# COMAR Title 01 — Executive Department

## Subtitle 02 — Secretary of State

### Chapter 04 — Charitable Organizations: Substantive Regulations

**Authority:** Business Regulation Article, §6-204, Annotated Code of Maryland

**Administrative History:** Effective date: February 10, 1978 (5:3 Md. R. 134)

**Administrative History:** Regulations .01—.04, .11, .14, .16, and .17 amended effective September 9, 1985 (12:18 Md. R. 1764)

**Administrative History:** Regulation .01L adopted effective March 2, 1992 (19:4 Md. R. 471)

**Administrative History:** Regulation .03 amended effective October 3, 1988 (15:20 Md. R. 2332)

**Administrative History:** Regulation .04D amended effective October 3, 1988 (15:20 Md. R. 2332)

**Administrative History:** Regulation .04E amended effective October 3, 1988 (15:20 Md. R. 2332)

**Administrative History:** Regulation .05 repealed effective September 9, 1985 (12:18 Md. R. 1764)

**Administrative History:** Regulation .09 amended effective October 3, 1988 (15:20 Md. R. 2332)

**Administrative History:** Regulation .10 amended effective October 3, 1988 (15:20 Md. R. 2332)

**Administrative History:** Regulation .14 repealed effective April 11, 1994 (21:7 Md. R. 529)

**Administrative History:** Regulation .17 repealed effective April 11, 1994 (21:7 Md. R. 529)

**Administrative History:** Regulation .17A amended effective February 15, 1982 (9:3 Md. R. 220)

**Administrative History:** Regulation .18 repealed effective September 9, 1985 (12:18 Md. R. 1764)

**Administrative History:** Regulation .19G adopted effective September 8, 1986 (13:18 Md. R. 2018)

**Administrative History:** Regulation .20 adopted and existing Regulation .20 renumbered as Regulation .21 effective May 5, 1986 (13:9 Md. R. 1023)

**Administrative History:** Regulation .20 amended effective September 8, 1986 (13:18 Md. R. 2018)

**Administrative History:** Regulation .20-1 adopted effective March 2, 1992 (19:4 Md. R. 471)

**Administrative History:** Chapter revised effective November 13, 2000 (27:22 Md. R. 2059)

**Administrative History:** Regulation .01 amended effective August 8, 2022 (49:16 Md. R. 757)

**Administrative History:** Regulation .02D adopted effective August 8, 2022 (49:16 Md. R. 757)

**Administrative History:** Regulation .03 amended effective August 8, 2022 (49:16 Md. R. 757)

**Administrative History:** Regulation .03D amended effective June 6, 2016 (43:11 Md. R. 633)

**Administrative History:** Regulation .10 amended effective August 8, 2022 (49:16 Md. R. 757)

**Administrative History:** Regulation .19 amended effective August 8, 2022 (49:16 Md. R. 757)

**Administrative History:** Regulation .20-1 amended effective August 8, 2022 (49:16 Md. R. 757)

**Administrative History:** Regulation .20-1A amended effective September 12, 2016 (43:18 Md. R. 1017)

**Administrative History:** Regulation .22 adopted effective January 19, 2026 (53:1 Md. R. 20)

#### Regulation .01 Definitions.

*COMAR 01.02.04.01*

A. Terms defined in Business Regulation Article, §6-101, Annotated Code of Maryland, shall have the same meaning for the purposes of these regulations as they do in the Act.

B. Terms defined in these regulations shall have the same meaning for the purposes of the Act as they do in these regulations.

C. “Act” means Business Regulation Article, Title 6, Annotated Code of Maryland.

D. Bona Fide Religious Organization.

  (1) “Bona fide religious organization” means an organization established for religious purposes or an organization which serves religion by the fostering of religion, including the moral and ethical aspects of a particular faith.

  (2) “Bona fide religious organization” includes an organization whose members or congregation are the primary source of revenue and whose purpose is an integral part of the membership's or congregation's mission.

E. “Charitable organization affiliated with a State agency” means a charitable organization which engages in activities for the benefit of the State agency or to further the purposes of the State agency, or both, through the use of contributions solicited from the public.

