Posted on January 15, 2024
Tips For Managing Charitable Solicitation Registration in Multiple States
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Charitable solicitation registration is the legal process of filing with a state in order to solicit donations from its residents. While not every state requires a nonprofit to register, the majority of them do, and the process of applying for registration and maintaining compliance isn’t as simple as just filling out a form.
State-specific requirements and deadlines can make the process very challenging, especially when dealing with multiple state jurisdictions and the lack of a standardized registration system. If you’re involved with a nonprofit that wants to solicit funds in multiple states, the following are some valuable tips for managing multi-state registration efficiently and effectively.
Compliance Challenges Involved With Soliciting Funds in Multiple States
Despite being an important part of your nonprofit’s strategy, the process of charitable solicitation registration is not straightforward and often includes significant administrative burdens. The following are some of the complexities unique to dealing with registrations in multiple states.
Differing State Regulations
The standards and requirements for charitable solicitation registration vary widely from state to state, both in terms of the registration process and regulatory oversight. This includes differences in the initial registration forms, annual reporting requirements, financial thresholds for a GAAP-based audit or independent CPA review, and fundraising event disclosure requirements both looking at what happened in the past year and what’s planned for the upcoming year. Maneuvering through these disparate regulations can be especially difficult, particularly for small organizations with limited resources.
Most states require annual updates or renewals of charitable solicitation registrations, yet the due dates for these filings can vary. In some states, the renewal is due in line with the organization’s annual Form 990 or calculated by fiscal year-end, while others have a fixed or anniversary-based annual due date. Some states have automatic extensions or extensions you need to apply for, and some have none. This inconsistency creates difficulties in keeping track of renewal deadlines and can result in late filing penalties.
Given the rise of online fundraising platforms, an organization’s potential donor base is not often restricted to the state where it operates. What constitutes soliciting donations in a state is largely defined by each state individually, and the criteria can range from sending emails or direct mail to residents of a state. An organization must be aware of each state’s specific laws regarding online fundraising to know where they must register, adding an additional layer of complexity.
There’s a cost associated with charitable solicitation registration. There are registration fees, renewal fees, and often penalties for late filings. For many organizations, there’s also an added cost of hiring registered agents, consultants, or lawyers to navigate through the intricate process. If not navigated with care, these costs can add up superfluously and take away resources from the organization’s mission-related activities.
Strategies for Effective Management of Charitable Solicitation Registration in Multiple States
Having a clear and comprehensive plan will help your charity gain and maintain compliance while saving you time and money along the way. Here are a few tips on how to get started.
Develop a Strategy for Fundraising Registration
Although it may seem like a good idea to spread your fundraising efforts as far as possible, managing the initial registration and renewal processes can quickly become a drain on your time and resources. Developing a strategic fundraising registration plan and being deliberate about the states you choose to fundraise in involves careful consideration of the cost, workload, legal consequences, mission alignment, and potential donor reach.
If you’re not confident you’re soliciting nationwide, you may want to carry out an analysis of your contacts and potential donors, examining their donation history, and states in which they reside. Once you’ve identified the states where fundraising is already occurring and/or could be most beneficial, you’ll also want to take into account state-specific requirements to ensure that the efforts to maintain compliance won’t outweigh the potential benefit of registering in that state. You may discover that the cost to register in some states doesn’t provide an adequate rate of return to continue fundraising there, or you’re required to obtain a costly audit to obtain registration in a state, despite being well below the threshold in your state of domicile.
The best way to get the most out of your registration efforts is to look at your full list of identified states and prioritize the ones that will make the most impact. Keep in mind that prioritization will look different for everyone. Some organizations choose to account for the size of the potential donor base, total money raised, and prospective benefits against the cost and hassle of acquiring and maintaining a registration.
For more information on how to be strategic about your charitable solicitation registration, check out our article on How to Develop a Strategic Fundraising Registration Plan for Your Charity.
File for Exemption Where Applicable
Some states offer exemptions based on an organization type or specific solicitation methods used. Religious organizations, accredited educational institutions and their foundations, hospitals and their foundations, select membership-based organizations, and government agencies may be exempt in some jurisdictions. Similarly, states may provide exceptions for organizations that raise below a certain threshold. It’s always a good idea to review each state’s rules carefully and file for exemptions where applicable, to save time and resources. For each exemption offered there are as many criteria that disqualify an exemption as well—be sure to stay organized so as not to unnecessarily disqualify yourself.
Be Diligent About Recordkeeping
Thorough and accurate recordkeeping and document organization is crucial throughout the registration process so as not to miss required details and paperwork. Best practice is to maintain records of donation transactions, board meeting minutes, organization policies, and other relevant documents. Charitable organizations often need to provide financial details, including audited financial statements, during registration. Moreover, well-kept records can streamline the process of annual renewals and could help catch any legal concerns or inquiries from donors, board members, and state offices.
Keep Track of Renewal Dates
It’s crucial to maintain your charitable solicitation registrations—once you’ve completed initial registration, it’s not easy to get back off of a state’s radar. In the majority of states, registrations must be renewed annually. Organizations need to establish a systematic way of tracking renewal dates and extended deadlines for each jurisdiction to avoid missing deadlines and incurring additional fees. Falling out of compliance due to lapsed registration can lead to penalties, fines, loss of solicitation privileges, and at times legal action from a state.
Regularly Review Regulations
Rules surrounding charitable solicitation change frequently. As an organization, it’s imperative to stay up-to-date on the changing landscape of legislation, and regularly review the regulations in each state where you are registered. Staying informed of any changes can help ensure continuous compliance and avoid any unexpected surprises.
Consider Partnering With a Professional
Navigating multi-state charitable solicitation registration can be complex and time-consuming which is why many nonprofits choose to seek out expert help from a legal professional or consultant. At Affinity Fundraising Registration, for example, we help nonprofits navigate the complicated registration process so they can raise funds legally in any state. We are not a law firm, but we are experts in charitable solicitation registration, so we can help with initial state registrations, renewals, filing extensions, and more. Best of all, we can offer our services for a fraction of the cost of working with a lawyer.
Get Help With Multi-State Charitable Solicitation Registration
Registration is a fundamental and unavoidable part of fundraising. However, managing multiple state registrations presents a complex web of administrative tasks combined with legal and financial implications. That’s where Affinity Fundraising Registration can help. We offer a variety of customizable support services designed to meet your needs and make the process as stress-free and seamless as possible.
Our Full Support and Full Support Plus services are ideal for organizations that prefer to allocate their staff and resources toward advancing their mission and obtain peace of mind knowing that nuanced compliance responsibilities are being expertly handled. For those who prefer to keep their registration efforts in-house, our Independent Registration service is a do-it-yourself software-based option that streamlines the process of managing charitable solicitation registration in multiple states. To learn more, or to request an estimate, please fill out our online form or contact us directly.