When to Notify the Attorney General of Nonprofit Changes

When nonprofits plan to take certain actions in the state of Oklahoma, they must notify the Oklahoma Attorney General (OAG) in advance. This statutory change occurred in 2023 with an update of the Oklahoma Solicitation of Charitable Contributions Act, yet,  many nonprofits are still unaware  of the law’s existences or overlook it in the midst of making big changes to their organization.

The updated law, Per 18 O.S. § 552.24, applies to Oklahoma nonprofits that plan to change their organizational exempt purpose of the organization, dissolve the organization, or substantially sell most of the organization’s assets. Prior to making any of these changes, the nonprofit must notify the OAG’s Charity Enforcement Unit at least 45 days in advance of making such a change. The requirement also applies if a nonprofit intends to change its domicile from Oklahoma or substantially remove its assets from the state.

Thise same law also requires that nonprofits notify the OAG’s office no later than 20 days after the notification that their federal tax-exempt status has been revoked, modified, or denied.

The statute includes a broad definition of which organizations are triggered under this law and required to notify the OAG of any changes. The organizations includes those:

· RIs required to register under 18 O.S. § 552.3;

· Is incorporated, organized or has its principal place of business in Oklahoma, or has assets located in Oklahoma with a fair market value in excess of five hundred thousand dollars ($500,000); and

· Engaged in solicitation of contributions in Oklahoma for a period of one (1) year.

Nonprofits have always been required to notify the IRS of any change in their exempt purpose by completing Schedule O of the nonprofit’s Form 990 annual tax return, which could occur after the change took effect at the nonprofit. The addition of state-level reporting requirements means that nonprofits must and notify the state before those changes happen and give the OAG time to respond. For example, if the board votes to change the exempt purpose of the organization, they must then notify the OAG and wait 45 days to receive authorization from the OAG before implementing this change.

When an organization notifies the OAG of their intent to change their exempt purpose, dissolve the organization, or take other actions outlined in the statute, the OAG may require additional documentation from the nonprofit. The law gives the OAG oversight in ensuring donor intent is followed in how solicited funds are used. Thus, if you raised significant funds for Purpose A and now your organization is shifting its entire focus to Purpose B, the OAG office can respond with a written objection to the actions proposed by the organization.

When an objection occurs, either party may file an action with the district court of the county where the organization is located to have the OAG’s objection reviewed.

The required notice and review by the OAG means nonprofits must have documentation ready to support the proposed changes in their organization. As you consider changes for your nonprofit, ensure that you are documenting those discussions and decisions in the board minutes to show board support of the change. If you have funds from key donors that were given for one purpose but now will be used for another purpose, get their permission in writing to use those funds for the modified purpose.   

It is natural for nonprofits to adapt and change over time, but it’s important for board members and executive leadership to understand what type of changes must be submitted to the OAGklahoma Attorney General and to the IRS. As those changes are discussed, ensure everyone understands the reporting requirements and the documentation necessary to support the change.

If your organization needs help navigating changing its exempt purpose, dissolving the organization, or reporting any changes to the OAG, contact the Nonprofit Solutions Law team to schedule a consultation.