New York attorney general Eric Schneiderman's office said the Donald J Trump Foundation was violating a state law requiring charitable organisations that solicit outside donations to register with the office's Charities Bureau.
"The failure immediately to discontinue solicitation and to file information and reports required under Article 7-A with the Charities Bureau shall be deemed to be a continuing fraud upon the people of the state of New York," according to a letter dated on Friday that the office posted online on Monday.
Trump's campaign has suggested that the probe launched by Schneiderman, a Democrat, was politically motivated.
Following a series of reports in The Washington Post that suggested improprieties by the foundation, Schneiderman's office began a probe into the Trump Foundation.
In its series on the Trump Foundation, The Washington Post reported that Trump may have violated US Internal Revenue Service rules against “self-dealing” by using foundation money to purchase two portraits of himself, which were then hung at his private golf clubs in New York and Florida.
The newspaper also said that Trump may have improperly used the foundation to settle legal disputes, including one at his Palm Beach, Florida, estate, diverted income from his business to the charity to avoid paying income tax, and donated foundation money to support Florida Attorney General Pam Bondi, a Republican, who was considering launching an investigation into Trump University, Trump’s for-profit education venture.
The Trump campaign said in a statement on Monday that the charity would cooperate with the investigation.
"While we remain very concerned about the political motives behind AG Schneiderman’s investigation, the Trump Foundation nevertheless intends to cooperate fully with the investigation," said Trump campaign spokeswoman Hope Hicks.
"Because this is an ongoing legal matter, the Trump Foundation will not comment further at this time,” she added.
Trump established the charitable foundation in 1988, but it runs no programs of its own. Instead, it donates money to other nonprofit groups such as the Police Athletic League for youths.