New Massachusetts Audit and Review Thresholds: What Non-Profits Need to Know

Key Changes Effective December 3, 2024

Massachusetts is updating its financial reporting requirements for non-profits and public charities as part of the Economic Development Bill. The new law raises the audit threshold from $500,000 to $1,000,000 in gross support and revenue and the review threshold from $200,000 to $500,000, easing compliance for smaller non-profits. Under the new law, non-profits with over $1,000,000 in gross support and revenue must submit audited financial statements, while those earning between $500,000 and $1,000,000 can submit reviewed statements.

By raising the audit and review thresholds, Massachusetts is making it easier for smaller non-profits to comply with reporting regulations without compromising transparency. Understanding these updates is essential for organizations to remain compliant and take advantage of potential benefits.

Non-profits should assess their financials to determine their reporting requirements.

Implications and Benefits for Non-Profits

Adapting to the new reporting thresholds is not just about compliance; it also presents opportunities for improved financial transparency, better resource management, and enhanced funding potential.

Key Benefits:

• Regulatory Compliance & Transparency: Meeting financial reporting requirements helps organizations adhere to state regulations, strengthening trust with donors, stakeholders, and the public.
• Improved Financial Management: Regular financial reviews and audits provide insights into budgeting, spending, and operational efficiency, helping non-profits allocate resources more effectively.
• Stronger Funding Potential: Organizations with well-documented financials may have a competitive edge when applying for grants, securing donations, or attracting corporate sponsorships. Many funders prioritize transparency in their grant-making decisions.
• Access to Financial Incentives: The Economic Development Bill includes other developments for non-profit organizations, including new tax credits and funding opportunities, such as the following:
  • Expanded Life Sciences Tax Incentives: Encouraging innovation in the non-profit life sciences sector.
  • Statewide Internship Tax Credit: A $10 million annual fund helping non-profits offer internships affordably.
  • Live Theater Tax Credit: A $5 million annual fund to support non-profit arts organizations.
  • Community Development Funding: Increased investments in local economic projects, benefiting community-focused non-profits.

By understanding and leveraging these changes, non-profits can ensure compliance while also positioning themselves for long-term financial stability and growth.

How Tonneson + Co Can Help

Tonneson + Co specializes in audit and assurance services for non-profits, ensuring compliance with Massachusetts’ new reporting requirements. Our team provides tailored financial solutions, helping organizations implement best practices and maintain financial health.

The recent changes present both challenges and opportunities for non-profits. With the right financial partner, organizations can adapt confidently and continue thriving.

Contact Tonneson + Co today to learn how our audit and assurance services can support your non-profit’s long-term success.