Over the last several years, New Jersey’s Center for Nonprofits, the New Jersey Society of CPAs Nonprofit Interest Group, and other local nonprofit leaders have been advocating the Legislature on behalf of all the state’s nonprofit organizations to amend the New Jersey Charities Registration Information Act (“NJ CRI Act”).
Their efforts have paid off – and on January 18, 2022, Governor Murphy signed the bill into law – effective immediately.
As a result, the New Jersey “Charitable Registration and Investigation Act” is now amended. The law raises the threshold for a nonprofit to undergo an audit from $500,000 to $1 million in gross revenues. At the same time, the bill also extends certain annual reporting and filing.
Here is further clarification of some of the key elements of the bill. It is important to understand the specific circumstances that determine if an audit may still be required:
- The $1M threshold represents monetary donations only. In-kind donations are not included.
- Organizations that spend between $100k and $750k of government funding are still required to have an audit under Government Auditing Standards.
- Organizations that are under the $1m revenue threshold but still spend at least $750k in government funding will be required to have a Uniform Grant Guidance audit.
- There are no compilation or review requirements. Either an audit is required, or not.
- Nongovernmental funding sources may still require an audit regardless of the amount of revenue received.
- An organization can still have an audit even if it does not meet the $1m annual revenue threshold in New Jersey. Some states, like Pennsylvania, will still maintain an audit requirement for organizations with an annual revenue of $500k.
These changes apply to organizations that have renewal registrations originally due to the State on or after January 18, 2022. They do not apply to organizations that have a filing extension for registrations due before January 18, 2022.
If your circumstances indicate that your organization no longer requires an audit, you should contact your advisors for guidance. At SobelCo our nonprofit professionals are available to discuss the pros and cons of conducting an audit and can help you with back-office support as needed.
Please feel free to email your questions or concerns to me at Kristen.Crouchelli@SobelCoLLC.com. I look forward to hearing from you.
