F R E Q U E N T L Y A S K E D Q U E S T I O N S
Many states lawfully require charitable organizations to register with their jurisdictions, mainly to protect the public from fraud and abuse/misuse of charitable funds. By asking charities to report financial and key information, the states ensure that the public makes informed decision when giving donations and prevent misleading statements to be made when soliciting funds on behalf of a charity.
In short, if your charity solicits for contributions, then most likely you need to register with the state where you ask the public for donations. There are a total of 41 states and the District of Columbia that have solicitations regulations in place. The registration requirement is triggered by actively seeking donations (i.e. emails, mail, internet, phone calls, advertisements, etc…) regardless of actually receiving funds. Most states require charities to register prior to beginning their solicitation efforts. However, each state offer registration exemptions based on a set of criteria to certain nonprofits. To find out if you qualify for an exemption, please read the next question and visit our exemption page.
Each state has a number of exemptions that nonprofit organizations can qualify for, but they vary greatly depending on their respective statutes. High level examples of organizations that could be exempted include colleges and universities, hospitals, religious institutions, political groups, membership nonprofits, veterans groups, labor unions, trade associations, nonprofit credit-counseling agencies, volunteer firefighters, ambulance associations, rescue squad associations, senior citizen centers and organizations that receive minimal contributions (the gross amount threshold varies greatly for each so your status with each state should be validated).
In many instances, the exemptions are self-executing. However several states still require to file for an exemption (a few of them on an annual basis) to confirm that the organization qualifies.
Properly understanding the exemptions rules could offer significant cost saving benefits as you could avoid expensive registration fees. We can help you determine which exemptions your organization are entitled to and complete the necessary paperwork to ensure compliance.
By law, charities should initially register with most states where they request for donations prior to conducting solicitation activities (i.e. phone and email appeals, print and web advertisements, internet, etc…).
The registration with each state has to be renewed on an annual or bi-annual basis prior to its solicitation license expiration date. Each state has different due date rules for registration renewal. To find out more, read our Registration Fees and Deadlines page .
Depending on the state that you soliciting in, you might need to register to comply with each charitable state law. If you are soliciting for contributions in certain state and do not qualify for an exemption, you are most likely operating illegally and your organization could be subject to costly fines and criminal and civil penalties as well as the revocation of your solicitation rights in that state.
If you realize that your nonprofit is not operating in accordance to the state solicitation laws, there are ways to restore your compliance and properly file with the necessary states. It is important for you to address your concerns as soon as possible.
If you contact us , we can help assess your situation and put a plan in place to bring you back in line.
All but the states of Arizona, Delaware, Indiana, Iowa, Idaho, Montana, Nebraska, South Dakota, Vermont and Wyoming have legal registrations requirements for charitable organizations. The registration process and renewal deadline vary for each state. Our consultants have a thorough understanding of the various state statutes and can handle all of the requirements on your behalf.
Over the past few years, the government has been increasing its efforts to pursue unlawful charitable organizations. If you are actively soliciting in a state and are not registered with this state you might be at risk of operating illegally. The penalties that you may be facing differ from state-to-state but could include:
• Civil and/or criminal penalties
• Several thousands of dollars in fines
• Late registration filing penalties
• Suspension or revocation of your nonprofit solicitation rights in the state
• Conviction of your officers and board members
• Loss of your nonprofit status
• Having to refund all of the contributions received in that state
However, if an organization demonstrates that it is willing to restore its compliance, the state might be more lenient with this charity and minimize its sanctions.
First, it is important to note that the initial and renewal registration process fluctuates on a state-by-state basis but typically requires at a minimum the completion of a print or online application, the most recent IRS form 990, audited financial statement (if applicable), list of officers, directors and salaried executives, IRS tax exempt determination letter, articles of incorporations, by-laws documents and fundraisers contracts if you hire professional fundraising solicitors and consultants. Renewal applications tend to require a different form and fees than the initial one. Remember to keep track of your renewal deadlines as they are dependent on each state requirements.
Most states require to complete an initial registration and renew it on an annual or bi-annual basis. The deadlines for the renewal registrations and annual reports vary from state-to-state. Annual renewals typically entail as much effort to complete as the initial registration and often require to pay a different fee as the initial one.
Registration fees are dependent on each state, your organization’s total contribution or gross revenues, and whether you are filing for an initial registration or a renewal. In addition, if your due date has passed, your organization may be subject to late fees. A regular registration fee ranges from $0 to $2,000 for each state (see our fees and deadlines page for more details).
If you are operating a large organization and you are soliciting on a national basis you may have to pay more than $6,700 in state filing fees alone. This is why it is critical for you to understand your status with each state to know if you qualify for certain exemptions or if you are actively soliciting in that state.
According to the Charleston Principles issued by the National Association of State Charity Officials (NASCO), registration in a state is required if the organization’s website permits donations to be completed online and if solicitation efforts have been made to request a resident of that state to donate online. All states tend to use the Charleston Principles except the states of New York and New Jersey. The same rules apply for any of your social media platforms.
However, remember to proceed with caution as these Charleston Principles guidelines are not legally binding in any state. If you want to ensure full compliance, you could simply disclaim on your website the states where you are not willing to accept donations from or use a donation software that restricts donations from residents of certain states where you are not registered.
A registered agent is a business or individual designated to receive legal communications on behalf of a business entity. In the context of state registration, five states: Colorado, Michigan, Nevada, North Dakota and the District of Columbia require to have a registered agent if they do not have a physical address in the state you are looking to register. You may also need registered agents in other states if you need to obtain a Business License in order to solicit donations. We can help you appoint a registered agent in any states should you require to have one, at a competitive rate.