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Multi-State Charitable Solicitation Registration
If you manage a charity and raise funds, there is a good chance you need to be registered with a state agency that regulates the solicitation of funds for charitable purposes. To make it even more complex, if you solicit or even receive contributions from more than one state, you may need to be registered in other states. Furthermore, if your website has a donation button, you may need to register in more states than you have realized.
However, certain charities are specifically excluded or exempt from this requirement if they meet certain criteria. The specific exemptions can vary from state to state.
Solicitation Definitions and Fundraising Regulations Vary by State
The laws governing charitable solicitation registration differ widely from state to state. However, the core principle remains the same: if your charity is actively asking for contributions, that activity is likely subject to state regulation. Whether you’re fundraising through your website, social media, text messages, phone calls, direct mail, or even in-person events, registration in each state where you solicit is likely required. Generally, most states require charities to register before beginning any fundraising efforts.
Cities and counties regulate solicitation as well. If you hold a fundraising event in a city or county for the first time, you should check the regulations and ordinances that may address that issue.
Submitting a Charitable Registration Application
Most states have their own specific process for submitting a charitable registration application. Steps typically include submitting the state’s registration form, paying a registration fee, and providing supporting documentation. Documentation may include:
- A copy of your charity’s Articles of Incorporation, Organizational Charter and Bylaws
- A copy of your charity’s IRS Determination Letter (confirming your tax-exempt status)
- Your organization’s IRS Form 990 Return of Organization Exempt From Income Tax (annual information return)
- A list of your charity’s Officers and Directors
Additionally, many states assess fees based on the previous year’s gross revenue or the amount of contributions received within that state.
Charitable Registration Renewals
Once your charity successfully registers in the states where it is soliciting do donations, it’s important to stay on top of renewal deadlines. Registration renewals typically occur annually or biannually, depending on the state.
Renewal applications typically require updated financial documentation, so it’s important to be prepared to submit reports on your charity’s fundraising activities and financial status each year. Keep in mind that some states may require reviewed or audited financial statements based on contribution thresholds. These statements must be accompanied by a report prepared and signed by a licensed, independent public accountant or certified public accountant.
Consequences of Unlicensed Solicitation
Failing to register before soliciting contributions can have serious consequences. Penalties vary by state, but they can include:
- Fees and penalties
- Revocation of tax-exempt status at the state level
- Suspension or denial of the right to solicit contributions
- Administrative or legal action
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