Pennsylvania Raises Financial Statement Engagement Thresholds for Charities

Pennsylvania Senate Bill 1183, signed into law October 22, 2026, raises the contribution thresholds that determine whether a charitable organization must obtain an audit, review, or compilation under Pennsylvania’s Solicitation of Funds for Charitable Purposes Act. The changes may give some organizations more flexibility, but they do not eliminate other audit, grant, lender, or governance requirements.

What changed?

Under the enacted legislation, the thresholds are as follows:

The law does not eliminate the underlying engagement requirements. Instead, it raises the dollar thresholds. As a result, some organizations may satisfy their state charitable reporting requirements with a less intensive engagement—or, if annual contributions are below $150,000, without an engagement required under this provision.

Who is most likely to be affected?

The practical effect will depend on an organization’s annual contribution revenue and on any other legal, grant, lender, or governance requirements that apply to the organization.

Organizations between $750,000 and $1 million

Under the previous thresholds, organizations with annual contributions of $750,000 or more were in the audit tier. Under the new thresholds, organizations with annual contributions of at least $750,000 but less than $1 million move into the review-or-audit tier. A review may satisfy the state requirement, although the organization’s board, funders, lenders, grant agreements, or other governing documents may still require an audit.

Organizations between $500,000 and $750,000

These organizations remain in the review-or-audit tier under the new thresholds. The change for this group is that the state audit threshold increases from $750,000 to $1 million. An organization in this range is therefore no longer in the audit tier based solely on the state charitable reporting requirements.

Organizations between $250,000 and $500,000

Under the previous thresholds, these organizations were in the review-or-audit tier. Under the new thresholds, they move into the compilation, review, or audit tier. A compilation may be an appropriate alternative for state-reporting purposes, but the overall decision should also consider the organization’s financial reporting needs, internal controls, funding sources, and stakeholder expectations.

Organizations between $150,000 and $250,000

These organizations remain in the compilation, review, or audit tier. The main change is that the lower boundary of this tier increases to $150,000. Organizations in this range remain subject to an engagement requirement under the new thresholds.

Organizations between $100,000 and $150,000

This group experiences one of the clearest changes. Under the previous thresholds, these organizations were in the compilation, review, or audit tier. Under the new thresholds, the state requirement is optional for organizations with annual contributions below $150,000.

Optional does not necessarily mean unnecessary. Organizations should consider whether an engagement is required by a grant agreement, financing arrangement, organizational policy, donor expectation, board resolution, or other obligation.

When do the changes take effect?

The act states that the changes apply to contributions received in calendar years beginning after the effective date of the section. The act takes effect in 120 days, or beginning in 2027.

What should nonprofit leaders do now?

Although the law creates additional flexibility, organizations should coordinate any change to their audit, review, or compilation plans with their CPA. In the meantime, nonprofit leaders can take several practical steps:

• Project annual contributions. Estimate whether the organization is likely to fall near $150,000, $500,000, or $1 million in annual contributions.
• Check other obligations. Review grant agreements, debt documents, donor restrictions, board policies, and governmental or pass-through funding requirements for independent audit or review provisions.
• Communicate with the board. The board or finance committee should understand that a lower state threshold requirement may not be the same as the organization’s best governance or accountability practice.

A threshold change is not a reporting-strategy decision

An audit or review can support donor confidence, strengthen oversight, satisfy financing or grant requirements, and help an organization identify control or reporting issues. A decision to move to a compilation, or to forgo an engagement where permitted, should consider the organization’s full operating environment.

This article is based on Pennsylvania Senate Bill 1183, Printer’s No. 1757, and is provided for general informational purposes. It is not legal advice and does not determine an organization’s filing or financial-statement engagement obligations. Please contact us if you have any questions on how this new regulation may impact your organization.