Illinois’ Charitable Trust Act (Section 480.20) lays out the framework for the operations of charities in the state. The Charitable Trusts Bureau of the Attorney General’s Chicago Office maintains the register of charitable trusts that have been registered with the state.
Under the Illinois Charitable Trust Act, gifts in any amount, to these organizations “for charitable purposes” can be used to provide any number of people with benefits, including:
- The benefit of religion
- Relief from poverty sickness or disease
- A means of establishing themselves in life
- Public building or recreational activities or
- Services which lessen the burden of government
The state of Illinois requires that all charitable organizations, trusts, and professional fundraisers register yearly with the Attorney General’s Office prior to holding or soliciting any charitable funds in Illinois. This allows the potential donors and the public access to important information such as income, expenditures, administration and the charity’s programs before they decide to donate.
All registrations with the Bureau are public records, (with the exception of confidential registrations) and are made available to the general public during the Attorney General’s business hours. The Illinois Attorney General’s office has resources for charities on its website, including necessary forms a short instruction sheet for starting a charity or nonprofit.
Illinois Charities That Need To Register
Trustees of any Illinois charity that has more than $4,000 in property and/or assets within a 12-month period must file a registration statement with the Bureau prior to its disbursement. In this case, a trustee is defined as “any person, individual, group of individuals, association, corporation, not-for-profit corporation, estate representative, or other legal entity holding property for or solicited for any charitable purpose.”
Registration is necessary whether the charity is actively soliciting for funds or holding property.
For the initial registration, a trustee is required to submit:
- A copy of the written instrument that creates and governs the trust
- Articles of incorporation and certificate of good standing, bylaws, partnership agreement, and other related organizational documents
- The organization’s previous three years of federal tax returns. If the trust has only existed for less than a year, submit a CO-2
- The list of names, mailing addresses, and daytime telephone numbers of all trustees, directors, and officers
- The charity’s IRS determination letter, or a copy of a submitted IRS 1023 or 1024 to show 501(c)(3) status
- Copies of all fundraising contracts, if any
- A registration fee of $15
- A late registration fee of $200, if applicable
- A late fee of $100 for each late annual report, if applicable.
Trustees are required to submit an AG990-IL (Annual Report Form) every year thereafter, unless the trust holds less than $25,000. Trustees that have less than $25,000 can fill out the simpler CO-2 every year instead. Each of these forms along with the instructions are available online.
Should the trustee resign or terminate, the Bureau must be notified within ten days.
Is A Charitable Trust Part Of Your Estate?
If so, you should know that different types of charitable trusts allow you to sell assets—retirement accounts, life insurance policies, etc.—to reduce your taxable income, and without incurring capital gain taxes. Before you include one in your Chicago estate plan, make sure that it complies with the Charitable Trust Act.
If you need help, enlist the assistance of an experienced Illinois attorney who understands state law surrounding nonprofits, charitable organizations and estate/trust planning.
Choosing an Illinois Nonprofit Attorney
James C. Provenza is a leading Illinois non-profit attorney with years of experience navigating the complex legal landscape surrounding charity and nonprofit organizations and the issues they face. Not only that, he’s also one of the area’s foremost estate planning lawyers. Call our firm today at (847) 729-3939, or use our online contact form. Let us work with you to start your charity or Chicago nonprofit organization, and ensure its legal compliance.