Many nonprofit executives incorrectly believe that 501(c)(3) organizations can fundraise without limitation. Having an 501(c)(3) determination letter from the IRS does not necessarily mean an organization can legally fundraise in every state. Charities are not only regulated by the IRS but also the states in which they fundraise. Forty-one states require charities to register in order to solicit donations from their citizens. This process is called charitable solicitation registration, or simply, fundraising registration. These requirements generally extend to applying for grants, as well.
Failure to comply with charitable solicitation requirements can lead to costly fines and penalties. Officers and directors can be held civilly and criminally liable. Nonprofits can lose their state recognition of tax exempt status and perhaps worse of all, their right to solicit donations in the state.
Registering in every state in order to be compliant is important, but it is a huge undertaking. The requirements vary by state and there is very little uniformity. Harbor Complaince created a free white paper to help nonprofit executives and board members understand these complex requirements. Their Charitable Solicitation Compliance white paper provides in-depth information on the following:
- Registration and renewal requirements and fees
- State applications vs. Unified Registration Statement (URS)
- Compliance for online fundraising and “Donate Now” buttons
- Consequences and penalties for noncompliance
- Reference of fees and requirements for each state
Downloading the white paper, and reviewing the newly updated Fundraising Compliance Guide, are great first steps to becoming educated on the requirements and ensuring that your organization is compliant.
Contributed by Harbor Compliance’s Erin Cusack: Erin Cusack is a Marketing Manager at Harbor Compliance, a leading provider of compliance solutions for organizations of all types and sizes. Headquartered in Lancaster, Pennsylvania, Harbor Compliance partners with organizations in every state and over 25 countries abroad to help solve the most challenging compliance problems. With clients that range from the largest organizations in the country to fast-growth startups, Harbor Compliance fully manages government licensing compliance in both nonprofit and business sectors.