Beneficial Ownership Reporting Guide
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Who Is the Beneficial Owner of a Nonprofit Organization—Answered

In light of the Corporate Transparency Act (CTA) taking effect on January 1, 2024, many organization owners started wondering how their entities would be affected. The CTA requires all reporting companies to submit beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).

Identifying beneficial owners in many legal entity types is relatively simple due to their quantifiable ownership interests. The situation is more complex with nonprofits, so this guide answers an important question—who is the beneficial owner of a nonprofit organization?

We’ll also introduce you to Harbor Compliance and the many ways we simplify BOI reporting to provide convenience and peace of mind.

Do Nonprofits Have Beneficial Owners?

The CTA defines beneficial owners as individuals who meet one of the following two requirements:

  1. Having substantial control over a company
  2. Owning at least 25% of the company’s ownership interests

The second requirement is the main cause of confusion for nonprofit owners since nonprofits don’t have percentage-based ownership interests like shares. Still, this doesn’t mean they don’t have beneficial owners since the first criterion is still applicable.

Anyone who controls a nonprofit’s operations can be considered a beneficial owner. This can be a director or another senior officer, as well as anyone who can appoint/remove senior officers or otherwise significantly impact a nonprofit’s general activities.

Such individuals should be identified, and their BOI must be reported to FinCEN if the nonprofit is considered a reporting company. This begs another important question—which nonprofits are required to file a BOI report?

Are Nonprofits Exempt From Beneficial Ownership Reporting?

On its own, nonprofit status doesn’t exempt a company from BOI reporting. Nonprofits can be formed as corporations and LLCs, which makes them reporting companies—unless they’re tax-exempt.

Specifically, nonprofits and other entities that are tax-exempt under Section 501(c) of the Internal Revenue Code are also exempt from the CTA and BOI reporting. Some examples of 501(c) exempt nonprofits include the following:

  • Charitable organizations
  • Scientific or educational organizations
  • Social welfare organization

If your nonprofit isn’t 501(c) tax-exempt, it’s treated as a regular reporting company, and you must submit a BOI report.

Note that two additional Sections of the Internal Revenue Code exempt the following entity types from reporting:

  1. Political organizations, as defined in Section 527(e)(1) of the Code
  2. Trusts, as described in Section 4947(a) of the Code

For a complete list of CTA exemptions, you can consult FinCEN’s Small Entity Compliance Guide.

What Information Is Required From Beneficial Owners in a Nonprofit?

If you don’t qualify for an exemption, you must provide the same information on beneficial owners as other reporting companies. The required information is as follows:

  • Full legal name
  • Date of birth
  • Complete current address
  • Image, unique number, and issuing jurisdiction of a government-issued identification document

You can use a beneficial owner’s passport, driver’s license, or any identification document issued by the state, tribe, or local government as proof of identity.

If your nonprofit was formed on or after January 1, 2024, you must also provide the above information for company applicants. There are two types of company applicants, as explained in the following table:

Company Applicant Type Definition
Direct filer The person who directly formed the organization by submitting a relevant filing to the secretary of state or equivalent entity
Individual who controls or directs the filing action The person who was responsible for directing the filing (even if they didn’t directly file the document)

The first category of company applicants is required for all reporting companies, while the second is only required if two or more people were involved in the filing process.

Harbor Compliance—BOI Reporting Simplified

If you’re unsure how to identify a beneficial owner of your nonprofit, Harbor Compliance can help. Our BOI Reporting Service not only clarifies any misunderstanding or confusion but also handles the entire reporting process on your behalf.

When you sign up, we’ll gather all the aforementioned information on your organization’s beneficial owners to ensure no stone is left unturned. We’ll then submit your initial BOI report and help you keep all the relevant information up-to-date so that you don’t need to worry about looming threats of inaccurate reports.

The initial report is only one part of our service. We’ll also provide ongoing support to help you keep your BOI accurate and up to date, so you won’t need to constantly think about whether you need to send an updated report. Failure to submit updates and corrections timely can expose you to civil or criminal penalties, which are outlined in the following table:

Besides nonprofits affected by the CTA, the service is available to all reporting companies, including:

  • For-profit corporations and LLCs
  • Small businesses
  • Multientity and multinational businesses

Benefits of Leveraging Our BOI Reporting Service

Nonprofits are somewhat of a gray area when it comes to BOI reporting due to a lack of clear ownership present in other legal entity types and several exemptions that apply to them. While you can work out these intricacies yourself, doing so might be too time-consuming and shift your focus away from running your nonprofit.

