Charitable Solicitation Compliance
By James Gilmer, with Harbor Compliance
As more nonprofits move toward faster, more comprehensive donor management and fundraising technology solutions, connecting with prospective and recurring donors is easier than ever. In the rush of expanding your mission and base of support, it’s easy to leave charitable solicitation compliance behind. Properly maintaining your nonprofit’s registration with state charity officials is the backbone of running a compliant organization and successful fundraising campaigns.
Many nonprofit leaders believe that having a 501(c)(3) exemption from the IRS is enough to fundraise anywhere, anytime. This misconception can lead to trouble with state agencies, like the Attorney General, and can cause distrust among your donors. Forty-one states require charities to file a separate registration prior to soliciting within their borders, in addition to being tax exempt at the federal level. Various solicitation methods trigger state registration requirements, such as sending mail, applying for grants, using professional fundraisers or fundraising consultants, and “Donate Now” buttons on your website. Chances are, your nonprofit does one or more of these activities!
Registration and renewing your solicitation license is different in each state. You can review your state’s requirements using this Fundraising Compliance Guide. Managing state bureaucracy and complex requirements in multiple states can take a large amount of time and energy from your executives, staff, and volunteers. At the same time, there is often a risk of noncompliance simply by letting a single registration renewal slip through the cracks. Noncompliance can create financial penalties, affect the reputation of the organization and its leadership, and can raise serious issues with your donors, who want to know their gifts are supporting a good cause.
As more solicitation takes place online, it’s increasingly easier to access charitable funds across the United States. At the same time, it’s important to reassure your donors, wherever they are, of your organization’s credibility. Whether an individual, a corporation or a foundation, your donors can and do search for your organization prior to giving. By registering and staying compliant, you can put your donors’ minds at ease.
Despite its challenges, fundraising compliance is a crucial responsibility for running and managing a nonprofit. The responsibility of compliance most likely falls primarily on your board of directors and officers, but it may lie elsewhere in your organization. If your nonprofit has not registered to solicit funds or has become overwhelmed by managing compliance, remember, the risks of noncompliance far outweigh the cost of a well-structured compliance plan bolstered by the consultative support of a responsible service company.
Charitable Solicitation Compliance: Free White Paper
Fundraising compliance is one of the most vexing areas for nonprofits. Harbor Compliance created a free white paper to help your nonprofit executive team and board make sense of the requirements.
The Charitable Solicitation Compliance white paper will answer your questions on the registration and renewal requirements, the state applications, the Unified Registration Statement (URS), online fundraising and “Donate Now” buttons, as well as the consequences and penalties for noncompliance.
Education is a key element to helping your organization become compliant. Downloading the white paper is a great start. Enjoy!
Author Bio: James Gilmer is a Compliance Specialist for 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. James is a co-founder of Berks Sinfonietta, Inc., a chamber orchestra in Berks County, Pennsylvania.