Florida Public Charity Legal Compliance Checklist

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LEGAL COMPLIANCE

CHECKLIST

FLORIDA PUBLIC CHARITY

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to the following partners for making this report possible:

THANK YOU

The Florida Nonprot Alliance informs, promotes, and strengthens the

nonprot sector in order to create more vibrant communities across the state.

MISSION

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This legal compliance checklist was created by the Florida Nonprot Alliance. It outlines laws applicable to

Florida nonprots regarding their governance, advocacy, human resources, and fundraising. This checkist is not

intended to give legal advice and before relying on any of the contents herein the nonprot should consult with

an attorney. The checklist is intended as a compliance tool for Florida nonprots classied as public charities

under Internal Revenue Code Section 501(c)(3). In order to be classied as a public charity under IRC Section

501(c)(3), a nonprot generally must be a church, hospital, qualied medical research organization afliated with

hospitals, schools, colleges and universities or must meet one of the public support tests provided for under the

IRC. Florida nonprots that are not classied as public charities under IRC Section 501(c)(3) may be subject to

different rules and regulations and should not rely on this checklist as a compliance tool.

What is the public support test for a public charity?

A new section 501(c)(3) organization will be classied as a public charity, and not a private foundation, during its

rst ve years if it can show when it applies for tax-exempt status that it can reasonably expect to be publicly

supported. The IRS will then monitor a new organization’s public charity status after the rst ve years of

existence based on the public support information reported annually by the organization on Schedule A of Form

990 based on a ve-year computation period that includes the current year and the four prior years. Beginning

with the organization’s sixth year and for all succeeding years, if an organization meets the public support test

on Schedule A, the organization qualies as a public charity for its current year and the next tax year. If a

publicly supported charity fails the public support test for two consecutive years, it will be reclassied as a

private foundation and will be subject to different rules and regulations.

There are two public support tests for public charities: One for organizations described in sections 509(a)(1) and

170(b)(1)(A)(vi) of the Internal Revenue Code, and one for organizations described in section 509(a)(2). Both

tests measure public support over a ve-year period.

Generally, the 509(a)(1) test requires that the organization receive at least one-third of its support from

contributions from the general public, or meet the 10 percent facts and circumstances test.

Generally, the 509(a)(2) test requires that the organization receive more than one-third of its support from

contributions from the general public and/or from gross receipts from activities related to its tax-exempt

purposes. Under the 509(a)(2) test, an organization can receive no more than one-third of its support from gross

investment income and unrelated business taxable income.

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

Filed Articles of

Incorporation and

held initial board

meeting to adopt

Bylaws and related

governance

policies?

• All FL public charities must le Articles of

Incorporation with the FL Department of State.

• File with the Florida Department of State Division of

Corporations https://dos.myorida.com/sunbiz/

start-business/ele/-nonprot-corporation/

• Adopt bylaws and related governance policies at your

initial board meeting.

• Florida public charities are required to have a minimum

of three board members.

• Florida nonprot corporations statute can viewed here.

http://www.leg.state..us/statutes/index.cfm?App_

mode=Display_Statute&URL=0600-0699/0617/0617.

html

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Filed Annual Report? • All FL public charities must le an annual report

with the FL Department of State.

• Each year following the year in which a FL public

charity was formed the public charity must le an

annual report with the FL Department of State by

May 1.

Filed IRS Form 1023

to apply for federal

corporate tax

exemption and

made it available

to the public?

• All public charities with gross receipts of $5,000

or more that would like to receive tax-deductible

grants or contributions.

• Generally, 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.

• File within 27 months of incorporation for retroactive

recognition of tax exemption to date of incorporation.

• As of January 31, 2020, the IRS requires that Form

1023 be completed and submitted online through

Pay.gov. Applicants are required to have a Pay.gov

account and payment of the user fee must be made

electronically.

• Make your form available for review by anyone who

requests it.

Filed Form 990,

990-EZ, or 990-N

(e-Postcard) and

made your forms for

the past three years

publicly available?

• Public charities with $50,000 or less in annual

gross receipts may use the online Form 990-N

(e-Postcard). Public charities who are not

required to le Form 1023 because they have

gross receipts under $5,000 will still need to ll

Form 990-N.

• Public charities 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

Form 990 or Form 990-EZ.