F. “Charitable purpose” means any charitable, benevolent, philanthropic, patriotic, or eleemosynary purpose for religion, health, education, social welfare, arts and humanities, and civic and public interests.

G. “Day” means calendar day.

H. “Exempt filer” means a charitable organization that is required to file an annual fundraising notice and an IRS Form 990 pursuant to §6-407 of the Act, but is otherwise exempt from the registration and disclosure requirements of the Maryland Solicitations Act pursuant to §6-102(c) of the Act because the organization did not raise more than $25,000 in its most recently completed fiscal year or solicited for a named individual and the gross amount was delivered to the individual.

I. “Feasibility study” means a study made by or on behalf of a charitable organization, before the undertaking of a fund-raising activity, for the purpose of determining whether the organization should undertake the activity. It does not include purchasing, preparing, testing, or revising mailing lists of potential contributors, or embarking on a new campaign different from previous campaigns.

J. “Membership” means that for the payment of fees, dues, assessments, and similar obligations, an organization provides services and confers a bona fide right, privilege, professional standing, honor, or other direct benefit, in addition to the right to vote, elect officers, or hold office. It does not include those persons who are granted a membership solely on the basis of making a contribution as a result of solicitation. In the case of an accredited school, college, or university, the students, alumni, their parents, past and present board members, and school personnel shall be considered members of the organization.

K. “Organization” means a charitable organization as defined by §6-101(d)(1)—(3) of the Act.

L. “Religious purpose” means maintaining or propagating religion or supporting public religious services, according to the rites of particular denominations.

M. “Secretary” means the Maryland Secretary of State.

#### Regulation .02 Responsibilities of Persons Regulated.

*COMAR 01.02.04.02*

A. Notice of Tax Deductibility.

  (1) An organization shall advise its members of the amount, if any, of the membership fees, dues, fines, or assessments which the Internal Revenue Service does not consider tax deductible as a contribution.

  (2) An organization shall advise each purchaser or contributor of the amount, if any, of the contribution which the Internal Revenue Service does not consider tax deductible.

B. Financial Management.

  (1) A person shall establish a system of internal accounting controls which will provide reasonable assurance that all transactions have been properly executed and recorded.

  (2) If an audit is required, the audit shall be made in accordance with generally accepted auditing standards and in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding period.

  (3) The governing board of an organization may not permit the commingling of the organization's assets with those of any other person without establishing and maintaining adequate accounting controls over the ownership and use of the assets.

C. Submission of Fund-Raising Contracts. An organization using the services of a professional solicitor or fund-raising counsel shall submit with its registration and each annual report a copy of each fund-raising agreement.

D. Identification of Alternate Names. A charitable organization which uses more than one name, or a name other than the name or names filed at the time of registration to solicit charitable contributions, shall include in their registration materials the name of the organization and any alternate names it uses or used in the previous year when soliciting contributions. An exempt filer which uses more than one name or a name other than the name or names filed in the most recently submitted annual fundraising notice shall include the name of the organization and any alternate names it uses or used in the previous year while soliciting contributions.

#### Regulation .03 Responsibilities of the Secretary.

*COMAR 01.02.04.03*

A. Notification to Persons Not Registered. The Secretary shall:

  (1) Identify to the extent possible persons who have not registered and are subject to the provisions of the Act;

  (2) Send to those identified the necessary forms and instructions and with instructions on how to access a copy of the Act and regulations; and

  (3) Advise the person not in compliance of the person's unlawful solicitation and note that a failure to register may result in the institution of enforcement proceedings by the Secretary of State or Attorney General as set forth in §6-205 of the Act.

B. Notice of Annual Report Filing. The Secretary shall issue each registered charitable organization a report reminder notice 30 days before the charitable organization's annual report is due. Failure to receive the reminder does not affect the organization's responsibility to timely file the annual fiscal report.

