Some states have a requirement, for charitable organizations that are required to register to fundraise in the state, to annually submit reviewed or audited financial statements as a condition of remaining authorized to fundraise.  Both reviews and audits can be e6xpensive, with audits often costing around $10,000 in auditor fees alone, not to mention staff and audit committee time that also must be invested.

This means that, even if an organization’s strategic plans did not include an annual audit, the organization is now “on the hook” for an annual audit if the organization needs to continue receiving donations or grants from the applicable state.

Note that audit requirements generally only apply to organizations that have to file a charitable solicitation registration, because the audit is a requirement to maintain registration. If an organization is exempt from charitable registration requirements, the organization will generally be exempt from the audit requirement as well.

Note also that the charitable solicitation registration law and audit requirement law are scored separately. If a state has broad exemptions from registration for most religious organizations, but still has burdensome audit requirements for those organizations that are required to register, the state will still receive a lower score for this audit factor.

Below is a tier ranking of each state for this factor. Click on the state's name to open up its page, which provides more information on that particular state's overall score and relevant laws.