• Public charities with annual gross receipts under

$200,000 and total assets under $500,000 may

le Form 990-EZ.

• All supporting or controlling organizations must

le Form 990 or 990-EZ.

• For scal years beginning on or after July 2, 2019

most public charities are required to le Form 990

or 990-EZ electronically.

• Public charities that fail to le their Form 990,

990-EZ or 990-N for three consecutive years will

automatically lose their tax-exempt status.

However, the IRS is required to provide notice of

the possibility of this revocation to organizations

that have failed to le for two consecutive years.

• Churches, their integrated auxiliaries, and

conventions or associations do not have to le.

• The form is due each year by the 15th day of the 5th

month following the end of your scal year (e.g. May

15 of your scal year ends Dec. 31 or Nov. 15 if your

scal year ends June 30).

• For information on which form to le, see https://www.

irs.gov/charities-non-prots/form-990-series-which-

forms-do-exempt-organizations-le-ling-phase-in

• You must make your applicable Form 990s available

for review by anyone who requests them. You must

provide immediately for in-person requests or within

30 days in the case of written requests. You may

charge a reasonable copying fee plus actual postage,

if any.

• The IRS customer service line for tax exempt entities is

877-829-5500 (Note that the line is currently

unavailable due to COVID-19). Also, you should

consult with your CPA for more details on Form 990

Adopted and

adhere to policies to

policies of interest,

gift acceptance,

Form 990 review,

whistleblower

protection and

document retention

and destruction?

• Most public charities

• On Part VI of Form 990, public charities may be

required to indicate whether they have each of

these policies in place.

• On Part VI of Form 990, public charities are also

asked whether its ofcers, directors, trustees, and

key employees are required to disclose annually

interests that could give rise to conicts.

• See FNA Document Retention Policy Page:

https://nonprots.org/page/RecordRetention

• See National Council of Nonprots Sample whistle

blower policy: https://www.councilofnonprots.org/

sites/default/les/Sample%20WhistleblowerPolicy%20

2.2010.pdf

• See National Council of Nonprot’s Sample conict of

interest policy: https://www.councilofnonprots.org/

tools-resources/conicts-of-interest

• See National Council of Nonprot’s Sample gift

acceptance policy: https://www.councilofnonprots.

org/tools-resources/gift-acceptance-policies

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Used comparability

data to determine

executive

compensation?

• Public charities with paid employees

• Form 990 requires public charities to indicate

whether they used comparability data to

determine salaries and benets.

• See FNA’s compensation survey as a guide:

https://nonprots.org/page/CompensationSurvey

Reported and paid

tax on Unrelated

Business Income

(UBIT) and made your

Form 990-T for the

past three years

publicly available?

• Any public charity with unrelated business income

of $1,000 or more.

• For more information, see IRS Publication 598,

Tax on Unrelated Business Income of Exempt

Organization. www.irs.gov/pub/irs-pdf/p598.pdf

• A public charity that has unrelated trade or

business income for federal tax purposes is

subject to Florida corporate income tax.

• File IRS Form 990-T (www.irs.gov/forms-pubs/about-

form-990-t) each year by the 15th day of the 5th

month after your scal year ends (e.g. May 15 of

your scal year ends Dec. 31 or Nov. 15 if your scal

year ends June 30).

• A public charity is required to le a Florida Corporate

Income/Franchise Tax Return (Form F-1120) only

when the public charity has “unrelated business

income or is ling Form 990-T with the IRS. or

idarevenue.com/taxes/businesses/Pages/nonprot.

aspx

Are you nonpartisan? • All 501(c)(3) public charities are prohibited from

supporting or opposing candidates for ofce or

political parties.

• Ensure that your board members and staff

understand that they shall not suggest or imply that

they are acting on behalf of the public charity when

engaging in any personal political activities.

Elect 501(h) status

to establish clear

lobbying limits?

• A public charity that will engage in lobbying can

choose to elect 501(h) status. Under Section

501(h), public charities may use up to 20% of the

rst $500,000 of its exempt purpose expenditures

for direct lobbying.

• Public charities that do not take the 501(h)

election must be prepared to demonstrate that

lobbying is an “insubstantial” part of its activities.

