Thirty-nine states and the District of Columbia have charitable solicitation statutes that generally require charities and their for-profit fundraising professionals to register prior to soliciting contributions or providing fundraising counsel services. Attendees will learn about these statutes from a former state charity regulator and former president of the National Association of State Charity Officials. Equally important, charities and their fundraising professionals who have been operating in violation of these statutes will learn the most appropriate strategies for getting into compliance.
Hosted by: GuideStar, Inc. (http://www.guidestar.org/Home.aspx)
Presenters: Karl E. Emerson, Of Counsel, Montgomery McCracken, and Chuck McLean, Vice President, Research, GuideStar USA, Inc.
Basic Definitions and Policy:
Solicitation: anything you do by asking people to make a contribution.
Grantwriters: are not considered professional soliciters but are professional counselors. Your organization is assumed to be registered in each state that you solicit a grant maker.
Charleston Principles: drafted in 1999 to address burdensome internet solicitation that must register in all states where solicitation originate. These Principles suggest that if an organization is only soliciting by website (Donate button) in other states, that charity should not have to register with that state until that charity resolicits (makes a followup call, writes a letter). Then, the charity only needs to register in each state where resolicits. Most organizations unknowingly have donors from a large number of states. The exemption of $25,000/year does not require registration as long as no one is compensated for fundraising. Email contributions eventually provide you with a physical address of the contributor, so solely asking online still requires you to comply with each state’s requirements.
Karl Emerson: 10 Basics you need to understand about charitable solicitation statutes
1.) Determine if you need to register under the charitable solicitation statute in your home state (39 require this: go to www.nasconet.org to find out). The links are provided to each state website for detailed information. Some states fine up to $1000 or $100/ day.
2.) Are you in compliance with applicable state charitable solicitation statutes in ALL states where you solicit contributions. Each state has various exemptions and exclusions. Usually the exemptions cover religious organizations. But, it’s not uniform across the country. Exemption in your home state does not cross to every other state. Formal application for exemption can be an annual process. Many states have conditions that determine exemption from solicitation statutes. You can use each state’s individual registration for OR a Unified Registration Statement (www.MultistateFiling.org). That can save you alot of time and effort. It’s a little lengthier. SC., Maine, Ok and a few other states do not accept a Unified Reg Statement.
3.) Make sure your IRS 990 Returns and other registration materials filed with the IRS are accurate, complete, free of material falsifications, misrepresentations, and omissions.
4.) Maintain your registrations by filing timely extesnion requests each uear and renewing your registration by the required due date each year. Extensions are needed because you won’t have your 990 done by the state(s) registration date(s). States are moving this online so it’s becoming easier. Penn, NC, and Wash are granting automatic extension.
5.) Make sure that all your professional fundraisers are properly registered and have filed copies of their contracts with state oversight agencies as required. Many are required to have written contracts, post bond and file campaign reports. The contracts may need to be filed with the state oversight agencies. States do cross check these names and numbers. Many of the fundraiser reports are published annually.
6.) Make sure all your organizations’ solicitation materials contain any disclosure statements required by statutes. A Disclosure Statement only requires information for each state about contributions from that state.
7.) Makes sure any commercial co-ventures conducting charitable sales promotions for you organzation are registered, have the required bonds, have filed copies of your contracts and other required forms with all states where commercial coventurers are required to register. So approach a charitable sales promotion cautiously. Be sure you are getting enough through the co-venture.
8.) Make sure your organizations’ soliciation materials are: truthful, free of material false statements, misrepresentations, and/or omissions. Don’t engage in conduct prohibited by state charitable solicitation statute.
9.) Make sure your organization is keeping true and accurate fiscal records–even if it is exempt from state registration requirements. States can investigate an accusation of wrong doing even if it is in
10.) Make sure your organization is paying all your key executive only “reasonable compensiaton” not “excessive compensation”. This is a high focus arena in law enforcement right now (So how do you know what the IRS expectations are?). Also, be sure you are properly forwarding all required withholding taxes to the IRS and state taxing authorities. That is the most common thing IRS finds iwrong n an audit.
Takeaways: States are often unclear about charitable solicitation compliance. Don’t wait for a state to “catch” you. You get a better deal by registering voluntarily.
Resources: GuideStar has an ongoing webinar calendar at http://www.guidestar.org/rxg/news/webinars/index.aspx
Personal Reflection: Why is it that states are so consistently unclear about charitable solicitation? The threat of fines from the state, IRS, etc are threatening in the sloppy world of charity. Achieving a full understanding of individual state requirements and compliance is burdensome to NP’s. This policy arena needs to be synchronized across state borders. States are the ones that are behind on their responsibility. It’s not fair for them to just impose fines, it is state responsibility to keep up with the changing internet economic system that NP’s (and all of us) swim in. The state move to put their requirements online helps, but the requirement for NP registration with every state is out of date with the actuality of nationwide and international internet economic trade. When do NP’s get to fine states for dragging their feet and making charity nearly impossible?