The Michigan Act 92, formally known as the Charitable Organizations Act of 1989, is a critical piece of legislation designed to regulate charitable organizations and professional fundraisers within the state of Michigan. While it may not be as widely recognized as major federal laws, Act 92 plays a vital role in ensuring transparency, accountability, and trust in nonprofit operations. Whether you’re a nonprofit leader, a donor, or simply a concerned citizen, understanding what Michigan Act 92 entails can help you navigate the complex landscape of charitable giving and philanthropy.
In this comprehensive guide, we’ll delve into the origins of Act 92, its purpose, who it affects, key requirements it imposes, enforcement mechanisms, and its broader impact on both the charitable sector and the public. By the end, you’ll have a clear understanding of why this law matters and how it shapes the nonprofit community in Michigan.
Origins and Purpose of Michigan Act 92
Historical Context
The roots of Michigan Act 92 trace back to growing concerns in the late 20th century over fraudulent fundraising practices and misuse of charitable donations. During the 1980s, several national and state-level incidents highlighted how loosely regulated some nonprofit and fundraising activities were. Scandals involving shell organizations, exaggerated claims, and inflated fundraising costs raised public alarm and pushed state governments to act.
Michigan responded by enacting Public Act 92 of 1989, which updated and strengthened the state’s oversight of charitable organizations. Prior laws were fragmented or outdated, leaving room for exploitation. Act 92 was designed to close those gaps, providing a more rigorous framework for charitable activity in the state.
Primary Objectives of the Law
The core purpose of Michigan Act 92 is threefold:
- Protect the Public: The law safeguards donors by requiring full disclosure about how their contributions will be used.
- Promote Transparency: Charities and paid fundraisers must report certain financial data and practices.
- Ensure Accountability: The act establishes legal consequences for misuse of funds and false solicitation statements.
This trio of goals aligns Michigan’s regulatory standards with national best practices and helps maintain confidence in the charitable sector.
Who Does Michigan Act 92 Affect?
Michigan’s Charitable Organizations Act applies to a wide range of entities and individuals involved in fundraising within the state. Understanding who is covered under the act is crucial for compliance.
Registered Charitable Organizations
Any nonprofit organization that solicits donations from Michigan residents is generally required to register under Act 92. This includes both in-state organizations and out-of-state charities that conduct fundraising activities in Michigan. The term “solicitation” is broadly defined—it includes direct mail campaigns, online donation appeals, telethons, door-to-door canvassing, and even social media appeals.
Types of Registered Entities
- 501(c)(3) public charities
- Private foundations
- Religious organizations engaged in fund drives (not automatically exempt)
- International nonprofits raising funds in Michigan
It’s important to note that while certain nonprofits like churches may be exempt from federal income tax, they are not automatically exempt from registration under Act 92 if they are soliciting funds from the public in Michigan.
Professional Fundraisers and Fundraising Counsel
Another key group affected by Act 92 includes individuals and companies hired by charities to solicit donations. These professionals—sometimes paid based on a percentage of the funds raised—can have a significant influence on how money is collected and used.
Michigan Act 92 explicitly defines:
- Professional fundraiser: A person or business paid to solicit or collect contributions on behalf of a charity.
- Fundraising counsel: A consultant who plans, manages, or advises on fundraising tactics for a compensation.
These entities must also register with the state and adhere to strict disclosure and reporting requirements.
Commercial Co-Venturers
Act 92 also regulates commercial co-venturers, companies that partner with charities to raise money through sales or promotions. For example, when a retail store advertises “5% of sales this weekend will benefit XYZ Charity,” that store is acting as a commercial co-venturer and must comply with the law.
These businesses must file written agreements with the Attorney General, provide financial disclosures, and avoid deceptive advertising practices.
Key Requirements Under Michigan Act 92
To uphold its goals of transparency and accountability, Act 92 imposes several mandatory requirements on regulated entities.
Registration with the Michigan Department of Attorney General
Before soliciting donations in Michigan, most charities must register with the Charitable Trust Section of the Michigan Department of Attorney General. The registration process includes filing:
- Articles of incorporation
- IRS Determination Letter (proving tax-exempt status)
- Previous years’ Form 990 (federal tax return for nonprofits)
- Financial statements
- A detailed description of fundraising activities
The application must be renewed annually, typically by December 31, with the submission of updated financial disclosures.
Registration Deadlines and Penalties
Failure to file on time can result in penalties and even criminal charges. Late renewals may be subject to fines, and continued non-compliance may lead to suspension of fundraising privileges within Michigan.
Disclosure to Donors
One of the most visible aspects of Act 92 is its donor communication rules. Charities and fundraisers must ensure donors receive accurate, complete information about how their contributions will be used.
This includes:
- Providing a clear breakdown of fundraising costs; if a professional fundraiser is involved, donors must be informed of what percentage goes to fundraising expenses.