Our BOI reporting service saves you a considerable amount of time you can put to better use. It also offers additional advantages, most notably:

  • Worry-free updates and corrections—Outdated BOI and unnoticed mistakes might be seen as CTA violations and expose you to civil or criminal penalties, so you should be on the constant lookout for them. Harbor Compliance solves this issue in two ways:
    • We send you automated periodic reminders to check your BOI for updates, so you don’t need to think about them all the time.
    • If any corrections or updates are needed, we submit them on your behalf so that you don’t need to fill out and file updated reports on your own. Reminders and updates/corrections come at no additional cost.
  • Easy BOI tracking—If you opt for our Records Manager add-on, you can track your organization’s leadership information without juggling multiple spreadsheets and documents. All relevant information will be displayed in a centralized hub, ensuring clarity and convenience.

How To Order the BOI Reporting Service

You can get started with our BOI Reporting Service in minutes—all you need to do is complete the signup wizard, and we’ll take it from there.

When you open the wizard, choose Report BOI for a Nonprofit that is NOT 501(c) Exempt. Note that there are two alternative options suitable for other business structures:

  1. Single business
  2. Multiple entities

Regardless of the selected option, you’ll be taken to a form where you can enter your contact and company information. Fill out the form and check out, and we’ll take over your organization’s BOI reporting process as soon as we gather the necessary information.

Other Ways Harbor Compliance Helps You Meet Your Regulatory Obligations

The BOI Reporting Service is only a small part of our extensive service portfolio. If you still haven’t formed your nonprofit, we can take care of the incorporation or charitable registration process alongside your 501(c) tax exemption. Of course, we can also incorporate S-Corps and C-Corps and complete the LLC formation process from start to finish.

Regardless of your organization’s business structure, we can support its growth throughout its lifecycle through numerous services, most notably:

If your organization isn’t tax-exempt, we can help you complete various tasks, including:

Harbor Compliance makes it easy to submit various filings to the secretary of state or similar governing body through the Drop-Off Filing Service. We can also obtain numerous documents on your behalf (certificate of good standing or authority, certified copies, etc.).

To make sure you never miss an important legal notice, you can appoint Harbor Compliance as your registered agent. You can also leverage our Change of Agent Service if you already have an agent but wish to partner with a different one.

If you need business licenses to operate in your jurisdiction, we’re here to help you obtain and manage them. Besides general business licenses, we take care of various industry-specific ones (construction, engineering, and more).

BOI Reporting FAQs

Here, you’ll see some of the most commonly asked questions about BOI reporting. For additional guidance, you can visit FinCEN’s FAQ page or explore our extensive Information Center that contains resources on numerous regulatory matters.

Virtually all legal entity types—including a 501(c)3—have individuals who can be considered beneficial owners due to their substantial control over the organization. However, 501(c)3 organizations are exempt from CTA requirements and don’t need to report BOI.

The CTA exempts 23 legal entity types for BOI reporting, and there are five exceptions from the beneficial owner definition. If an individual qualifies for an exception, their information doesn’t need to be included in the report.

Failure to submit a BOI report and update/correct it as needed can lead to a civil penalty of up to $500 per day of the continued violation. There’s also a criminal penalty of up to $10,000, two years of imprisonment, or both.

You can file a BOI report through FinCEN’s secure online portal. If you’re unable to submit the report electronically, reach out to FinCEN for guidance on the available alternatives.

Make BOI Reporting Effortless With Harbor Compliance

According to FinCEN, gathering and submitting your beneficial ownership information can take up to three hours. If you want to outsource filing to a team of experts, order our BOI Reporting Service today.

To check if your organization meets all of its additional obligations and avoid unpleasant surprises, you can also get a free Harbor Compliance Score™. It will highlight any red flags worth addressing to help you operate in accordance with the law. If you need help along the way, inquire about our additional services for a custom solution.

Harbor Compliance also offers an advanced software solution that helps you stay on top of regulatory requirements. Schedule a demonstration to see how it works.