Posted on May 21, 2024

10 Common Mistakes of Managing Charitable Solicitation Registration In-House

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When it comes to charitable solicitation registration, many nonprofits choose to handle the process internally. Whether it’s because they wish to maintain complete control over their compliance efforts or because they believe that keeping the responsibilities within the organization will be a more cost-effective option, they often overlook the complexity and time involved in obtaining and maintaining compliance.

Registering involves more than just filling out a form, especially if you’re going to be soliciting in multiple states. Organizations must have a thorough understanding of diverse state laws, impeccable record-keeping habits, top-tier sleuthing skills and patience, as well as sufficient time to manage the process effectively. Because of this, registration is both challenging and time-consuming – and it’s not surprising that many charities inadvertently make mistakes. 

At Affinity Fundraising Registration, we’ve worked with hundreds of nonprofits over the years and we want to help you navigate the complicated registration process. If you’re handling registration in-house, please be aware of these common mistakes we’ve seen charities make.

1. Not Staying Up-to-Date With Changing Forms and Requirements

In the US, most states have their own unique charitable solicitation registration requirements, resulting in a patchwork of rules and regulations that can change frequently, sometimes at an individual regulator’s discretion. Therefore, it is vital for charities to continually monitor and adapt to these compliance updates. Not keeping up with changing laws and practices often results in noncompliance, penalties, and could harm the public perception of your organization. 

2. Not Staying Organized

Charitable organizations that are soliciting in different states need to hold multiple registrations — each with varied renewal dates, documentary evidence, and annual reporting requirements. Not maintaining an organized system to track everything can lead to missed deadlines, incomplete submissions, and penalty fees. Meticulous record-keeping, regular internal audits, and fundraising registration software can help nonprofits stay organized and avoid these pitfalls.

3. Failing to Submit a Withdrawal When No Longer Soliciting in a Particular State

If you no longer plan to solicit donations in a particular state, it goes without saying that you would no longer want or need to register there. However, did you know that you also have to alert the state of your decision by submitting the proper withdrawal paperwork? Organizations often overlook this step, leading to unnecessary fees, paperwork, and possible legal complications. Proper registration management includes not only applying on time but also withdrawing promptly to avoid penalties.

4. Not Following Up if You Haven’t Received a Response Within the Expected Approval Window 

Waiting for approval from regulatory bodies can be a nerve-wracking process, but silence doesn’t necessarily imply a positive outcome. If you don’t receive a response within the expected approval timeline, the responsibility falls on your organization to follow up. Not doing so might result in missed communication or overlooked issues with your application which could lead to a delay in your ability to start solicitations or complete a withdrawal process.

5. Waiting Until the Last Minute to File

Registration is often not a single-day process. From gathering necessary documents to tailoring applications for each state, it demands time and attention to detail. Despite this, many organizations wait until the last minute to complete their applications, leading to rushed submittals, overlooked details, and potentially, rejection and fees. Instead, a better strategy would be to prepare well in advance to account for unexpected challenges and ensure all the necessary information is accurate and complete.

6. Keeping Your Registration Process In-house To Save Money

While managing the registration process in-house may seem cost-effective initially, the administrative burden, effort it takes to keep up with a myriad of state laws, and the potential for costly errors can really add up. Issues such as lacking a system for tracking extension and renewal dates or failing to properly manage documentation can lead to missed deadlines, noncompliance, and, at worst, legal repercussions and reputational damage. Outsourcing to a specialized firm ensures that the complex and often time-consuming process of registration is handled efficiently, effectively, and accurately.

7. Registering With the Wrong State Office

Another mistake nonprofits make is obtaining Registered Agents in all states, or registering with the Secretary of State (SOS) as a corporate entity when it should have been done with the Attorney General’s office (or vice versa, depending on the state). Registered Agents are a prerequisite in many states, but not the be-all end-all of compliance, and the SOS and the AG’s office have distinct roles and responsibilities within each state. Misunderstanding with which office to register can lead to all sorts of issues concerning charitable solicitations. Knowing with which office, or when to register with both, is specific to each state’s unique laws. It’s important to fully understand these intricate regulatory differences in order to avoid any setbacks or legal implications. 

8. Failing to Get the Prerequisite Certificate of Authority

Another common mistake is a failure to obtain the prerequisite Certificate of Authority in states that require one. This filing with the SOS serves as proof that an organization can legally conduct its business within a state’s borders. Ignoring its importance may lead to legal consequences, including fines and penalties, thereby impacting an organization’s fundraising initiatives.

9. Registering in States That Don’t Provide an Adequate Return on Investment 

Common sense may tell you that the more states you can solicit in, the more money you can expect to receive. However, this strategy is not always as straightforward as it appears to be.   Before choosing to register (or renew) in a particular state, you should carefully consider whether or not it makes sense to do so. In other words, will the cost and effort provide an adequate return on investment?

Filing costs, renewal fees, and operational expenses can pile up and become a significant burden to a nonprofit. It can be a disappointment to spend money on registration fees and compliance work only to find out that the investment was not worth the return. For example, in Hawaii, there is no cost to register the first year, but it can cost you upwards of $600 to maintain — plus daily late fees if filing late. Therefore, a careful evaluation of potential fundraising sources, both demographically and economically, as well as historical contributions (if available) should be carried out before registering or renewing registration in any particular state. 

Affinity can help assess the potential cost for your organization’s registration goals, simply fill out our Estimate Request Form

10. Not Enlisting Help 

An all too common mistake many organizations make is not considering outside help for managing the fundraising registration process. While doing it all internally may seem like the most cost-effective strategy at first glance, the process demands a steep learning curve and an in-depth understanding of the regulatory landscape. In-house teams will experience significant administrative burdens and may find themselves caught up in a web of constantly changing state laws, complex reporting requirements, and tight deadlines. All of this can lead to inaccuracies, lapses, and consequently, noncompliance issues that could potentially be avoided with the help of an outside source.

Seeking the help of a specialized entity like Affinity Fundraising Registration can eliminate these concerns. We handle every aspect of the registration process, from tracking compliance status to accurately completing forms, and ensuring timely submissions. With a team of skilled experts dedicated to maintaining a clear understanding of each state’s regulations, Affinity provides dedicated, people-focused support to help you navigate state registration laws so you can gain and maintain full compliance for your charitable fundraising.

Avoid Common Registration Mistakes With Affinity Fundraising Registration

Avoid the common pitfalls of registering in-house. Partnering with Affinity Fundraising Registration will not only provide peace of mind that your organization’s registration responsibilities are in capable hands, but it also frees up resources and allows you to focus more time on delivering on your nonprofit’s mission. 

To learn more about our charitable solicitation registration services or to get a personalized estimate, please fill out our free estimate request.

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