C. Notice of Annual Fundraising Notice. The Secretary shall issue each exempt filer a reminder 30 days before the organization’s annual fundraising notice is due. Failure to receive the reminder does not affect the exempt filer’s responsibility to timely file the annual fundraising notice.

D. Substitution of Required Forms. If information asked for on any form required by the Maryland Solicitations Act or regulations promulgated by the Secretary of State pursuant to §6-204 of the Act is contained in any other written material, the Secretary may accept other material in hard copy or electronic form instead of the completed form.

E. Extension of Time for Filing Annual Fiscal Reports. The Secretary may grant an organization an extension of time to file its annual report. The extension may not exceed the 15th day of the 11th month after the end of the charitable organization’s fiscal year.

F. Incomplete Annual Fiscal Report. An organization’s annual fiscal report required by the Act to be filed with the Secretary under §6-408 of the Act which does not contain the requested information or is not accompanied by the required fee, if any, is incomplete. The Secretary shall notify the person who submitted the incomplete form of the incompleteness and of the items required to comply. The Secretary shall allow that person 60 days in which to comply before late fees shall be assessed pursuant to §6-407(c) of the Act.

G. Incomplete Annual Fundraising Notice. If an exempt filer has failed to submit an annual fundraising notice due under §6-405 of the Act, or has filed an incomplete or incorrect annual fundraising notice, the Secretary may notify the exempt filer and identify each of the items required to comply. If an exempt filer has been so notified, the exempt filer shall submit the required documents within 30 days of the notice. A person so notified may request, in writing, additional time to comply

H. Incomplete Application for Registration. For persons who have filed an incomplete application for registration under §6-404 of the Act, the Secretary may allow an additional 15 days from the date of the notice of an incomplete application in which to comply. A person so notified of an incomplete application for registration may request, in writing, an additional 30 days in which to comply.

#### Regulation .04 Allocation of Expenses.

*COMAR 01.02.04.04*

A. Program Services Expenses.

  (1) Program services expenses are activities which the organization was created to conduct and which form the basis for the organization's tax-exempt status. Each major program service shall be distinguishable from all other program services, and shall include activities, the costs of which can be practicably segregated and accounted for in the records of the organization.

  (2) Examples of program services expenses include, but are not limited to, the following:

    (a) Research;

    (b) Public education;

    (c) Professional education and training;

    (d) Patient services; and

    (e) Community services.

  (3) The expenses of public education materials and activities, which include a specific appeal for financial support, may be jointly allocated with other functions according to the Financial Accounting Standard Board's Statement of Position 98-2 and any subsequent accounting guidance.

B. Supporting Services Expenses. Supporting services expenses are the expenses related to the organization's auxiliary services that support program services. The expenses of supporting services shall be allocated between two classifications: management and general expenses, and fund-raising expenses.

C. Management and General Expenses.

  (1) Management and general expenses are the expenses which are not directly identifiable with any of the organization's program service activities or fund-raising activities but are indispensable to the conduct of each of them and to an organization's existence. They include expenditures for the overall direction of the organization, general record keeping, business management, general board activities, and related purposes.

  (2) Examples of management and general expenses include, but are not limited to, the following:

    (a) General board and committee meetings;

    (b) Executive direction;

    (c) General staff meetings;

    (d) Office management;

    (e) Accounting, auditing, and budgeting;

    (f) Legal services;

    (g) Personnel procurement;

    (h) Purchasing and distribution of materials unrelated to fund-raising activities;

    (i) Receptionist, switchboard, mail distribution, filing, and other central services;

    (j) Administrative reporting;

    (k) Legal and accounting services generated by papers required to be filed by the Act;

    (l) Fees required by the Act; and

    (m) Organization and procedure studies.

  (3) If the chief officer or any member of his staff spends a portion of his time directly supervising fund raising or program service activities, his salary and expenses shall be prorated among those activities. If the chief officer or any member of his staff spends all of his time supervising the overall direction of the organization, his salary and expenses shall be management and general expense.

  (4) Direct supervision of program services and of fund raising shall be allocated to those activities and not to the management and general activities.