- Disclosing if the charity is not registered with the state.
- Making the written contract with a professional fundraiser available upon request.
Verbal or written appeals cannot misrepresent financial solvency, intended use of funds, or tax-deductibility.
Financial Reporting and Audits
Under Act 92, charities are required to maintain detailed records of their finances and provide annual reports. The type of report depends on the scale of fundraising:
| Annual Revenue | Reporting Requirement |
|—————-|————————-|
| Less than $25,000 | No filing required (but still must register) |
| $25,000–$100,000 | File Form 990-EZ or full Form 990 |
| Over $100,000 | File full IRS Form 990, additional state disclosures |
Additionally, high-revenue charities with substantial Michigan fundraising may be subject to independent audits conducted by certified public accountants (CPAs). These audits enhance transparency and deter financial misconduct.
Contracts with Professional Fundraisers
Any agreement between a charity and a professional fundraiser must be formalized in a written contract. This contract must be filed with the Attorney General and include:
- Compensation structure (flat fee vs. percentage)
- Duration of the agreement
- Projected fundraising expenses
- A detailed breakdown of how funds collected will be allocated
Transparency in these contracts ensures that charities avoid exploitative “pay-to-play” fundraising models, where fundraisers take a disproportionate share.
Enforcement and Oversight
Michigan Act 92 places enforcement authority in the hands of the Attorney General’s Office, specifically its Charitable Trust Section. This office is responsible for reviewing registrations, conducting investigations, and taking legal action when violations occur.
Investigative Powers
The Attorney General has broad authority to:
- Request and inspect financial records
- Investigate complaints from donors or watchdog groups
- Audit charitable organizations
- Interview officers, board members, or fundraisers
These powers contribute to the proactive oversight of nonprofit activities.
Penalties for Non-Compliance
Violations of Act 92 can lead to serious consequences. The state can pursue:
- Civil penalties up to $10,000 per violation
- Criminal charges for willful misrepresentation or fraudulent solicitation
- Injunctions to halt fundraising activities
- Restitution for misappropriated funds
For example, in 2018, the Michigan Attorney General took legal action against a professional fundraising firm that was found to be withholding donor information and keeping over 90% of contributions. This case highlighted how Act 92 can be used to crack down on exploitative practices.
Watchdog Role and Public Access
The Charitable Trust Section maintains a publicly accessible database of registered organizations, filed reports, and enforcement actions. This allows donors, regulators, and researchers to:
- Verify a charity’s registration status
- Check financial health
- Review fundraising expenses
- Report suspicious activity
This openness is central to fostering trust in the nonprofit sector.
Exemptions and Special Cases
While Act 92 applies broadly, certain organizations and activities are exempt from full compliance.
Automatic Exemptions
The following are fully exempt from registration and reporting:
- Government entities
- Religious, educational, or charitable organizations that raise less than $25,000 annually and do not use professional fundraisers
However, if these groups start using professional fundraisers or cross the revenue threshold, they must register.
Religious Organizations
Religious organizations often benefit from certain exemptions, but Act 92 still requires registration if they are actively soliciting donations through public campaigns. The law makes a distinction between “internal” fundraising (within the congregation) and “public” solicitation (open appeals beyond the church community).
Church-Affiliated Charities
A church-run soup kitchen, for example, might be exempt if it receives only member donations. But if it launches a statewide food drive involving advertising and third-party collection, it becomes subject to Act 92 regulation.
Impact of Michigan Act 92 on Charitable Giving
Increased Donor Confidence
Perhaps the most significant impact of Act 92 is the boost it provides to donor confidence. By requiring transparency and offering accessible records, the law helps people make informed decisions about where to give.
Studies have shown that states with strong charitable regulation, like Michigan, see higher levels of charitable giving per capita. Donors are more likely to contribute when they trust that their money will be used as promised.
Encouraging Best Practices in Nonprofits
Act 92 pushes nonprofits toward healthier operational models. Because high fundraising costs are disclosed, charities are incentivized to:
- Partner with cost-effective fundraisers
- Use funds efficiently
- Focus on long-term donor relationships rather than one-off campaigns
This promotes sustainability in the sector.
Deterrence of Fraud and Misconduct
The threat of penalties and oversight has a strong deterrent effect. Dishonest operators are less likely to target Michigan-based campaigns, knowing the state has a well-established enforcement structure.
In recent years, the Attorney General’s office has highlighted Act 92 as a key tool in dismantling “ghost charities” — organizations that exist primarily to funnel money to personal accounts or fundraising firms.
Recent Updates and Modern Challenges
The landscape of fundraising is evolving rapidly, especially with the rise of digital platforms, crowdfunding sites, and cryptocurrency donations. Michigan Act 92, while robust, faces ongoing challenges in adapting to these changes.
