Charitable Solicitation Registration: Why Is It Important?
If you are a nonprofit executive, you know that fundraising is vital for expansion and growth. Because your fundraising efforts are key, it is vital that you are registered to raise money in each state where you solicit funds.
Many organizations are not aware that Charitable Solicitation Registration is an important part of the fundraising process, now more than ever. Failing to register could result in hefty fines for your organization. This blog will provide some basic information to start you on your way.
What exactly is a Charitable Solicitation?
The simple definition is the act of asking for something of value. Currently, 41 states require charities to register before soliciting funds from state residents. But here is where it gets confusing: there is no “uniform statute” for charitable solicitation registrations, and no two state laws are alike.
How do I know if my charity needs to register?
Generally, when a charity, or 501(c)3,organization, is formed, it is required to register in its home state. As fundraising efforts expand to other states, additional registration is required. There are some laws regarding minimum revenue thresholds, but typically, if you receive a donation from a state, you should be registered there. Other exceptions may apply, especially if you are a religious organization. Every state has an exemption for religious organizations, although the scope of that exemption varies from state to state.
What if I only solicit donations online.
If your website has a “DONATE” button, you should be compliant in all 41 states that have requirements. When you fundraise online, in most cases it is considered fundraising nationwide. When charities receive online donations, they usually receive the address of the donor in the course of the transaction. Subsequently, the organizations will follow up by email or “snail mail” to ask for more donations. This would require you to register in each state where there is a donor.
Once I register in all states where I fundraise. I am done, right?
Not quite. Charitable Solicitation Registration is ongoing. Once you register in a state, your organization must renew the registration annually.
Charitable Solicitation Registration can be quite confusing. Not only do all states have different regulations, they are constantly changing. It takes a lot of time and effort to maintain compliance, but a good organization knows the value. We recommend you consult an attorney who specializes in this field for proper guidance in this area.
*NOTE: This article does not constitute legal advice. Please consult an attorney for current Charitable Solicitation Registration information.
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