Charitable solicitations registration (also called “Fundraising Compliance”) is not optional, it’s the law. 41 states require registration and the requirements vary by state. Think of it like a license to legally fundraise in your home state and any other states you accept donations from to fund your mission.
Charitable Solicitations Registration Requirements
It’s important to understand that charitable solicitations registration is no longer just required for large nonprofits running massive nationwide fundraising campaigns. Nearly every nonprofit these days falls under the umbrella of requirements.
Without a thorough understanding of the state-level charitable solicitations laws and registration requirements, most fundraising activities can subject nonprofit organizations to significant financial and legal risk.
For example, if you’re running mail, phone, and email campaigns to foundations, corporations, and individuals then it’s highly likely you’re triggering state charitable solicitations registration requirements.
Additionally, with the massive reach available through the internet, nationwide registration may be required.
Nonprofits need to be aware that the “donate” button on your website, social media, crowdsourcing, and mobile fundraising can all lead to nationwide fundraising compliance requirements.
Additionally, donations through professional solicitors, commercial co-ventures, and fundraising consultants can also trigger registration requirements.
Every state except California (which provides a grace period of 30 days after receiving assets) requires charitable solicitations registration before your nonprofit begins fundraising, regardless of whether you’ve actually received any money. Remember, it’s not about receiving money, it’s about the avenues you have to receive it.
Nonprofits are sometimes unaware of fundraising compliance requirements and start raising money immediately upon launch, forgetting about registration requirements. If this is you, then you should register your nonprofit ASAP!
Most states will process a “good-faith” late registration if your nonprofit can legitimately explain ignorance of registration requirements. However, if you continue to fundraise despite knowing the registration requirements, states are much less cooperative and the fees, penalties, and damage to your reputation that come from noncompliance are brutal. It’s just not worth it.
41 states require charitable solicitations registration, and navigating the maze of laws and complex paperwork for the registration/renewal regulations can cost a lot of time and money.
Each state has their own application consisting of their specific form, supporting documentation, and a filing fee. On a base level, applications must include your nonprofit’s IRS Form 990 (basically the nonprofit’s version of a federal tax return) IRS Determination Letter, a list of your Board of Directors and a variety of other requirements.
Also, fees vary by state and are calculated based off your nonprofit’s total gross revenue in the previous year plus the amount of contributions received in that specific state.
In a nutshell, this can all add up to a lot of work, time, and money which is why most nonprofits seek out help. If you’d rather focus on your mission and not deal with the headaches, then we can help you. We achieve fundraising compliance for our customers by leveraging technology with our quick, easy-to-use, online platform. You can learn more about it here.
Depending on the state, certain types of nonprofits can be exempt from charitable solicitations registration. These exemptions typically include nonprofits receiving less than a certain amount of donations annually and certain religious organizations, schools, and hospitals.
One would think this would then allow a “free pass” on the hassle of fundraising registration, but unfortunately, that is not the case.
Organizations that file exemptions still require an application, registration, and renewal process on an annual basis which puts them up against the challenges of determining multiple state requirements, laws, regulations and a complex patch of paperwork, similar to the charitable solicitations registration process.
Charitable solicitations registration allows you to legally and confidently fundraise at scale, make your donors happy, and drive your mission forward. It’s a best practice for any successful nonprofit and should be a priority for your board of directors.
The last thing you want is an unexpected state notice enforcing fundraising compliance on you which can result in, penalties, fines, loss of the right to fundraise, loss of tax-exempt status, listed as non-compliant in public databases that donors can search, and damage to your credibility and public image.
Therefore, be proactive and make sure you understand what is required of your nonprofit to be able to fundraise legally, whenever and wherever you want.
And remember, donors are becoming more educated and will only support credible nonprofits. It’s common for them to ask for proof of charitable registration before donating, which is all the more reason to ensure your organization’s fundraising compliance now.
Cheers to your mission,
Jacqui Long | Yippiekiyay