Committee hears bill to exempt small food-distribution nonprofits from charitable-solicitation audit requirement

The House Regulatory Reform Committee on May 20 considered House Bill 4745, a bill sponsors described as exempting small, community-based nonprofits that collect and distribute donated food from certain registration and audit requirements under the Charitable Organizations and Solicitations Act.

Representative Wolford opened the bill’s testimony, saying the measure would create an exemption for groups that raise only limited funds, do not pay professional solicitors and already file federal Form 990s. Wolford said the bill is intended to avoid forcing small volunteer organizations to spend limited resources on audits and legal compliance designed for large professional fundraisers.

Rhonda Callahan, founder and executive director of a volunteer nonprofit identified in testimony as Torch 180, told the committee her organization picks up donated groceries from area Trader Joe’s and Panera and distributes them to people in need. Callahan said in-kind donations reported to the organization’s Form 990 totaled about $500,000 last year, reflecting the retail dollar value of food donation receipts. She said her group typically raises about $30,000 in cash from grassroots donors and uses funds for gasoline, insurance and food distribution; when the in-kind donation amount was counted on the charity filing, state reviewers told Torch 180 it would be subject to a required audit that the organization estimated would cost $18,000 to $20,000.

Callahan said an audit requirement of that scale would jeopardize the nonprofit’s ability to operate and would force staff and volunteers to divert resources away from serving food-insecure households. Committee members questioned the basis for the statutory threshold cited in the bill; Representative Nyer asked why $25,000 was used, and the sponsor and witnesses pointed to language in Michigan Compiled Laws tied to the definition of charitable organizations and reporting thresholds.

Representative Wozniak and others asked how many organizations might be affected; sponsors said they did not have a statewide count but expressed concern that requiring audits for in-kind donations could discourage or diminish small food-distribution efforts.

Support cards read into the record included a supportive card from LARA’s Paige Fultz, and the Department of Attorney General supplied a supportive-with-amendments card for related cannabis enforcement bills (recorded separately). No formal committee vote on HB 4745 was recorded at this meeting; the committee proceeded to other agenda items after the hearing.