40 states and the District of Columbia require 501(c)(3) organizations to register with their Department of Charities prior to soliciting donations from the public. This department is usually a division of either the Attorney General’s office or the Secretary of State.
The Foundation Group provides Charitable Solicitations Registration services for every state in the nation that requires it. There is simply no reason to continue to operate out of compliance and to risk the penalties associated with not registering.
Must my organization register?
Yes, it’s the law. In fact, most state laws require registration before any donor is solicited to give to your nonprofit.
More about who must register...
Generally, any nonprofit conducting a charitable solicitation within the borders of a state, by any means, is subject to that state’s law and is therefore required to register (and must do so before soliciting).
Typically, states exercise regulatory authority over nonprofits based on one of two premises: the nonprofit is physically “present” in the state or the nonprofit raises funds in the state.
In either case, a state may require the nonprofit to “register” by providing identifying information about the nonprofit and its operations. Organizations may find that raising funds from the public will give rise to regulatory obligations in multiple states.
What is registration?
Registration typically consists of providing the state with detailed information about the organization’s programs, purpose and finances. The level of detail is often on par with filing for IRS 501(c)(3) status. And once a charity is registered, most states require renewal of the registration annually.
More about the registration process...
Compliance reporting under solicitation laws is divided into two pieces: (1) registration, which provides an initial base of data and information about an organization’s finances and governance; and (2) annual financial reporting, which keeps the states apprised about the organization’s operations with an emphasis on fundraising results and practices. Typically, states require both registration (at least an initial registration) and annual financial reporting.
With forty jurisdictions regulating in this manner, there is inevitably little consistency of approach. Some states have one-time registration; others require annual renewal of registration; some will require submission of every common governance and financial document; others make do with just an IRS Form 990; and so forth.
The complexities involved can be overwhelming to any nonprofit! We can take that worry off your shoulders.
Penalties for noncompliance are stiff and can quickly reach into the thousands of dollars. As cash-strapped states increase their ability to track down unregistered charities, the odds of getting sanctioned are rapidly rising.
More about potential penalties...
Failure to register before soliciting is a violation of law and could subject the organization (and in some circumstances, its officers or directors) to whatever sanctions (e.g., a substantial fine) exist in each state’s law. But, the states generally wish to encourage honest efforts to comply with registration laws and tend to employ sanctions only when enforcement officials deem it necessary. So, an organization able to demonstrate its good faith which promptly registers after discovering its obligation (albeit tardily) stands a good chance of avoiding or minimizing sanctions. The bottom line: registration is the law and you must comply as soon as possible.
Significantly, technical compliance with any state’s registration law requires initial registration before the first solicitation has been directed into the state. The fact remains that many nonprofits have not done the necessary legal homework before launching fundraising campaigns. If your nonprofit is one of these, you should be very concerned. But you should not be deterred from going ahead with registration because you fear you are breaking a law already and it’s too late to comply.