July 23, 2010 — Gov. Deval Patrick has signed legislation that makes it easier for inactive Massachusetts nonprofits to dissolve, strengthens the attorney generals’ oversight with respect to nonprofit reporting requirements, and institutes a tiered registration fee structure.

David Magnani, executive director of the Massachusetts Nonprofit Network, the state’s nonprofit trade association, said, “The law codifies good practices for nonprofits and should be a net gain for nonprofits over the long term.”

Currently, if a nonprofit wants to dissolve, it must petition the Supreme Judicial Court for approval. Because many organizations either lack the expertise to petition the court or because they perceive the process as too burdensome, they avoid the formal process, according to the attorney general (AG).

The new law—An Act Further Regulating Public Charities—simplifies these requirements by allowing nonprofits to dissolve with the approval of the AG’s office if the nonprofit has no net assets. Nonprofit that want to dissolve, but which have net assets, will still require the Supreme Judicial Court’s approval.

Reporting Requirements

Under the new law, if a any public charity fails to file a written report for any year, it can be assessed up to $50 a day, up to $10,000, for each day after a 30-day notification period expires, until a complete report is filed.

The president, treasurer, or others authorized to sign documents on behalf of the public charity, who fail to provide the required report will be liable to civil penalty, which cannot be paid for by the organization.

In addition, “Any public charity, or any officer or agent of a public charity, who willfully makes, executes or files a report false in any material representation shall be punished by a fine of not more than five thousand dollars or by imprisonment for not more than one year or both.”

Registration Fees and Solicitor Oversight

The new law also requires charities to pay an initial registration fee of $100, and increases the annual filing fees on charities with annual revenues over $1 million. Filing fees will be tiered, based on gross revenues.

Registration fees for professional solicitors will increase from $300 to $1,000.

In addition, the law increases the amount of solicitors’ bonds from $10,000 to $25,000 and requires bonds for all people who serve as professional fundraisers.

In a letter to Patrick, Magnani wrote, “While the provisions relating to solicitor activities are less of a priority for us, we appreciate the Attorney General’s interest in protecting charities from unscrupulous vendors and respect the need for a fee structure that relates to the services provided.”