The Compliance Requirements That Many Oklahoma Nonprofits Miss
Oklahoma generally has fewer regulatory hurdles and compliance requirements than other states, but that isn’t always the case. Oklahoma has numerous legal requirements for nonprofits under both the Oklahoma Solicitation of Charitable Contributions Act and the State’s tax laws. Compounding the perception problem, lax enforcement in the past has resulted in many nonprofits not even knowing some of these requirements exist.
With fraud on the rise, so too is enforcement. To make sure your organization stays compliant with State law, let’s discuss the primary requirements you have to meet if you’re operating a charitable nonprofit in Oklahoma:
Secretary of State Charitable Organization Registration
Nonprofits soliciting charitable contributions in Oklahoma generally must register with the Secretary of State as charitable organizations before soliciting donations, unless an exemption applies. That includes both foreign (based outside of the state) and domestic (based within the state) organizations. This is not the same as incorporating with the state - it’s a separate requirement just for charitable organizations.
Nonprofits must complete State Form FM0101 annually, which requires organizations to provide general information (like names of the corporate officers, mission statement, etc) and financial information (like fundraising expenses, amounts paid to professional fundraisers, program expenses, etc).
The registration fee is generally $65, although organizations receiving $10,000 or less in contributions may qualify for a reduced $15 fee. Nonprofits who don’t register are subject to enforcement actions by the State Attorney General’s Charity Enforcement Unit (CEU) and civil penalties.
See 18 O.S. § 552 (OSCN 2026), Oklahoma Solicitation of Charitable Contributions Act
Annual State Tax Return
Many nonprofits don’t know that they are required to file a state return in addition to their Federal 990. Oklahoma organizations exempt from federal income tax under IRC § 501(c) generally must file State form 512-E annually, no later than 30 days after the applicable federal filing deadline.
Organizations required to file a federal information return must attach a copy of that return, including applicable schedules, to Form 512-E. Organizations with unrelated business taxable income must also report that income and attach the applicable federal income tax return, such as Form 990-T.
Even if you don’t have any unrelated business taxable income, you are still required to file a state return. Failure to file a state return could result in civil penalties and other enforcement actions.
Report And Pay Tax On Unrelated Business Income
As part of your state and federal tax returns, you must report any unrelated business taxable income (UBTI) earned by your organization. Generally, unrelated business income arises from activities that meet the following three-part test:
- It is a trade or business,
- It is regularly carried on, and
- It is not substantially related to furthering the exempt purpose of the organization.
Unrelated business income defined, IRS.gov
Critically, unrelated business income may still be taxable even if the profits are used to support the charitable mission of the organization.
Example
Let’s say you operate a nonprofit with a large facility, and you decide to open a cafe to serve the surrounding area in the extra space. The profits from that cafe are $100,000 after the first year. You report $100,000 of unrelated business taxable income on your federal and Oklahoma returns.
Federal: UBIT is taxed at a flat rate of 21%*. You pay $21,000 in federal tax.
State: UBIT is taxed at a flat rate of 4%*. You pay $4,000 in state tax.
Assuming the full $100,000 is taxable in both jurisdictions, the combined federal and Oklahoma income taxes would total $25,000.
* For Corporations. Trusts have a different structure
Apply For Exemption From Ad Valorem Taxes
Many nonprofits own property, but just because you have received a federal tax exemption does not mean that you automatically are exempt from state property taxes. You must complete form OTC-988 to apply for an exemption.
In your application, you’ll provide details about the property, its usage, and information about your organization and its charitable mission.
Once approved, the exemption generally continues as long as the property remains eligible, although certain properties may be subject to additional reporting or renewal requirements.
Notify The Attorney General For Certain Major Events
Certain charitable organizations, including those organized or principally located in Oklahoma or holding more than $500,000 in assets in the state, may be required to notify the Oklahoma Attorney General before undertaking significant organizational changes. These requirements generally apply to organizations subject to charitable solicitation registration that have solicited contributions in Oklahoma for at least one year. For the events listed below, written notice generally must be provided at least 45 days in advance.
- The organization is dissolved or terminated
- The organization disposes of all or substantially all of the charitable assets or moves them out of state
- The organization is removed from the State’s jurisdiction (e.g. the org in its entirety moves out of state)
- The organization amends the governing docs of the organization that describe the charitable purpose and the use of charitable assets
- The organization merges, consolidates, or converts
Additionally, organizations subject to these requirements must notify the Attorney General within 20 days after receiving notice that their federal charitable income tax exemption has been revoked, modified, or denied.
What You Can Do
If you’re an officer or director of an Oklahoma nonprofit, make sure that your organization is meeting Oklahoma’s regulatory requirements, and that you have internal policies and procedures to make sure you fulfill those requirements over the long term.
Need help with a specific nonprofit compliance issue? Contact us.