause shown the attorney general may extend the time for filing 
        the annual report for a period not to exceed three months. 
           Sec. 5.  Minnesota Statutes 1994, section 309.53, 
        subdivision 2, is amended to read: 
           Subd. 2.  Such annual report shall include a financial 
        statement covering the immediately preceding 12-month period of 
        operation, and shall be executed by any two duly constituted 
        officers of the charitable organization, who and shall 
        acknowledge that it was be executed pursuant to resolution of 
        the board of directors or trustees, or if there be no such 
        board, then by its managing group which has approved the content 
        of the annual report.  This Except as provided in section 
        309.55, subdivision 1, the annual report shall also include a 
        copy of any all tax return or information returns, 
        including all schedules and amendments, submitted by the 
        charitable organization to the Internal Revenue Service for the 
        period covered by the annual report except any schedules of 
        contributors to the organization.  
           A charitable organization which files the annual report 
        required under this subdivision with the attorney general is not 
        required to file the tax return with the commissioner of 
        revenue.  An organization which fails to file the tax return 
        annual report on or before the date required or allowed under 
        this section is subject to the penalties imposed by the 
        commissioner of revenue as set forth in sections 289A.60, 
        subdivision 9, and 289A.63, subdivision 1 shall pay a late fee 
        of $50.  This late fee shall be in addition to all other fees, 
        costs, and penalties which may be imposed pursuant to this 
        section or section 309.57.  
           Sec. 6.  Minnesota Statutes 1994, section 309.53, 
        subdivision 3, is amended to read: 
           Subd. 3.  The financial statement shall include a balance 
        sheet, statement of income and expense, and statement of 
        functional expenses, shall be consistent with forms furnished by 
        the attorney general, and shall be prepared in accordance with 
        generally accepted accounting principles so as to make a full 
        disclosure of the following, including necessary allocations 
        between each item and the basis of such allocations: 
           (a) total receipts and total income from all sources; 
           (b) cost of management and general; 
           (c) cost of fund raising; 
           (d) cost of public education; 
           (e) funds or properties transferred out of state, with 
        explanation as to recipient and purpose; 
           (f) total net amount disbursed or dedicated within this 
        state, broken down into total amounts disbursed or dedicated for 
        each major purpose, charitable or otherwise; 
           (g) names of professional fund raisers used during the 
        accounting year and the financial compensation or profit 
        resulting to each professional fund raiser.; and 
           (h) a list of the five highest paid directors, officers, 
        and employees of the organization that receive total 
        compensation of more than $50,000, together with the total 
        compensation paid to each.  Total compensation shall include 
        salaries, fees, bonuses, fringe benefits, severance payments, 
        and deferred compensation paid by the charitable organization 
        and all related organizations as that term is defined by section 
        317A.011, subdivision 18.  On July 1, 1997, and thereafter, the 
        charitable organization shall begin disclosure of the total 
        compensation of the five highest paid directors, officers, and 
        employees of any related organization if the related 
        organization receives funds from the charitable organization. 
           Unless otherwise required by this subdivision, the 
        financial statement need not be certified. 
           A financial statement of a charitable organization which 
        has solicited from the public within or outside this state total 
        contributions received total revenue in excess of 
        $100,000 $350,000 for the 12 months of operation covered by the 
        statement shall be accompanied by an audited financial statement 
        prepared in accordance with generally accepted accounting 
        principles that has been examined by an independent certified 
        public accountant for the purpose of expressing an opinion.  In 
        preparing the audit the certified public accountant shall take 
        into consideration capital, endowment or other reserve funds, if 
        any, controlled by the charitable organization.  
           Sec. 7.  Minnesota Statutes 1994, section 309.53, 
        subdivision 8, is amended to read: 
           Subd. 8.  A reregistration fee of $25 shall be paid by 
        every charitable organization submitting the annual report 
        required by this section if the organization raised or expended, 
        exclusive of the direct cost of prizes given to the public by 
        the charitable organization in connection with lawful gambling 
        conducted in compliance with chapter 349, more than $25,000 
        during the previous 12-month period.  
