Let’s do a quick nonprofit pop quiz.
How many states have registration requirements for charitable solicitations?
A) None
B) 25
C) 45
Yes, friends, the answer is C.
Does this apply to my nonprofit?
A) No
B) Maybe
C) Yes
Again, we’re going with C.
If you’re receiving donations from out-of-state donors, it is extremely likely that you need to register in that state. There are exceptions for some organizations such as places of worship but do your research.
While the legal definition of charitable solicitation varies by state, it typically means you are asking for a contribution to your charity. Common solicitation strategies include direct mail, emails, phone calls, social media and having a Donate Now button on your website. Even a small, regional nonprofit can still have donors from all over the United States.
Besides wanting to be compliant with states’ laws and regulations, there are other important reasons to register.
Donor Transparency
Your Nonprofit’s Reputation
Penalties and Fines. States are increasingly taking action to enforce penalties, levy fines and even taking legal action to raise revenue for their coffers.
Many states publicly list noncompliant charities online.
If you plan to solicit out-of-state donors, think about how much you can raise because there are costs associated with registering your charity out-of-state. Registration fees range from as little at $10.00 to $400.00 or more. The Secretary of State is the registration authority in most, but not all, states. For example, in New Jersey, it’s the Department of the Treasury. In Michigan, it’s the Department of Licensing and Regulatory Affairs.
Do your homework before you expand your network of donors. It’s the smart thing to do.
Cheers,
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching and fundraising services for our nonprofit clients. We specialize in startup and smaller nonprofits because we understand your challenges. Please contact us for more information.