D. Fund-Raising Expenses.

  (1) Fund-raising expenses are the expenses of those activities of which the intent and purpose is an appeal for financial support or the solicitation of funds. They include expenditures for activities that constitute an integral and inseparable part of an appeal for financial support.

  (2) Examples of fund-raising expenses include, but are not limited to, the following:

    (a) Transmitting appeals for contributions to the public;

    (b) Salaries of personnel associated with campaigns or other solicitations;

    (c) Fund-raising services and materials received from affiliates;

    (d) Publicizing fund-raising campaigns and special events (for example, by paid public relations counselors, by printed, radio, and TV material; in meetings with potential contributors; through campaign “kick-off” dinners);

    (e) Conducting fund-raising campaigns, including the services of fund-raising consultants and professional solicitors; purchasing, preparing, maintaining, and revising mailing lists; recruiting and training volunteer solicitors and other campaign personnel; soliciting in person or by mail; acquiring and distributing of seals and other enclosures with appeals for contributions, campaign kits, coin containers, and other fund-raising materials; and maintaining fund-raising records;

    (f) Participation in local federated and governmental fund-raising campaigns, including attendance at pre-campaign budget reviews;

    (g) Participation in fund-raising special events by employees of the organization benefited;

    (h) Solicitation of bequests, foundation grants, and other special gifts (for example, from corporations, from affluent individuals);

    (i) Clinics, workshops, and other activities for improving fund-raising techniques;

    (j) Preparation and distribution of fund-raising manuals and instructions;

    (k) Feasibility studies;

    (l) Goods, food, entertainment, or drink sold or provided in connection with an appeal for contributions; and

    (m) Postage and printing expenses incurred in connection with an appeal for contributions.

  (3) An organization shall allocate to fund-raising expenses an appropriate portion of the salaries of regular staff members who devote time to record keeping relating to fund-raising activities whether during a campaign period or other period of solicitation.

E. Additional Financial Information. The Secretary of State may require charitable organizations to provide additional financial information pertaining to the allocation of expenses.

#### Regulation .05 Repealed.

*COMAR 01.02.04.05*

#### Regulation .06 Payments for Property Sold or Services Rendered.

*COMAR 01.02.04.06*

If an organization implies or states that payments for property sold or services rendered by the organization will be used in whole or in part for charitable purposes, the act of selling property or rendering services shall be a solicitation, and all the payments shall be contributions.

#### Regulation .07 Declaratory Rulings as to Status.

*COMAR 01.02.04.07*

An organization uncertain of its status under that Act may request a declaratory ruling from the Secretary in accordance with COMAR 01.02.03.

#### Regulation .08 Repealed.

*COMAR 01.02.04.08*

#### Regulation .09 Determination of Charitable Purpose.

*COMAR 01.02.04.09*

A. Charitable Purpose and Noncharitable Purposes. An organization's governing instrument, actions, deeds, oral statements and written materials shall be used to determine whether the organization has a charitable purpose.

B. Solicitations. If a solicitation reflects both the charitable and noncharitable purposes of the organization, the proceeds of the entire solicitation shall be designated for charitable purposes.

#### Regulation .10 Method of Delivery of Required Forms and Other Written Materials.

*COMAR 01.02.04.10*

A. Mailing Address. The official mailing address of the Secretary for delivery and receipt of any mail, information, filings, registrations, applications, or other material required by the Act or regulations promulgated by the Secretary of State pursuant to §6-204 of the Act is: Office of the Secretary of State, Charitable Organizations Division, 16 Francis Street, Annapolis, MD 21401.

B. Electronic Submission. The Secretary may accept forms or other written materials required by the Act or regulations promulgated by the Secretary of State pursuant to §6-204 of the Act, by electronic transmission. The Secretary may specify or adopt additional forms or electronic filing requirements.

C. The signature of a person signing forms or other materials required by the Act or regulations promulgated by the Secretary of State pursuant to §6-204 of the Act shall be an original or electronic signature acceptable to the Secretary under Commercial Law Article, §21-117, Annotated Code of Maryland.

