Understanding Back Filings and Gap Filings in Fundraising Registration

In the world of nonprofit compliance, understanding the nuances of state filings are essential for maintaining good standing with state regulators, especially when it comes to prior year filings, such as back filings and gap filings. These terms, though similar, refer to different compliance situations that nonprofits may encounter during their fundraising activities. This post will delve into the differences between back filings and gap filings, highlighting their implications and some specific state requirements of which nonprofits need to be aware.

What are Back Filings?

Back filings occur when a nonprofit organization is registering for the first time but has been soliciting donations for more than a year prior to their initial registration. This scenario typically arises when an organization has never registered before but has a history of soliciting funds. During the registration process, some states require nonprofits to disclose their fundraising history through a “date of first solicitation,” which might trigger the need for late fees, penalty fees, and/or back filings.

When Required: If an organization reports previously soliciting donations for more than one year, predating the period their Form 990 covers, especially in states like California, back filings and associated fees will likely be required by the state before the initial registration will be complete. States have been known to require back filings for up to six or seven years.
Financial Review Requirements: For true back filings, if an organization has never before completed an audit because their state of domicile never required one, states may grant an audit waiver provided the nonprofit has a completed financial review available when submitting their initial registration, and intends to complete a financial review every year thereafter when meeting/exceeding the state threshold.

What are Gap Filings?

Gap filings, a term coined more recently, occur when a nonprofit was previously registered but failed to maintain their registration, resulting in a lapse. States requiring gap filings mandate that the organization provide reports and state fees for every year missed in order to restore compliance, as they do not allow skipping years.

When Required: About half of the states require gap filings. The specific requirements can vary by state, and can sometimes come down to regulator discretion, so it is crucial to check with each state first. Just be ready to file ASAP once contacting the state, as some state offices may put the pressure on upon realizing you’re out of compliance, or only offer to waive fees for a limited time period.
Financial Review Requirements: If an organization fails to maintain an audit for a year during a gap filing period, states may withhold compliance until an audit is completed. Unlike back filings, states are less likely to grant audit waivers for gap filings.

State-Specific Requirements

The requirements for back and gap filings vary significantly by state, and can change from year to year. As of July 2024, here are a few examples of state filing expectations:

Arkansas: Gap filings are required.
California: Enforces back filings and state fees to the date of first solicitation. Gap filings are required.
Colorado: Case-dependent for initial filings. Gap fillings usually required, with state fees.
Illinois: Enforces up to two years of back filings with $100 late fee per year, in addition to state fee, and one-time $200 penalty fee. State will often grant a one-time audit waiver at initial registration if the most recently completed fiscal year audit is missing, but do not offer this waiver repeatedly. Gap filings are required.
Massachusetts: Enforces up to three years of back filings with state fees. State will often grant a one-time audit waiver at initial registration if the most recently completed fiscal year audit is missing, but won’t offer this waiver repeatedly. Gap filings are required.
Minnesota: Gap filings are required with state fees and $50 late fee per missing filing. If there is no record on the state database, call the state to verify.
New Jersey: Gap filings are required. State is known for being particularly stringent, potentially resulting in permanent noncompliance for gap filings without an audit.
New Mexico: Gap filings are required with the 990, an audit, and a late fee for each missed year.
New York: Gap filings are required.
Oregon: Gap filings are required.
West Virginia: Gap filings are required with all annual state fees, and must be submitted all at once, with the most recently completed fiscal year filing and a total of accrued $25/mo late fee, in order to regain compliance.

Seek Assistance When Necessary

Navigating the complexities of back filings and gap filings is a critical aspect of nonprofit compliance. Understanding these requirements can help nonprofits avoid penalties and maintain good standing with state regulators. Always consult the specific state’s regulations and consider seeking professional advice to ensure compliance. Affinity Fundraising Registration is here for any assistance regarding your fundraising registration and compliance needs, simply fill out our online form to start a conversation.

Disclaimer

The information provided on this page is intended purely for educational purposes and should not be construed as legal advice. Every effort has been made to ensure the accuracy and completeness of the information up until the published date. However, laws related to fundraising registration are subject to change, and variations may occur between states. Furthermore, the interpretation and enforcement of these laws can often be complex, and the specifics of your situation can impact how the law applies.

Affinity Fundraising Registration is not a law firm and, as such, cannot provide legal opinions. For all specific legal questions or concerns, we strongly recommend consulting with a qualified attorney who is experienced in nonprofit law and compliance. Hiring a legal professional ensures that your organization is fully aware of its obligations under the law and can act accordingly to remain compliant.

By using this site, you acknowledge that Affinity Fundraising Registration holds no liability for any consequences, legal or otherwise, resulting from actions taken based on the information provided on this page.