(1)The calculation of program services expenses and total functional expenses shall be based on the amounts of program services expenses and total functional expenses identified by the organization in the organization’s Internal Revenue Service (“IRS”) form 990 return or equivalent return required to be filed as part of the organization’s report to the Attorney General.
(2)Pursuant to ORS 128.760 (Issuance of disqualification order by Attorney General), a disqualification order may not be issued if the organization meets any of the following criteria:
(a)The organization is a private foundation as defined in section 509 of the Internal Revenue Code, as in effect on October 7, 2013.
(b)The organization is a community trust or foundation operating as described in 26 C.F.R. 1.170A-9(f)(10) and (11), as in effect on October 7, 2013.
(c)The organization is a qualified charitable remainder trust described in section 664 of the Internal Revenue Code, as in effect on October 7, 2013.
(d)The organization does not qualify to receive tax deductible contributions. This includes organizations that hold IRS 501(c)(4) status.
(e)The organization is not required to file annual reports with the Attorney General.
(f)The organization is not required to file an Internal Revenue Service form 990 return or an equivalent Internal Revenue Service return.
(g)The organization receives less than 50 percent of the organization’s total annual revenues from contributions or grants identified in accordance with Internal Revenue Service form 990 or an equivalent form.
(h)The organization has been in existence for less than four years, based upon the date of incorporation or organization.
(3)In addition to the exemptions outlined in OAR 137-010-0032 (Disqualification Orders)(2) and notwithstanding a finding that the charitable organization’s program services expenses fall below the minimum percentage specified in OAR 137-010-0032 (Disqualification Orders)(1), the Attorney General may decline to issue a disqualification order if the organization establishes:
(a)That the organization made payments to affiliates that should be considered in calculating the organization’s program services expenses;
(b)That the organization is accumulating revenue or charitable assets for a specific program purpose consistent with representations in solicitations. Such purposes may include a capital campaign, conservation campaign, development of an endowment fund, or similar purposes that result in the significant accumulation of charitable assets relative to program or other expenditures.
(c)The organization supports a related organization or is closely affiliated with another charitable organization such that the IRS form 990 reflects administrative or fundraising expenses incurred on behalf of the related or affiliated organization’s charitable programs. The making of grants to another organization is not sufficient to establish that the organization is related or closely affiliated to the recipient organization. The fact that the organizations have consolidated financial statements is relevant to establishing that the organizations are closely affiliated.
(d)The majority of the organization’s revenues are from sources that are not eligible for treatment as tax deductible charitable donations, including investment income, program service income, or payments from governmental entitites, or if the organization’s revenues from charitable donations average less than $200,000 per year.
(e)The organization’s IRS form 990 report contains typographical errors or other errors in its completion that would result in a program service expenditures of at least 30 percent if the errors were corrected.
(f)The organization has experienced unusual fluctuations in revenues or expenditures such that the program service calculation described in OAR 137-010-0032 (Disqualification Orders)(1) does not fairly reflect the organization’s historic expenditures on charitable programs.
(4)If an organization is registered with the Attorney General, has not yet filed at least three or the three most recent IRS form 990 returns with the Charitable Activities Section, but has filed such returns with the IRS, the Attorney General may utilize the IRS returns in connection with the calculation described in ORS 128.760 (Issuance of disqualification order by Attorney General) and OAR 137-010-0032 (Disqualification Orders)(1).
(5)A disqualification order may not be issued if an organization was eligible to and filed an IRS form 990EZ or 990N, rather than the full IRS form 990, for any one of its most recent three fiscal years or if the organization would have been eligible to file a form 990EZ or 990N for any one of its most recent three fiscal years, but voluntarily filed the full IRS form 990.
(6)If during the period under review, the organization changes its fiscal year such that it files an IRS form 990 for less than a full year, the Attorney General may make appropriate adjustments to ensure that the calculation described in OAR 137-010-0032 (Disqualification Orders)(1) includes at least three full years’ of expenditure information.
(7)For purposes of determining whether to issue a disqualification order or whether an organization has established that it should not be subject to a disqualification order, information contained in an organization’s reports filed with the Charitable Activities Section, the organization’s IRS form 990 returns, the organization’s website or other public sources of information, information provided by the organization, and any other sources of relevant information may be considered.
(8)A charitable organization may request a contested case hearing within 60 days after notification from the Attorney General that the Attorney General proposes to issue a disqualification order.
(9)When a disqualification order is issued, the charitable organization that is the subject of the order does not qualify for and may not claim exemption from taxation under ORS 307.130 (Property of certain museums, volunteer fire departments and literary, benevolent, charitable and scientific institutions) for the tax year following the tax year in which the order went into effect and subsequent tax years in which the order remains in effect.
(10)A disqualification order issued pursuant to ORS 128.760 (Issuance of disqualification order by Attorney General) and these rules remains in effect until such time as the charitable organization submits sufficient information to the Attorney General to demonstrate that the organization’s program services expenses meet the minimum percentage specified in ORS 128.760 (Issuance of disqualification order by Attorney General). A charitable organization may submit information under this subsection no earlier than one year after the disqualification order becomes final, and may not submit information under this subsection more than once each year after the initial submission is made. The information submitted under this subsection must include all Internal Revenue Service form 990 returns, or equivalent Internal Revenue Service returns, filed by the organization after the disqualification order became final.
Rule 137-010-0032 — Disqualification Orders,