Online Fundraising and Social Media
One key area of gray is peer-to-peer fundraising via platforms like GoFundMe or Facebook Fundraisers. While the law assumes control over formal charities, it’s less clear how it applies when individuals launch campaigns in the name of charitable causes.
The Attorney General’s office has issued guidance urging individuals to partner with registered charities for such efforts and to clearly disclose their relationship (or lack thereof) with a nonprofit.
Cryptocurrency and Digital Assets
Another emerging challenge is the acceptance of cryptocurrency donations. Charities must now report these contributions accurately and manage them according to financial regulations. While Act 92 doesn’t specifically mention digital assets, they fall under the broad definition of “contributions,” requiring disclosure and proper accounting.
Proposed Modifications
In response to these shifts, the Michigan Legislature has considered amendments to expand Act 92’s reach. Proposals include:
- Requiring greater disclosure for crowdfunding campaigns aligned with charities
- Setting thresholds for digital solicitations
- Clarifying the responsibilities of third-party platform hosts
While no major revisions have passed as of 2023, advocacy groups and regulators continue to push for modernized oversight tools.
How to Comply with Michigan Act 92: A Step-by-Step Guide
For organizations operating in Michigan, compliance with Act 92 is not optional—it’s essential. Here’s how to stay on the right side of the law.
Step 1: Determine If You Need to Register
Evaluate whether your organization publicly solicits donations in Michigan and exceeds $25,000 in annual revenue. Use the Charitable Trust Section’s online checklist to assess your status.
Step 2: Prepare Required Documentation
Gather the necessary documents, including:
- IRS Form 990 or 990-EZ
- Articles of incorporation
- Bylaws (if applicable)
- Fundraising plans
Nonprofits based outside of Michigan must also provide proof of registration in their home state.
Step 3: Submit Registration Through Charitable Organizations Licensing and Service System (COLSS)
Michigan uses an online portal called COLSS to manage registrations and renewals. Visit the official website to create an account, submit forms, and track your status.
Step 4: Renew Annually and File Reports
Mark your calendar—registrations must be renewed every year by December 31. Late renewals are subject to fees and possible suspension.
Step 5: Maintain Accurate Records
Keep your financial records, donor correspondence, and fundraising contracts organized. In the event of an audit or investigation, prompt access to accurate data can save time and prevent penalties.
Resources for Charities and Donors
Michigan offers several tools to help both nonprofits and the public understand and comply with Act 92.
Michigan Department of Attorney General – Charitable Trust Section
The primary resource is the official website hosted by the Attorney General. It includes:
- Registration forms
- Filing deadlines
- Sample contracts for professional fundraisers
- Enforcement alerts
Office of the Auditor General and IRS Collaboration
Charities are also encouraged to follow federal IRS guidance on governance and Form 990 filing. The state and federal agencies often cross-reference data to identify discrepancies.
Nonprofit Support Organizations
Groups like the Council of Michigan Foundations and the Michigan Nonprofit Association offer workshops, legal resources, and compliance tips tailored to Act 92.
Conclusion: Why Michigan Act 92 Matters
Michigan Act 92 is more than just a regulatory requirement—it’s a cornerstone of nonprofit accountability in the state. By establishing clear rules for fundraising, promoting transparency, and enabling enforcement, the law protects donors, ensures ethical practices, and strengthens public trust in philanthropy.
For nonprofits, compliance isn’t merely about avoiding penalties; it’s about demonstrating integrity to stakeholders. For donors, the information provided under Act 92 empowers smarter giving and greater impact. And for Michigan as a whole, the law supports a vibrant, responsible charitable sector.
As fundraising methods continue to evolve, so too must the mechanisms that govern them. Michigan Act 92 provides a strong foundation, but ongoing vigilance and policy refinement will be essential to meet the challenges of the digital age.
Whether you’re starting a charity, donating to a cause, or simply want to understand how Michigan protects charitable giving, Act 92 is a critical piece of the puzzle—one that ensures generosity is met with responsibility.
What is Michigan Act 92, also known as the Charitable Solicitations Act?
Michigan Act 92, officially known as the Charitable Solicitations Act, is a state law enacted to regulate charitable organizations and their fundraising activities within Michigan. The primary goal of the act is to ensure transparency, accountability, and integrity in charitable solicitations by requiring organizations to register and provide financial and operational disclosures before soliciting donations from the public. It applies to both in-state and out-of-state charities that seek contributions from Michigan residents, including those conducting fundraising events, telethons, online campaigns, or direct mail appeals.
The law is administered and enforced by the Michigan Department of Attorney General’s Charities Division. Under the act, charitable organizations must file an annual registration statement that includes information such as mission, board members, financial statements, and details about professional fundraisers they may employ. By establishing standards and oversight, Michigan Act 92 protects donors from fraudulent or deceptive practices and promotes public trust in the charitable sector. Any failure to comply can result in penalties, fines, or legal action.