#### Regulation .11 Consolidated Filings.

*COMAR 01.02.04.11*

An organization which files a consolidated registration statement on behalf of its Maryland chapters, branches, or affiliates, shall state separately the names and addresses of those organizations included in the consolidated filing.

#### Regulation .12 Federated Fund-Raising Organizations.

*COMAR 01.02.04.12*

A federated fund-raising organization shall state the names and addresses of its member agencies in its registration statement.

#### Regulation .13 Employee of a Charitable Organization.

*COMAR 01.02.04.13*

In determining whether an individual is an employee of an organization, a professional solicitor, or a fund-raising counsel, the payment of payroll taxes on behalf of the individual and reporting the payments, salaries, or fees as income for the individual to the Internal Revenue Service is evidence that an employer-employee relationship exists. The Secretary may require proof that these are being reported to the Internal Revenue Service.

#### Regulation .14 Repealed.

*COMAR 01.02.04.14*

#### Regulation .15 Complaints.

*COMAR 01.02.04.15*

A. Complaints alleging a violation of the Act or these regulations may be filed with the Secretary.

B. A complaint shall:

  (1) Be in writing;

  (2) State the name, address, and telephone number of the complainant;

  (3) State to the extent possible the nature of the alleged violation, the date of occurrence, and the name of each person involved;

  (4) Include to the extent possible any materials distributed by the alleged violator; and

  (5) Include any other information which the complainant believes useful to sustaining the complaint.

#### Regulation .16 Disclosure of Information.

*COMAR 01.02.04.16*

The Secretary may request additional information which relates to a true and full disclosure of facts affecting a person's past or impending solicitation or practices, to aid the Secretary in the administration of the Act.

#### Regulation .17 Repealed.

*COMAR 01.02.04.17*

#### Regulation .18 Repealed.

*COMAR 01.02.04.18*

#### Regulation .19 Prohibited Acts.

*COMAR 01.02.04.19*

A. Closely Related Names. A person may not use a name, symbol, or statement so closely related to that used by a charitable organization or governmental agency that the use would tend to confuse or mislead the public.

B. Restrictions on Use of Name. A person may not use a name implying an activity in any field of law enforcement, public safety, fire fighting, or emergency services unless a majority of the members of the organization are actively engaged in that field.

C. Unordered Goods. A person who sends unordered goods, printed materials, or pamphlets to prospective contributors or purchasers may not request the return of these items or refer to the unordered items in an attempt to induce the prospective contributor or purchaser to make a contribution.

D. Duplicate Tickets. A person selling seats in connection with a charitable solicitation may not sell duplicate tickets for the same seat.

E. A person may not, in connection with the solicitation of contributions, make any false or misleading oral or written statement or other representation which has the capacity, tendency, or effect of deceiving or misleading the person solicited.

#### Regulation .20 Professional Solicitors' and Fund-Raising Counsel's Contracts.

*COMAR 01.02.04.20*

A. The Secretary of State shall make a determination that a contract between a professional solicitor or fund-raising counsel and a charitable organization does or does not comply with Maryland law within 30 days of the filing of the contract with the Secretary of State. Upon notification that a contract does not comply with the Maryland law, a new contract or contract addendum addressing the provisions not in compliance shall be executed and filed with the Secretary of State.

B. An application to register as a professional solicitor or fund-raising counsel shall be accompanied by a sample copy of the contract into which the professional solicitor or fund-raising counsel intends to enter with charitable organizations. The sample copy shall be completed to the extent necessary to disclose compensation and otherwise comply with Maryland law.

#### Regulation .20-1 Charitable Organizations Affiliated with State Agencies.

*COMAR 01.02.04.20-1*

A. A charitable organization affiliated with a State agency that is required to register with the Secretary of State as a charitable organization shall file with its registration statement and with each annual report an audit prepared in accordance with generally accepted auditing standards if it is required to do so under §6-402(b)(7)(i) of the Act.

B. The auditor's opinion shall state whether the financial statements present fairly the financial position of the charitable organization affiliated with a State agency and the results of its operations and changes in fund balance for the year then ended, in conformity with generally accepted accounting principles.