• Complete IRS Form 5768 to elect 501(h) status for

the current year and subsequent years. Once

elected, the election will remain in place until

revoked. www.irs.gov/pub/irs-pdf/f5768.pdf

• For additional information, see www.councilofnon

prots.org/taking-the-501h-election

• For additional information, join FNA’s advocacy

101 training. Visit https://nonprots.org/events/

event_list.asp?

Provided donors

with letters of

acknowledgement for

“quid pro quo” gifts of

$75 or more and all

gifts of $250 or more?

• Every public charity that provides goods or

services to donors in exchange for contributions

above $75, must disclose the value of the goods

and services received by the donor, and only

the amount contributed in excess of this value is

tax-deductible to the donor.

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

p1771.pdf) for gift acknowledgement guidelines.

• Donors are responsible for obtaining written gift

acknowledgement for contributions of $250 or

more, but it is considered a best practice for public

charities to send timely gift acknowledgements to

donors for all contributions.

• See National Council of Nonprot’s Sample gift

acknowledgement policy: https://www.councilofnon

prots.org/tools-resources/saying-thank-you-to-

donors

Applied for the

Florida charitable

solicitation license,

renewed it each year,

and included the

required disclosure

statement on your

fundraising materials?

• Prior to soliciting contributions Florida requires

that the public charity register with the Florida

Department of Agriculture and Consumer

Services (FDACS).

• Charitable organizations and fundraisers that

solicit contributions are prohibited from

commingling charitable contributions with

noncharitable funds. This means that

contributions should be kept in a separate

account from funds that are not used for a

charitable purpose. Additionally, charitable

organizations and fundraisers are required to

keep documents to show how contributions are

used.

• You may register online using a link provided on the

FDACS website https://www.fdacs.gov/Busi

ness-Services/Solicitation-of-Contributions

• You may also nd a copy of the registration

application here https://forms.freshfromorida.

com/10100.pdf

• This registration is annual and must be renewed

yearly. If your public charity receives more than

$1,000,000 in contributions in a given year, your

nancials must be audited by a CPA.

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Checked into the

compliance for

fundraising solicitation

for state from which

you receive donations?

• 41 states require solicitation and public charities

must register in states from which they receive

donations

• Visit the National Association of State Charity

Ofcials website for more information: https://www.

nasconet.org/resources/state-government/

• If you will solicit contributions in other states, you

will need to check the requirements for those states.

For additional information, see www.councilofnon

prots.org/tools-resources/charitable-solicita

tion-registration

Conrmed that any

contract fundraisers

or fundraising

consultants are

licensed?

• Any public charity that will use a contractor to

solicit contributions or advise or assist in

fundraising activities.

• Florida requires that all “professional fundraising

consultants” and “professional solicitors” be

registered prior to engaging in fundraising activities

for a public charity.

• A “professional fundraising consultant” is a person

who is retained by a charitable organization or

sponsor for a xed fee or rate under a written

agreement to plan, manage, conduct, carry on,

advise, consult, or prepare material for a

solicitation of contributions in this state but who

does not solicit contributions or employ, procure, or

engage any compensated person to solicit

contributions and who does not at any time have

custody or control of contributions.

Applied for exemption

from Florida sales and

use tax?

• Florida law grants certain public charities

specic exemptions from Florida sales and use

tax. In order to receive this exemption your public

charity must obtain a Florida Consumer’s

Certicate of Exemption for the Florida

Department of Revenue.

• Renewal Process: At the end of the ve-year

period, the Department will use available

information to determine whether your nonprot

organization or governmental entity is actively

engaged in an exempt endeavor. When the

Department is able to determine that your

nonprot organization or governmental entity

continues to be actively engaged in an exempt

endeavor using available information, a new

Consumer’s Certicate of Exemption will be

issued. When the Department is unable to make a

determination based on the available information,

a letter requesting the documentation listed in

“How to Establish Qualication” for the

appropriate exemption category will be mailed to

you. If you fail to respond to the written requests,

your certicate will expire and will not be

renewed.

• Submit a completed Application for a Consumer’s

Certicate of Exemption Form DR-5 with the FL

Department of Revenue. For more information, see

https://oridarevenue.com/taxes/businesses/Pag

es/nonprot_sales_tax.aspx

Correctly classify

all employees and

independent

contractors?

