The legal ins and outs of fundraising can get a bit tangled. If you’re a fundraiser, you know that nonprofits are required to register with state governments for each state in which it actively solicits donations. Whether or not a nonprofit must register in a particular state can be hard to determine. That’s why the National Association of State Charity Officials (NASCO) drafted The Charleston Principles, a set of guidelines designed to help nonprofits determine where they need to register. Here is a summary of those Principles, or you can read the whole thing.
The Principles are supposed to help make it easier for nonprofits to determine in which states they must be registered. There are still plenty of myths surrounding the Principles, though. Let’s take a look at the three most common ones.
Myth #1: My fundraising platform is registered, so I don’t have to register
This one comes up frequently at Qgiv, mostly because we ARE a fundraising platform! Many fundraisers think that registering with the states can be avoided if their fundraising service provider is registered. But remember, The Charleston Principles are for nonprofits who are soliciting donations, not processing them. Your vendor may be registered in each state, but that registration only covers their fundraising operations, not yours. If you are soliciting for donations or collecting money from donors on a regular basis in a given state, you are required to register with that state, regardless of your vendor’s status. Even if they’re a nonprofit!
Myth #2: My organization only needs to register in the state in which we are based
Where your nonprofit has its headquarters has nothing to do with whether or not you’re required to register in a particular state. You are required to register in any state in which you actively solicit donations. That means that, if you’re based in Ohio and send fundraising appeals to donors in Illinois, you must be registered in both states. This can get pretty interesting for online fundraising campaigns — if you’re actively running a nationwide campaign (or even if people in other states donate!), you could be required to register in all 51 areas (all 50 states, plus Washington, D.C.).
Myth #3: I only have to register in a state if I fall within the perimeters set in the Charleston Principles.
Well, not exactly. The Charleston Principles are only guidelines used to help nonprofits decide where they need to register. The tricky part is that not all states’ requirements for registration fall in line with the Principles. If they have different laws about registration, they might require nonprofits to register who wouldn’t be operating within the guidelines set forth in the Principles. It gets even more complicated when you consider that not all states will let you know if you’re in violation of their laws until you get a letter penalizing you for not following the law. Scary.
Sounds a bit complex, doesn’t it? Your charity probably needs to be registered in multiple states, and your merchant processor’s registration status won’t cover you. What to do?
- Figure out where you definitely need to register. Those states will include your home state and any states in which you actively raise money, own property, or run satellite branches.
- Talk to an attorney or other nonprofits about other states in which you should register. You wouldn’t want to be penalized because a donor in Hawaii saw an ad online and made a donation to your Maine-based nonprofit. Definitely consult other professionals in this area.