           Sec. 8.  Minnesota Statutes 1994, section 309.531, 
        subdivision 1, is amended to read: 
           Subdivision 1.  No person shall act as a professional fund 
        raiser unless registered with the attorney general.  The 
        registration statement must be in writing, under oath, in the 
        form prescribed by the attorney general and must be accompanied 
        by an application a registration fee of $200.  Each registration 
        is effective for a period of not more than 12 months from the 
        date of issuance, and in any event expires on July April 30 next 
        following the date of issuance registration.  The registration 
        may be renewed for additional one-year periods on application 
        and payment of the fee all required fees.  A professional fund 
        raiser failing to register on the date required by this section 
        or failing to file the financial report required by this section 
        on or before the date provided shall pay a late fee of $300.  
        This late fee shall be in addition to all other fees, costs, and 
        penalties which may be imposed pursuant to this section or 
        section 309.57. 
           Sec. 9.  Minnesota Statutes 1994, section 309.531, 
        subdivision 4, is amended to read: 
           Subd. 4.  Within 90 days after a solicitation campaign has 
        been completed, and on 90 days following the anniversary of the 
        commencement of a solicitation campaign lasting more than one 
        year, the professional fund raiser who solicited contributions 
        in this state in conjunction with a charitable organization 
        shall file with the attorney general a financial report for the 
        campaign, including gross revenue and an itemization of all 
        expenses incurred.  The report shall be completed on a form 
        prescribed by the attorney general.  The report shall be signed 
        by an authorized official of the professional fund raiser and an 
        authorized official from the charitable organization and they 
        shall certify, under oath, that it is true to the best of their 
        knowledge.  
           Sec. 10.  Minnesota Statutes 1994, section 309.54, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Registration statements, annual reports, 
        and other documents required to be filed shall become public 
        records in the office of the attorney general.  Investigative 
        data obtained by the attorney general in anticipation of or in 
        connection with litigation or an administration proceeding are 
        nonpublic data under section 13.02, subdivision 9.  
           Sec. 11.  Minnesota Statutes 1994, section 309.556, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IDENTITY OF ORGANIZATION; PERCENTAGE OF 
        DEDUCTIBILITY; DESCRIPTION OF PROGRAM.] Prior to orally 
        requesting a contribution or contemporaneously with a written 
        request for a contribution, the following information shall be 
        clearly disclosed: 
           (a) the name and location by city and state of each 
        charitable organization on behalf of which the solicitation is 
        made; 
           (b) The percentage of the contribution which may be 
        deducted as a charitable contribution under both federal and 
        state income tax laws the tax deductibility of the contribution; 
        and 
           (c) a description of the charitable program for which the 
        solicitation campaign is being carried out; and, if different, a 
        description of the programs and activities of the organization 
        on whose behalf the solicitation campaign is being carried out.  
           If the solicitation is made by direct personal contact, the 
        required information shall also be disclosed prominently on a 
        written document which shall be exhibited to the person 
        solicited.  If the solicitation is made by radio, television, 
        letter, telephone, or any other means not involving direct 
        personal contact, the required information shall be clearly 
        disclosed in the solicitation. 
           Sec. 12.  Minnesota Statutes 1994, section 501B.36, is 
        amended to read: 
           501B.36 [REGISTRATION AND REPORTING.] 
           The registration and reporting provisions of sections 
        501B.37 and 501B.38 apply to a charitable trust, or including an 
        organization with a charitable purpose, that has gross assets of 
        $25,000 or more at any time during the year, except that the 
        provisions do not apply to: 
           (1) a charitable trust administered by the United States or 
        a state, territory, or possession of the United States, the 
        District of Columbia, the Commonwealth of Puerto Rico, or any of 
        their agencies or subdivisions; 
           (2) a religious association organized under chapter 315 or 
        chapter 317A; 
           (3) a charitable trust organized and operated exclusively 
        for religious purposes and administered by a religious 
        association organized under chapter 315 or 317A; 
           (4) an organization described in section 509(a)(3) of the 
        Internal Revenue Code of 1986 and operated, supervised, or 
        controlled by or in connection with one or more organizations 
        described in clauses (2) to (5); a pooled income fund as defined 
        in section 642(c)(5) of the Internal Revenue Code of 1986 
        maintained by an organization described in clauses (2) to (5); 
        or a charitable remainder annuity trust or unitrust, as defined 
        in section 664 of the Internal Revenue Code of 1986; 
           (5) a trust in which the only charitable interest is a 
        contingent interest for which no charitable deduction has been 
        allowed for Minnesota income, inheritance, or gift tax purposes 
        or a trust in which not all of the unexpired interests are 
        devoted to one or more charitable purposes and in which the only 
        charitable interest is an annuity or an income interest with 
        respect to which a charitable deduction is allowed the trust 
        under applicable Minnesota income tax laws; 
           (6) an organization subject registered with the attorney 
        general pursuant to sections 309.50 to 309.61 309.52 and 309.53; 
           (7) a trust for individual and charitable beneficiaries 
        that is described in section 4947(a)(2) of the Internal Revenue 
        Code of 1986, also known as a split-interest trust; or 
           (8) a charitable gift, bequest, or devise not held and 
        continued by a private express trust or corporation even though 
        the gift, bequest, or devise creates a fiduciary relationship, 
        unless there is no named charitable beneficiary in existence or 
        unless a named charitable beneficiary elects in a writing filed 
        with the attorney general and with the fiduciary to come within 
        the provisions of sections 501B.37 and 501B.38. 
