Did you know that if your nonprofit organization plans to ask for donations, you may need to register with one or more state agencies first? Asking for donations is considered “solicitation,” and solicitation activities are strictly regulated by most states. You may be required to complete a registration form with financial information, pay a filing fee, and renew or maintain this registration on a regular basis.
Every state has different rules for charitable solicitation registration. The first step is to know when to register. You typically need to complete all necessary registrations before you ask for any donations – not after you receive the funds. Asking is the trigger for registration, not receiving.
Then you need to figure out where to register. Depending on your organization’s structure and specific fundraising activities, you may need to register in multiple states. At a minimum, most organizations should register in their state of incorporation, any state where you have a physical presence (like offices or employees), and any state where you solicit donations from residents. For example, if you send a fundraising appeal to someone who lives in Colorado, you should be registered in Colorado. Not every state requires registration, and some states offer exemptions. You can usually look up the rules for charitable solicitation registration on the website of the appropriate state agency. This list of state government websites for tax-exempt organizations can help point you in the right direction.
After your initial registration, most states will require your organization to submit annual or bi-annual reports or renewal forms to maintain your registration. Your registration must be active and in good standing for as long as you plan to solicit donations within that state. If you no longer have any solicitation activities in a state, you may need to officially “un-register” to avoid any fees or penalties.
While the registration process itself is usually fairly straightforward, it can be very difficult to juggle many different state requirements, due dates, and filing policies. Depending on the volume, your organization may be able to handle these in-house, or you may choose to outsource them to a company that specializes in charitable solicitation registrations. You may also choose to hire the CPA firm that prepares your Form 990, since state solicitation registrations require much of the same information. However, not every CPA firm offers this service, and it’s important to be clear about your needs, since this is not automatically included with Form 990 preparation services.
It is ultimately your organization’s responsibility to determine where and when you need to register for charitable solicitation activities. It isn’t fun or easy, but fortunately there are many resources to help. For more information, visit the National Association of State Charity Officials (NASCO), an association of state offices (attorneys general, secretaries of state and other offices) charged with the regulation and oversight of charitable organizations and charitable solicitation in the United States.