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AG Grewal: Trump Transition Team Agrees to Settlement Over Registration as Charitable Organization

AG's Office Will Receive Transition Records that Organization Previously Refused to Produce

NEW JERSEY — Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced a temporary Voluntary Compliance Program to encourage certain 501(c)(4) social welfare organizations to comply with their obligations to register as charitable organizations with the Division.

Under the Voluntary Compliance Program, the Division will forego collection of penalties for past registration violations by certain 501(c)(4) entities that are subject to the registration requirements of the Charitable Registration & Investigation Act (CRIA), if they have failed to register as required but submit the required documentation by October 1, 2020.

The CRIA requires certain “charitable organizations,” including “social welfare” organizations exempt from federal taxation under Section 501(c)(4) of the Internal Revenue Code, to register with the Division’s Charitable Registration & Investigation Section. Under the law, social welfare organizations that engage in political activities without being required to disclose their donors to the general public—so-called “dark money” groups—may still be required to report their substantial donors to the Division.

Although the Division has registered over 900 charitable organizations identified as 501(c)(4) social welfare organizations, the Division believes that compliance with the CRIA’s registration requirements may be lower among 501(c)(4) social welfare organizations than among other charitable organizations. As a result, the Division has been enhancing its efforts to enforce the CRIA’s registration requirements with respect to 501(c)(4) social welfare organizations.

Charitable organizations that have violated the CRIA’s registration requirements and that do not take advantage of this Voluntary Compliance Program may face civil penalties of up to $10,000 for their first violation of the CRIA and up to $20,000 each for any subsequent violation.

“As we move into election season, we cannot let dark money groups hide in the shadows,” said Attorney General Grewal. “State law requires that 501(c)(4) organizations register with the Attorney General’s Office and produce certain documents about their donors and operations. Our voluntary compliance program is designed to encourage unregistered organizations to submit the records required by law — and avoid the penalties they could face if we find them after the voluntary program ends.”

“New Jerseyans are known for their generosity,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. “Our registration requirements help ensure that consumers’ interests are protected when making donations and that funds are being expended appropriately in furtherance of the organization’s charitable purposes.”

Eligibility for the Voluntary Compliance Program announced today is limited to certain unregistered charitable organizations claiming exemption from federal taxation under Section 501(c)(4) of the Internal Revenue Code. If an organization previously registered under the CRIA and then failed to comply with the CRIA’s registration requirements for one or more subsequent years, the organization is not eligible for the Voluntary Compliance Program. Organizations that have received subpoenas from the Division pursuant to the CRIA are also ineligible.

To be eligible for the Voluntary Compliance Program, a charitable organization must submit a completed registration statement by October 1, 2020. The information required for registration depends in part on the amount of a charitable organization’s annual revenue.

A charitable organization with more than $500,000 in gross annual revenue is generally required to file an independent auditor’s report, but as part of the Voluntary Compliance Program, the Division is accepting alternative documentation from organizations that no longer operate or solicit contributions in New Jersey and that agree to refrain from operating or soliciting in New Jersey in the future.

Alternative documentation will include the organization’s unaudited financial statements and tax filings covering the entirety of the organization’s last fiscal year in which the organization operated or solicited, together with certification, under penalty of perjury, attesting that (1) all information in the unaudited financial statement is true and accurate; and (2) that the organization no longer operates or solicits and will not operate or solicit in New Jersey in the future.

If an organization satisfies the requirements for the Voluntary Compliance Program, the Division will exercise its discretion not to seek penalties from the organization for the organization’s past failure to register with the Division.

The Division maintains its authority to seek additional information from an organization that participates in the Voluntary Compliance Program; to seek penalties for future violations of the CRIA’s registration requirements; and to seek penalties for past, ongoing, and/or future violations of any other requirement of the CRIA or its implementing regulations, or any other law or regulation.

In addition to increased enforcement of the CRIA against 501(c)(4) social welfare organizations, the Attorney General and the Division have taken several steps in response to actions by the Internal Revenue Service (IRS) that make it easier for such groups to keep the identities of their donors hidden from government authorities.

After the IRS first announced the elimination of federal donor-reporting requirements, Attorney General Grewal joined Montana Governor Stephen C. Bullock and the Montana Department of Revenue in a lawsuit to challenge the IRS’s policy change. In July 2019, a federal court agreed that the IRS violated the law. And when the IRS proposed to change its policy a second time, in December 2019, Attorney General Grewal co-led twenty Attorney Generals opposing the change.

In addition, in May 2019, the Division amended its rules to ensure that dark money groups and other charitable organizations would continue to be required to report their substantial donors to the Division even if they are no longer required to report that information to the IRS.

Organizations may register with the Division through the Charities Registration Portal by clicking here.

Through the deadline for registering as part of the Voluntary Compliance Program, organizations that identify themselves as 501(c)(4) organizations when completing an online charities registration form in the normal course will now be asked to indicate whether or not they are registering as part of the Voluntary Compliance Program or are instead filing an ordinary registration statement by checking a box in the registration form. Applicants who click the checkbox for the Voluntary Compliance Program will have their registration statements expedited by Division staff, to facilitate the curing of any deficiencies prior to October 1, 2020.

For questions or additional information, please contact the Charities Registration Section at (973) 504-6215 or via e-mail (

Frank Cahill
Frank Cahill
Publisher of Parsippany Focus since 1989 and Morris Focus since January 1, 2019, both covering a wide range of events. Mr. Cahill serves as the Executive Board Member of the Parsippany Area Chamber of Commerce, Lt. Governor of Division 9 Kiwanis Club of NJ, and Chairman of the Parsippany-Troy Hills Economic Development Advisory Board. Owner of the Morris now app serving small business in Morris County.

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