C. The auditor shall give an agreed-upon procedures report describing the procedures performed and shall make a finding with respect to each of the following items, stating whether anything came to the attention of the auditor which would cause the auditor to have an adverse opinion as to each item:

  (1) Whether the unrestricted resources of the organization were used in accordance with its purposes as stated in its charter, its bylaws, and the actions of its governing board;

  (2) Whether restricted gifts or grants have been properly segregated and used in accordance with the restrictions or designations imposed by the donor or grantor;

  (3) Whether all restricted funds are reported clearly as such;

  (4) Whether the organization is in compliance with agreements between the organization and its affiliated State agency, particularly as they relate to money due the State agency from the private foundation;

  (5) Whether the organization’s expenditures and activities are in compliance with the Internal Revenue Code, the Maryland Solicitations Act under Business Regulation Article, Title 6, Annotated Code of Maryland, and other federal, State, and local laws governing financial matters;

  (6) Whether securities owned by the organization are in existence and adequately accounted for;

  (7) Whether purchases and sales of securities were properly authorized;

  (8) Whether investment income and gains or losses have been recorded in the appropriate fund;

  (9) Whether adequate internal controls are in place to provide reasonable satisfaction that the amounts reported as contributions are not materially misstated;

  (10) Whether adequate internal controls are in place to provide reasonable satisfaction that expenditures are properly classified; and

  (11) Whether grants by the organization have been authorized by the governing board and procedures have been established to ascertain whether the grants made have been expended for their intended purposes.

D. If the auditor is unable to render an unqualified opinion regarding the financial statements of the organization or for any item in §B of this regulation, the auditor shall inform the organization in writing of recommendations for corrective action.

E. The auditor's written recommendations for corrective action shall be filed by the organization with its affiliated State agency and with the Secretary of State.

F. Review of Auditor's Recommendations.

  (1) The Secretary of State shall review the auditor's recommendations and determine whether:

    (a) Further auditing or other investigation is necessary; and

    (b) Action shall be taken based on the auditor's recommendations and any investigation conducted.

  (2) The Secretary of State may take one or more of the following actions based on the auditor's report or recommendations:

    (a) Require the organization to take corrective action;

    (b) Require the organization to report on corrective action taken within a certain time;

    (c) Delay the registration or renewal of the organization;

    (d) Refer the matter to the Attorney General for civil enforcement; and

    (e) Refer the matter to the appropriate State's attorney for prosecution.

#### Regulation .21 Penalties.

*COMAR 01.02.04.21*

A person who violates these regulations is subject to the penalties contained in Business Regulation Article, §6-619, Annotated Code of Maryland.

#### Regulation .22 Late Fee Waiver or Suspension.

*COMAR 01.02.04.22*

A. A charitable organization may request the Secretary of State to waive or suspend a late fee.

B. A request to waive or suspend a late fee must:

  (1) Be in writing;

  (2) Explain the cause or causes of the charitable organization’s late filing; and

  (3) To the extent such late filing was reasonably preventable, explain what has been or will be done to prevent future late filings.

C. In addition to the written request submitted in accordance with §B of this regulation, the Secretary of State may consider, among other factors and without limitation, the following when determining whether to grant a request to waive or suspend some or all of a late fee:

  (1) Whether the charitable organization has submitted all required outstanding annual reports to the Secretary of State;

  (2) Whether the charitable organization’s registration history includes previous late filings;

  (3) Whether the charitable organization already paid some of the late fee;

  (4) Whether the charitable organization previously asked for and was granted a late fee waiver or suspension; and

  (5) Whether the charitable organization has the ability to pay the late fee.

D. If the Secretary of State makes a determination to waive or suspend some of the late fee, the charitable organization must pay any remaining late fee within 30 days of notification of the Secretary’s decision.

E. Failure of a charitable organization to fully comply after being granted partial waiver or suspension of a late fee will result in revocation of the late fee waiver or suspension.

F. A partial or complete denial of a late fee waiver or suspension request is not an adverse action under COMAR 01.02.03.05.