Once a nonprofit organization has a tax exemption letter from the IRS and is registered to do business in its state, people may think the nonprofit is ready to start soliciting donations. However, that depends on the state where your organization is soliciting donations. Organizations need to understand what is considered soliciting, how to find information for the states they’ll be soliciting in, and how their “donate now” button on their website may impact them in order to operate compliantly.
Defining Solicitation
If the goal of the interaction is to secure financial support for an organization, it’s considered solicitation. Generally, anytime an organization asks for a contribution, donation, or other support, it’s soliciting. Thirty-nine states and the District of Columbia have specific requirements to follow in soliciting in that state, and the method of solicitation doesn’t matter—whether it’s by direct mail, phone calls, emails, or presentations.
Researching State Solicitation Laws
It will take some research to make sure your organization is complying with the appropriate state solicitation laws in which it operates. It is a good plan to start with the state your organization is working in and branch out to all states that you will solicit in some manner. Organizations may want to consider registering in every state, regardless of where they are soliciting, to help ensure compliance.
Solicitation laws vary by state and are often found with the attorney general or secretary of state for the state you’re researching. Nonprofit organizations should note who is required to register, as some states have excluded certain organizations from being required to register. Some potential exceptions include small nonprofits with revenue of $25,000 or less, religious organizations, educational institutions, and hospitals. It’s also important to note that exemptions are state-specific so being exempt in one state may not mean an organization is exempt from all states. Nonprofits may need to apply for exemptions as they’re typically not automatically given.
The IRS provides a link to the National Association of State Charity Officials, which includes a summary of requirements. Some organizations start with “The Uniformed Registration Statement,” which can be found at The Multi-State Filer Project.1 This site also provides a summary of requirements by state. These tools are a great reference, but organizations should do their own research as these sites may not have the most up-to-date information.
Interactive Websites
Most organizations’ websites include a button users can click to make a donation. Interactive websites that accept payments via credit card or use social media to accept payment are viewed as a form of solicitation and can be viewed by certain states as an active solicitation.
Many, but not all, states have adopted the Charleston Principles regarding websites. These principles provide a framework for evaluating a nonprofit organization’s website and the states they solicit in to determine their registration compliance. In general, if these principles apply to your organization, you must register in the state(s) where you operate and determine if your website is set up to target specific persons in other states or if you receive substantial donations consistently from out-of-state donors to determine any other required state registration.
Summary
The charitable state solicitation laws are complex and vary from state to state, but understanding the laws in the states your organization solicits in, how your organization’s website can impact the registration requirements in each state, reviewing your compliance annually, and utilizing professional advice when needed can help your organization comply with these laws so you can focus on your mission! If you have questions or need assistance, please contact a professional at Forvis Mazars.
- 1“The Unified Registration Statement,” multistatefiling.org.