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As charitable organizations expand their fundraising efforts in Maryland, state law requires greater financial reporting to promote transparency and accountability. For many nonprofits, this means obtaining independently audited financial statements prepared by a Certified Public Accountant (CPA).

Maryland determines its audit and review requirements using gross income from charitable contributions received during the organization’s most recently completed fiscal year. Effective July 1, 2026, an independent CPA audit is required when those charitable contributions are at least $1,000,000, while a CPA review applies at lower contribution levels. (Maryland Business Regulation § 6-402, as amended by 2026 Md. Laws Ch. 393; Maryland Secretary of State, Registration Instructions)

Because the reporting threshold is tied to charitable contributions rather than total organizational revenue, nonprofits should evaluate the composition of their funding before determining which financial reporting requirement applies. The Maryland Secretary of State provides specific instructions for calculating charitable contributions from Form 990, Form 990-EZ, Form 990-PF, or Form COF-85. (Maryland Secretary of State, Registration Instructions)

Whether your organization serves Baltimore, Annapolis, Frederick, Rockville, Columbia, Salisbury, Hagerstown, or communities throughout Maryland, planning ahead for your first audit can make the annual registration process far more efficient.

Maryland Audit Requirements at a Glance

Quick Answer

If your Maryland charitable organization reports at least $1,000,000 in gross income from charitable contributions for its most recently completed fiscal year, Maryland generally requires an audit by an independent CPA. Organizations with at least $400,000 but less than $1,000,000 in charitable contributions generally must submit a CPA financial review. (Maryland Business Regulation § 6-402, as amended by 2026 Md. Laws Ch. 393; Maryland Secretary of State, Registration Instructions)

Organizations receiving:

Because the reporting level changes as charitable contributions increase, nonprofits should review contribution totals annually rather than assuming the same reporting requirement will apply every year. The current thresholds took effect July 1, 2026. (2026 Md. Laws Ch. 393)

Understanding Charitable Contributions in Maryland

For Maryland charitable registration purposes, the key measurement is gross income from charitable contributions. The Secretary of State’s instructions explain how those contributions are calculated from the organization’s federal return or Maryland Form COF-85. (Maryland Secretary of State, Registration Instructions)

Depending on the organization and filing form, charitable contributions can include amounts reported as gifts, grants, fundraising-event receipts, and similar support. Maryland’s instructions also note that certain government money is not treated as a charitable contribution for this calculation. (Maryland Secretary of State, Registration Instructions)

• Individual charitable donations
• Corporate contributions
• Foundation grants
• Federated fundraising organizations
• Public fundraising campaigns

Because not every revenue stream is treated as a charitable contribution for Maryland registration purposes, program service revenue, investment income, and other operating income should not automatically be included in the threshold calculation.

Organizations should reconcile their contribution calculation to the applicable Maryland filing instructions and discuss unusual funding sources with their CPA before determining whether an audit is required. (Maryland Secretary of State, Registration Instructions)

Maryland Law at a Glance

The Maryland Secretary of State’s Charitable Organizations Division administers charitable registrations and reviews financial and governing documents filed by organizations soliciting charitable contributions in the state. (Maryland Secretary of State, Charities Division)

Registered charities submit annual registration materials together with the appropriate level of financial statements. Under the current rules, a CPA review generally applies from $400,000 to less than $1,000,000 in charitable contributions, and an independent CPA audit applies at $1,000,000 or more. (Maryland Secretary of State, Registration Instructions; 2026 Md. Laws Ch. 393)

Organizations expecting significant fundraising growth should begin discussing audit planning with their CPA well before the fiscal year closes.

Preparing for a Maryland Nonprofit Audit

Preparing early helps reduce delays and allows nonprofit leadership to address accounting questions before audit fieldwork begins.

Your CPA will typically request:

• General ledger
• Trial balance
• Public support schedules
• Contribution records
• Grant agreements
• Bank reconciliations
• Board meeting minutes
• Investment statements
• Fixed asset schedules
• Internal control documentation
• IRS Form 990
• Prior-year financial statements

Maintaining organized records throughout the year can significantly streamline both the audit and Maryland’s annual registration process.

Common Reasons Maryland Nonprofits Reach the Audit Threshold

Organizations often exceed Maryland’s audit threshold because of changes in fundraising activity rather than operational expansion alone.

Examples include:

• Successful capital campaigns
• Large foundation grants
• Major donor gifts
• Community fundraising initiatives
• Multi-year fundraising drives
• Significant year-end charitable giving

Monitoring public support throughout the year enables nonprofit leadership to anticipate audit requirements before annual filings become due.

Benefits Beyond Compliance

Although Maryland law requires audited financial statements once charitable contributions reach the applicable threshold, an independent audit also offers long-term organizational benefits. (Maryland Business Regulation § 6-402, as amended by 2026 Md. Laws Ch. 393)

A financial statement audit can help your nonprofit:

• Increase donor confidence
• Improve board oversight
• Strengthen internal financial controls
• Enhance grant competitiveness
• Improve financial reporting processes
• Demonstrate accountability to regulators
• Support future organizational growth

Many nonprofits find these benefits extend well beyond satisfying Maryland’s annual filing requirements.

Why Choose ELT CPA LLC?

ELT CPA LLC provides independent nonprofit financial statement audit services for charitable organizations throughout Maryland.

Our professionals understand nonprofit accounting standards, Maryland’s charitable registration requirements, and the unique reporting rules based on public support. We work closely with nonprofit leadership to complete efficient audit engagements while minimizing disruption to daily operations.

Whether your organization is preparing for its first required audit or has completed audits for many years, ELT CPA LLC can help you navigate Maryland’s nonprofit reporting requirements with confidence.

Frequently Asked Questions

Does Maryland use revenue or contributions?

Maryland uses gross income from charitable contributions to determine the CPA review and audit thresholds, rather than total organizational revenue. (Maryland Business Regulation § 6-402; Maryland Secretary of State, Registration Instructions)

What counts toward Maryland’s charitable contribution threshold?

The Maryland Secretary of State provides form-specific instructions for calculating charitable contributions from Form 990, Form 990-EZ, Form 990-PF, or Form COF-85. Organizations with unusual funding sources should review those instructions carefully before determining their filing level. (Maryland Secretary of State, Registration Instructions)

What annual filing includes the audited financial statements?

Audited financial statements are generally submitted as part of the organization’s charitable registration or annual renewal materials filed with the Maryland Secretary of State. (Maryland Secretary of State, Registering a Charity)

Should we begin planning before reaching $750,000?

Yes. Organizations approaching the $1,000,000 charitable contributions audit threshold should engage an independent CPA well before fiscal year-end to allow sufficient time for audit planning and fieldwork.