• Any public charity which has paid employees,

consultants, or contractors. The U.S. Department

of Labor, IRS, and FL Department of Revenue may

impose penalties if a public charity improperly

classies someone as an independent contractor

when they are an employee.

• The IRS provides specic criteria for classifying

employees and contractors. See IRS Publication

1779 www.irs.gov/pub/irs-pdf/p1779.pdf

• The U.S. Department of Labor has also established

a fact sheet detailing which factors employers

should consider when classifying workers as

employees or independent contractors. www.dol.

gov/sites/dolgov/les/WHD/legacy/les/whdfs13.

pdf

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Correctly classify all

employees as either

exempt or non-exempt

from the Fair Labor

Standards Act (FLSA)

and paid overtime

where appropriate?

• Any public charity with paid employees. • Employees are exempt from the overtime pay

requirements of FLSA if they meet all the following:

(1) paid at least the minimum salary level; (2) paid

on a salary basis; and (3) exercise job duties that are

classied as exempt. The minimum salary threshold

is $35,568 per year ($684 per week). Highly

compensated employees with salaries of $107,432

or more are also exempt from overtime pay

requirements if they regularly perform some of the

job duties of executive, administrative, or

professional employees.

• An employee’s status may change at any time during

the year.

• Non-exempt staff must receive 1.5 times their usual

hourly rate for any time they work in excess of 40

hours in a week.

• For more information see the U.S. Department of

Labor Fact sheet: www.dol.gov/sites/dolgov/les/

WHD/legacy/les/fs17a_overview.pdf

Followed all state and

federal employment

laws including: ling

I-9, W-2, and W-4

forms; withholding tax;

employment tax?

• Any public charity with paid employees.

• The public charity must pay Social Security and

Medicare taxes for all employees.

• For information on withholding and federal

employment taxes, see www.irs.gov/chari

ties-non-prots/employment-taxes-for-exempt-orga

nizations

• For information on Form I-9, see www.uscis.gov/i-9

Determined if you

are liable for FL

reemployment tax?

• A public charity is liable for reemployment tax if

it employs four or more workers for any portion

of a day in 20 different calendar weeks during the

current or preceding calendar year.

• Churches and schools are exempt from this

reemployment tax liability.

• A Florida Business Tax Application (DR-1) must be

completed to provide necessary information to

determine if the public charity is liable for

reemployment tax. (oridarevenue.com/taxes/reg

istration)

• For more information, see (https://oridarevenue.

com/taxes/taxesfees/Pages/reemployment.aspx)

Obtained workers’

compensation

insurance?

• Public charities with four or more employees are

required to provide workers compensation

insurance for their employees.

• Contact the Florida Division of Workers’

Compensation at (850) 413-1609. https://www.my

oridacfo.com/division/wc/employer/coverage.htm

Properly compensated

your paid interns?

• Public charities may use volunteer interns

provided, that they are unpaid, not provided a

stipend and would not be considered an

employee under the FLSA.

• If a public charity chooses to pay its interns, these

interns may be classied as employees subject to

the minimum wage and overtime pay

requirements under the FLSA. If a public charity

pays an intern stipend below the Florida minimum

wage of $8.56 per hour, it must ensure that the

internship would not be considered employment.

• The U.S. Department of Labor provided a fact sheet

for determining if interns would be considered

employees under the FLSA. www.dol.gov/sites/dol

gov/les/WHD/legacy/les/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

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Created a plan

document for your

employee retirement

plan and electronically

led a Form 5500?

• Public charities which establish a 403(b) plan or

any other retirement plan subject to the

Employment Retirement Income Security Act

(ERISA).

• If your public charity establishes a 403(b) or 401(k)

plan, then you must have a written plan document. It

is advisable to work with the third-party

administrator to establish and administer your plan.

• You must le Form 5500 electronically. The due date

for Form 5500 is seven months after the plan-year

for your plan ends.

• Individuals at your public charity that will be

responsible for signing your Form 5500 need to

website. https://www.efast.dol.gov/welcome.html

Provided health

insurance for your

employees?

• A public charity which has 50 or more full-time

employees, including full-time equivalents, on

average for the prior year is considered a large

employer under the Affordable Care Act and is

required to offer health insurance coverage to its

employees.

• Public charities that are not considered large

employers have the option to offer health

coverage for their employees.