Who must comply with Michigan Act 92?
Any charitable organization that solicits donations from Michigan residents must comply with Michigan Act 92, regardless of whether the organization is based in Michigan or another state. This includes nonprofit corporations, religious institutions, educational organizations, and any entity claiming tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. Additionally, professional fundraisers and fundraising counsel who solicit or advise charities on solicitation activities on their behalf must also register under the act.
There are limited exemptions, such as religious congregations soliciting only their members, charitable organizations with annual gross revenues under a specific threshold (which is subject to change), and organizations that conduct only occasional, unsolicited fundraising. However, even exempt entities may need to provide documentation if they use third-party fundraisers or solicit widely. Complying with Act 92 ensures that organizations operate transparently and remain in good standing with state authorities, thereby maintaining legitimacy and donor confidence.
How do charitable organizations register under Michigan Act 92?
To register under Michigan Act 92, charitable organizations must file a registration statement with the Michigan Department of Attorney General’s Charities Division. This is done electronically through the state’s online portal, the Charitable Organizations Registration System (CORS). Organizations are required to submit essential information, including their official name, mission, principal officers, board of directors, and IRS determination letter confirming tax-exempt status. They must also provide a complete copy of their most recent IRS Form 990 and detailed financial reports.
Registration must be renewed annually, typically due by the 15th day of the fifth month after the organization’s fiscal year ends. Late filings may incur penalties, and failure to file for two consecutive years could result in automatic revocation of registration. Once registered, a charity receives a registration number that must be disclosed in all solicitation materials upon request. Organizations employing professional fundraisers must also include an attached agreement as part of their registration to ensure full transparency of fundraising practices.
What are the responsibilities of professional fundraisers under Act 92?
Professional fundraisers who solicit contributions on behalf of charitable organizations in Michigan are subject to specific provisions under Act 92. They must register with the Attorney General’s office before conducting any fundraising activities and disclose key contract terms, including the percentage of donations they retain. Fundraisers are required to provide detailed records of each solicitation campaign, including dates, methods used, gross receipts, and net proceeds delivered to the charity.
Additionally, professional fundraisers must adhere to ethical standards outlined in the act, such as not misrepresenting the charity’s mission or the use of donated funds. Contracts between the charity and the fundraiser must be in writing and submitted to the state during registration. These requirements help prevent exploitation of charitable causes and ensure that donors’ contributions are used as intended. Violations by fundraisers can result in fines, suspension of registration, or legal action by the state.
What penalties exist for non-compliance with Michigan Act 92?
Failure to comply with Michigan Act 92 can result in significant penalties for both charitable organizations and professional fundraisers. Charities that solicit donations without proper registration may face civil fines of up to $5,000 per violation, and repeated offenses can lead to cease-and-desist orders or criminal charges. The Attorney General has the authority to take legal action against non-compliant entities, including enjoining unauthorized solicitations and recovering damages on behalf of donors.
In addition to financial penalties, non-compliance can damage an organization’s reputation and lead to loss of public trust. Charities may also be removed from the state’s list of registered organizations, affecting eligibility for grants or tax deductions. For professional fundraisers, violations can result in debarment from conducting fundraising activities in Michigan. These enforcement mechanisms underscore the importance of adherence to Act 92 to maintain lawful and ethical fundraising practices.
How does Michigan Act 92 protect donors?
Michigan Act 92 protects donors by requiring full transparency and accountability from charitable organizations that seek contributions. By mandating registration and public disclosure of financial information, the act allows donors to make informed decisions about where and how their money is used. Donors can access charity registration records through the Attorney General’s website to review financial statements, fundraising costs, and program expenditures before giving.
Moreover, the act prohibits deceptive solicitation practices, ensuring that charities cannot misrepresent their mission, programs, or the percentage of contributions that go toward charitable work. If a donor suspects fraud or misrepresentation, they can file a complaint with the Charities Division, which has investigative authority to respond. These protections foster a safer giving environment and strengthen public confidence in the integrity of charitable organizations operating in Michigan.
How can the public access information about registered charities in Michigan?
The public can access detailed information about charities registered under Michigan Act 92 through the Charities Division’s online database, available on the Michigan Department of Attorney General’s official website. This searchable database includes each organization’s registration status, mission statement, key personnel, financial reports, and any disciplinary actions taken. The information is updated regularly and is free to access, promoting openness and accountability within the charitable sector.
In addition to the online portal, individuals can request paper copies of filings directly from the Charities Division. This accessibility allows donors, researchers, and watchdog groups to evaluate a charity’s operations and financial health before contributing or partnering. Transparency tools like these help ensure that Michigan’s charitable landscape remains trustworthy, responsible, and focused on fulfilling genuine public benefit goals.