Update: Are Changes in Store for New Jersey Nonprofit Reporting Thresholds?
This post updates previously published content regarding legislation that would raise the threshold for nonprofit audits from $500,000 to $1M. Assembly Bill 4635 (AB4635) passed the New Jersey legislature on December 20, 2021. If AB4635 is signed into law, New Jersey nonprofits whose gross receipts do not exceed $1M would not 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.
A brief overview of the major points of AB4635:
- Increases the audit requirement threshold 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 that is 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 would be welcome news for smaller nonprofit organizations. We will continue to monitor further developments regarding AB4635 and provide updates accordingly.
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