New Law Increases New Jersey Nonprofit Reporting Threshold
On January 18, 2022, New Jersey Governor Phil Murphy signed bills S844 and S2533, raising the threshold for nonprofit audits from $500,000 to $1M, effective immediately. Therefore, New Jersey nonprofits whose gross receipts exceed $500,000, but do not exceed $1M, no longer need an audit.
This applies to New Jersey Charitable Registration only; yellow book and single audits are federal award audits and therefore have lower thresholds. Certain grants may also have their own audit requirements as part of their application process.
A brief overview of the major points of the legislation:
- Increases the audit requirement threshold from $500,000 to $1M
- Gross receipts shall not include:
- One-time bequests
- Fundraising campaigns for capital property in a single fiscal year
- The value of services performed by volunteers
- Items purchased by other entities for the use of the charitable organization in situations in which ownership of the item is retained by the original purchaser.
- Would exempt non-monetary in-kind contributions directly related to the organization’s mission from inclusion as gross revenue.
- Organizations with gross revenues between $25,000-$1,000,000 must file an annual financial report certified by an authorized officer of the organization.
- A nonprofit corporation’s annual report filed with the New Jersey Department of Treasury and the annual charity registration filed with the Division of Consumer Affairs can be filed up to 180 days after the conclusion of executive order 103 for 2020 without penalty.
The passage of the legislation is welcome news for smaller nonprofit organizations that may no longer be required to incur costly audit fees. Instead, these general and administrative audit fee funds can now be used for additional programming and help many smaller nonprofits expand the reach of their mission.
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©2022 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date and does not constitute accounting, tax, or financial advice. Please consult your advisor concerning your specific situation.