• Public charities that are considered large employers

and therefore required to offer health insurance to

its employees, must le Form 1095-C and 1094-C

with the IRS. For additional information, see www.

irs.gov/affordable-care-act/employers/affordable-

care-act-tax-provisions-for-large-employers

• Public charities that are not classied as large

employers under the Affordable Care Act have the

option of offering health coverage to their

employees. For additional information on healthcare

options for small public charities, see www.health

care.gov/small-businesses/

Adhered to state laws

for drawing by chance?

• Any public charity that offers a rafe or drawing

by chance as a fundraising event.

• The public charity must make sure that all brochures,

advertisements, notices, tickets, or entry blanks

used in connection with a drawing by chance

conspicuously discloses: 1) the rules governing the

conduct and operation of the drawing; 2) the full

name of the organization and its principal place of

business; 3) the source of the funds used to award

cash prizes or purchase prizes; 4) the date, hour, and

place where the winner will be chosen and the prizes

will be awarded, unless the brochures,

advertisements etc. are not offered to the public

more than 3 days prior to the drawing; and 5) that no

purchase or contribution is necessary.

• If you are offering a rafe of drawing by chance you

may not engage in any of the following: 1) design,

engage in, promote, or conduct any drawing in which

the winner is predetermined by means of matching,

instant win, or preselected sweepstakes or

otherwise or in which the selection of the winners

is in any way rigged; 2) require an entry fee,

donation, substantial consideration, payment, proof

of purchase, or contribution as a condition of

entering the drawing or of being selected to win a

prize. However, this paragraph does not prohibit an

organization from suggesting a minimum donation

or from including a statement of such suggested

minimum donation on any printed material used in

connection with the fundraising event or drawing;

3) condition the drawing on a minimum number of

tickets having been disbursed to contributors or

on a minimum amount of contributions having been

received; 4) arbitrarily remove, disqualify, disallow,

or reject any entry or to discriminate in any

manner between entrants who gave contributions

to the organization and those who did not give such

contributions;

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5) fail to promptly notify, at the address set forth on

the entry blank, any person whose entry is selected

to win of the fact that he or she won; 6) fail to award

all prizes offered; 7) print, publish, or circulate

literature or advertising material used in connection

with the drawing which is false, deceptive, or

misleading; 8) cancel a drawing; or 9) condition the

acquisition or giveaway of any prize upon the receipt

of voluntary donations or contributions.

Followed the federal

grant and contract

rules under the OMB

Uniform Guidance?

• Public charities with federal grants or contracts,

or state or local grants or contracts which include

federal funds, with effective dates on or after

December 26, 2014.

• Public charities that do not have a federally approved

indirect cost rate may elect to be paid a de minimis

rate of 10% of modied total direct costs.

• Pass through entities, such as state and local

governments are required to recognize this 10% de

minimis rate.

• The OMB Uniform Guidance treats additional costs,

including some program administration costs, as

direct costs.

• The single audit threshold is $750,000.

• The OMB Uniform Guidance requires the use of

consistent, 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

invest and spend from

endowed and other

restricted funds?

• All public charities which hold funds with

donor-imposed restrictions.

• These rules do not apply to funds set aside for

specic purposes by the public charity’s board.

• It is possible for restrictions that apply to funds

created more than 10 years ago which have total

assets less than $100,000 to be released.

• A policy must be adopted which requires the board

to analyze the statutory prudent investing factors

when investing and spending from endowed and

other restricted funds.

• Keep any gift agreements creating endowed and

other restricted funds with your permanent records.

Conrmed that

individuals who will

lobby on your behalf

are registered as a

lobbyist with the

state?

• A person paid to lobby for a public charity must

• If a public charity has a staff member whose job

is to lobby, then that person must register as a

lobbyist, but there will not be reporting of the

organizations activities because the organization

is not a lobbying rm.

• All lobbyists must register with the Lobbyist

Registration Ofce in the Division of Information

Services of the Ofce of Legislative Services. For

additional information, see www.oridalobbyist.gov/

Filed for a ctitious

name?

• If you will be conducting business under a name

that is different from your public charity’s legal

name, Florida requires you to register this

ctitious name with the Florida Department of

State prior to conducting business under such

ctitious name.

• For more information on registering a ctitious

name, see dos.myorida.com/sunbiz/start-busi

ness/ele/-ctitious-name-registration/