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Significant COSA Changes Coming Soon
Michigan's Charitable Solicitations Act (COSA) was substantially amended in December, 2010. The amendments take effect on March 31, 2011.
The changes effect nonprofits of all sizes. Please learn integrate them into your operation by the effective date. Penalties for violations are steep.
Some of the significant changes made by the amendments are:
1. A charitable organization will be exempt from registering under the Act if all of its fundraising will be conducted by volunteers and it expects to receive less than $25,000 per year in contributions through their efforts. This is an increase from the current level of $8,000 per year. An organization will still have to register if it will use paid staff or a professional fundraiser to raise any amount of donations.
2. Nonprofits will now "register" with the Michigan Attorney General to solicit donations, instead of being licensed by the Attorney General to solicit donations. The registration will be good for a period of 19 months, instead of the current 12 months.
3. The law lists a number of activities that are prohibited. Many of these are targeted against misrepresentations. However, one prohibits a person from soliciting a contribution on behalf of a charitable organization that is not registered. A violation of any of these prohibitions could result in a civil fine of up to $10,000 for each violation.
4. The amendments also list certain actions that are punishable as crimes as either a misdemeanor or a felony. Misdemeanors are subject to up to 6 months in prison or a fine of up to $5,000, while felonies are punishable by imprisonment of up to 5 years and a fine of not more than $20,000. It is a misdemeanor if a person knowingly solicits or operates as a charitable organization in Michigan and the charitable organization is not registered with the Attorney General.
5. The amendments allow local County prosecutors to prosecute persons who have committed acts that are misdemeanors or felonies. This takes the burden off the Attorney General to prosecute these cases. This might result in greater enforcement of the Act and criminal prosecution of smaller infractions.
A few sections of the Act were not amended and these do not appear in the bill that was passed in December. To understand the entire Act, you will need to look at both the current law(pdf) and the amendments and insert the amendments into the current law, where applicable.
Our thanks to Leo Goddeyne, attorney with Miller Canfield, for this summary of important changes effecting nonprofit fundraising in Michigan.
CHARITABLE ORGANIZATIONS AND SOLICITATIONS ACT Act 169 of 1975