October 21, 2008 — Thanks to new financial reporting requirements signed into law recently, smaller Massachusetts nonprofits are exempted from filing an annual audited financial statement with the state.

Beginning in January, nonprofits with less than $200,000 in annual gross support and revenue will not have to submit an annual audited financial statement with their annual reports to the state. Previously, charities with support and revenue greater than $100,000 had to file such statements.

Developing an audited financial statement requires engaging accounting services, which can typically cost between $3,000 and $5,000.

"We estimate that this measure will affect about 2,000 nonprofits in Massachusetts and will save them approximately $25 million over the next five years," said Dave. Magnani, executive director of the Massachusetts Nonprofit Network, which was instrumental in helping to pass the new law. "This comes as a relief these days because additional regulations have been added at the federal level."

For example, Stephen Innis of Framingham Public Access Television said the new law means his organization will not have to file a report this year.

"Eliminating this burden allows us to spend a greater portion of our limited resources on providing programming and purchasing much needed equipment to provide a higher quality service to our viewers," said Innis. "Raising the bar allows us to take full advantage of spending our precious dollars on services, not administration."

Approximately half of the state’s more than 30,000 nonprofits have annual incomes under $100,000, and about 60% have annual incomes under $250,000.

The new legislation, sponsored by State Rep. Charles Murphy (D – Twenty-first Middlesex), was signed into law Oct. 9 by Gov. Deval Patrick. It applies to nonprofits with yearend dates on or after Jan. 1, 2008.

“This is good legislation which does away with an unnecessary and expensive burden shouldered by many of our state’s nonprofits,” said Murphy. “Eliminating this particular reporting mandate allows these charities to direct more of their resources towards helping people in need.”

“Small nonprofits across the state owe a real debt of gratitude to Representative Murphy for his initiative in getting this bill signed into law,” said Magnani.

“It will save thousands of nonprofits across the state a great deal of money and will allow them to devote more of their precious resources to their mission. He has made an enormous impact for nonprofits through these efforts.”

Magnani said the new law will affect about 2,000 nonprofits with annual revenues beween $100,000 and $200,000.