Clearly Compliant works primarily with 501(c)(3) and (c)(4) organizations as defined by federal law. As a reminder, federal law determines tax exemption and deductibility. Nonprofit status is determined by state law. Most states require nonprofits to register prior to fundraising. Failure to comply with state laws can lead to fines, civil suites, and revocation of future fundraising privileges. The requirements for registration are different in each state! For some states it is the mere solicitation of funds, while in others it is the receipt of funds. Some states have thresholds with the number of donors triggering the need to register. Other states, like New York, consider any on-line donation capability as solicitation triggering the requirement for registration. Registration triggers are unique to each state, and can be complex to evaluate, and critical to monitor. Additionally, as nonprofits face increased financial scrutiny, state laws are continuously being assessed and re-visited.
Again, this differs state by state. Common exemptions for many states include churches, religious organizations, educational institutions, hospitals, organizations who solicit only through membership, and organizations with gross contributions of less than $25,000 in a given fiscal year. Exemption in one state does not necessarily mean exemption in another.
Yes, most 501(c)(3) public charities are subject to registration requirements in states where solicitations are made. It is usually “the ask” that triggers the need to register, not “the receipt” of donations.
1) It is the law – filing a 990 Form with the IRS is not enough in most states.
2) By signing your 990 Form, you now certify that you comply, under penalty of perjury, with all applicable State and Federal laws. Additionally, you must list on the 990 Form each individual state where your fundraising activities require submission of a 990 Form/Registration.
3) It demonstrates transparency and is often required by grantors, donors, auditors, and oversight organizations
Each state has its own set of laws, forms, and processes. Generally, the information can be found on the state attorney general or secretary of state websites. Clearly Compliant offers turnkey registration services.
Legally, before any solicitation is made. However, states generally support a good faith effort of a nonprofit that is working to become compliant. Once registered, you will have to continue with annual reports to the states where you are registered.
An analysis of the donor database and a review of the organization’s fundraising strategies will give you an idea of where you are currently soliciting and where you plan to solicit in the future.
State registrations fees vary from state to state. Some are free, some are several hundred dollars. Which states you register in will determine the fees. If you retain the services of a company to provide registration and renewal services, those fees will be additional.
Yes, like registrations fees, exemptions vary from state to state. Generally, hospitals, religious organizations, educational institutions, or organizations raising small amounts of money may be eligible for exemption.
Most states have not addressed this as a compliance issue. However, FL, NJ, NY and PA require registration if you have a “donate now” button or ask for funds on your website. CO has very specific guidance based on the number of residents contacted and total charitable contributions from Internet solicitations.
Lots! Articles, bylaws, IRS application for nonprofit status, IRS letter of determination, IRS Form 990, audits, board of directors contact information, certificate of good standing, and more!
The initial registration requires extensive general organizational information in addition to the fundraising information. Annual renewals and reports generally include information from the prior year’s fundraising activities, updated board rosters, and amended governance documents.
It varies by state; penalties may include a loss of right to solicit, civil penalties, fines, a letter of reprimand, and even felony charges.