Common Mistakes to Avoid

Dear Filer,

As the authorized officer or registered agent of an organization registered to solicit contributions in Colorado, you may recall that the organization is required to update its registration statement and file a financial form with the Secretary of State’s Charities Registration Program annually.  This is in addition to the requirement to file a periodic report with the Business Organizations Program. 

Each of these filings is examined by program staff and may be rejected for certain deficiencies.  We appreciate that time spent making these corrections is time that could be spent more productively pursuing your organization’s charitable purposes, so we are providing information about common mistakes that will help ensure you have your document approved the first time it is filed.  The chart below illustrates the eight most common reasons for rejecting a filed document, followed by a brief description of how to complete that section correctly.

 

Table showing a bar graph with the top eight reasons for rejection. In order, from highest to lowest: No revenue or expenses listed, Balance sheet information, Bad address, Professional fundraising fees, Estimated figures, Reporting year incorrect, First year budges, and invalid authorized officer.

 

No Revenue or Expense Items Listed

One frequent reason for rejecting a document is failure to list any revenue and expense items on the financial statement.  It would be unusual for this to be an accurate depiction of the financial activity of the organization. If the organization indeed had $0.00 in revenue and $0.00 in expenses, or estimates it will have $0.00 in revenue and $0.00 in expenses, please send an explanatory email to charitable@sos.state.co.us prior to filing the document.

 

No Balance Sheet Information

It is extremely rare for an organization to have $0.00 in assets at the end of a reporting period.  However, if this is the case, please send an explanatory email to charitable@sos.state.co.us prior to filing the document.  Note that staff routinely compare balance sheet information from the previous reporting period to revenues and expenses and balance sheet information in the current period, so please confirm that the current period’s information is consistent with what was reported in the previous period.

 

Bad Address

Our filings require a street address for the organization’s principal office, registered agent, and custodian of financial records.  In addition, please note that the registered agent must be located in Colorado.  A P.O. Box or other mailing address may be entered in addition to a street address, but it cannot substitute for one, not even in mountain and rural communities.  Please contact program staff at charitable@sos.state.co.us prior to filing a document, if providing a street address is not possible or presents genuine concerns about personal safety.

 

Professional Fundraising Fees

There are two types of mistakes commonly made in this section:

  • An organization lists the name of a paid solicitor or professional fundraising consultant on its registration in Step 8, yet enters $0.00 in professional fundraiser fees paid in Step 9.  If a name is listed in Step 8, staff will expect to see some amount for professional fundraising fees in Step 9 (unless the only name listed is a commercial co-venturer).  Note that any professional fundraiser’s name listed in the previous reporting period will be carried over to the current reporting period by default, so, if the organization did not contract with that fundraiser or consultant in the current period and indeed paid $0.00 in professional fundraising fees, you will need to delete those names in Step 8.
  • The organization lists some amount of professional fundraising fees paid in Step 9, but it does not name a paid solicitor or professional fundraising consultant in Step 8.  If there is an amount listed for professional fundraising fees, there should be at least one paid solicitor or professional fundraising consultant named as well.

 

Estimated Figures

This rejection occurs when an organization submits estimated financial results for a period once the deadline for doing so has passed. When filing an amendment to replace the estimated figures with which the initial registration was filed, please take care to uncheck the box near the top of Step 7 that indicates that the figures are estimated. This is the only way to indicate that the filing contains actual financial information for the period.

 

Reporting Year Incorrect

This involves organizations registering for the first time that have been subject to registration under the Colorado Charitable Solicitations Act (6-16-104 C.R.S.) in previous years.  In such cases, the Secretary of State’s policy is to require the organization to file retroactively for at least two years, so the initial registration will need to cover the fiscal year prior to the most recently concluded fiscal year, and once that is approved, the organization will file a registration renewal for the next year.  If financial information for the second year is not available, the organization files an extension request instead of a renewal by selecting "File a Document" and then "File an Extension."

 

First Year Budget

Newly formed organizations are required to provide estimated financial information for the first year of operation. This is the period from the date the organization was legally established to the end of its first fiscal year.  In most cases, the organization can find this “first-year budget” information in the IRS Form 1023 or Form 1024 application for tax-exemption.  Enter an estimated total for each revenue and expense item that applies in the organization's first fiscal year in Step 7 of the initial registration form. Please take care to check the box that indicates the information is "estimated". Keep in mind that after the conclusion of the organization's first fiscal year, it must "amend" the Initial Registration Statement to replace the estimated financial information with actual figures.

 

Invalid Authorized Officer

An "authorized officer" must be an officer of a nonprofit corporation, a trustee of a charitable trust, or a senior manager member of any other entity subject to the filing requirements of the CCSA. The authorized officer is also considered the account manager. An example of a role that is not an “authorized officers” is a third party service provider contracted for the purpose of filing state charities registrations.

 


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