A charitable or nonprofit organization must not accumulate
excessive reserves. Organizations accumulating excessive reserves may be deemed
as organized primarily for purposes of gambling. Reserves must be computed by
using the financial data most recently filed with us. We will not treat funds
as excessive reserves if the following restrictions are met:
(1) A majority of the organization's
membership approves the accumulation of excessive reserves; and
(2) The funds are expressly dedicated for
funding new programs, capital projects, or to endow service-providing
activities; and
(3) The funds are
saved according to a plan that includes the amount to be reserved, the purpose
for which the funds are being reserved, and the estimated time the reserves
will be used; and
(4) The
organization's officers or board of director's approves the plan ;
and
(5) The organization submits
the plan to us for review and approval; and
(6) The total amount of excessive reserves
may exceed four million dollars only if the organization petitions the director
to exceed this limitation and the director approves the petition. The director
may disapprove with written comments or approve a modified level based on facts
presented. The director's decision may be appealed to the commission. Appeal of
this decision will be heard at a regular public meeting of the commission. The
commission's decision shall be final. Petitions for relief must include:
(a) The reason for the request, including
whether the increased reserves are for charitable or nonprofit purposes and
planned timelines for use; and
(b)
The total amount of reserves requested; and
(c) The impact on programs if the petition is
denied; and
(d) Alternative sources
of funding available.