           Sec. 13.  Minnesota Statutes 1994, section 501B.37, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FILING OF INSTRUMENTS.] A charitable trust 
        subject to sections 501B.33 to 501B.45 must Except as otherwise 
        provided in section 501B.36, a charitable trust shall register 
        and file with the attorney general a copy of its articles of 
        incorporation or the instrument that created the charitable 
        trust, including any amendments, within three months after the 
        charitable trust first receives possession or control of 
        property authorized or required to be applied, either at present 
        or in the future, for charitable purposes. 
           Sec. 14.  Minnesota Statutes 1994, section 501B.37, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [REGISTRATION FEE.] A $25 registration fee shall 
        be paid by every charitable trust filing the information 
        required by this section. 
           Sec. 15.  Minnesota Statutes 1994, section 501B.38, is 
        amended to read: 
           501B.38 [INFORMATION FILING OF ANNUAL REPORTS.] 
           Subdivision 1.  [REPORTS REQUIRED; DEADLINES; EXTENSIONS.] 
        A charitable trust subject to sections 501B.33 to 501B.45 must 
        file with the attorney general written reports containing any 
        information the trust is required to report under sections 
        6056(b), 6033, 6034, and 6056 of the Internal Revenue Code of 
        1986. a copy of its federal tax or information return, including 
        all schedules and amendments, submitted by the charitable trust 
        to the Internal Revenue Service for the period covered in the 
        trust's accounting year last completed.  If the charitable trust 
        does not file a federal tax or information return, it shall file 
        a balance sheet and a statement of income and expenses for the 
        accounting year last completed. 
           Subd. 1a.  [EXTENSIONS.] The reports information required 
        by this section must be filed annually on or before the 15th day 
        of the fifth month following the close of the charitable trust's 
        taxable year as established for federal tax purposes.  The time 
        for filing may be extended by application to the attorney 
        general, but no extension may be for more than six three 
        months.  A charitable trust that files the information required 
        under this subdivision with the attorney general is not required 
        to file the same information with the commissioner of revenue. 
           Subd. 2.  [SUSPENSION OF FILING.] The attorney general may 
        suspend the filing requirements under subdivision 1 for a 
        particular charitable trust for a reasonable, specifically 
        designated time on written application of the trustee filed with 
        the attorney general.  If the filing requirements are suspended, 
        the attorney general shall file in the register of charitable 
        trusts a written statement that the interests of the 
        beneficiaries will not be prejudiced by the suspension and that 
        annual reports are the information required by this section is 
        not required for proper supervision by the attorney general's 
        office. 
           Subd. 3.  [FILING FEE.] A $25 filing fee shall be paid by 
        every charitable trust filing the information required by this 
        section. 
           Sec. 16.  [APPROPRIATION.] 
           $75,000 for fiscal year 1996 and $75,000 for fiscal year 
        1997 is appropriated from the general fund to the attorney 
        general for the purpose of sections 1 to 15. 
           Sec. 17.  [REPEALER.] 
           Minnesota Statutes 1994, section 309.53, subdivision 1a, is 
        repealed. 
           Presented to the governor May 30, 1995 
           Signed by the governor June 1, 1995, 1:58 p.m.