Charitable Solicitation Registration
Charitable Solicitation Registration
Did you know that 41 states require charities to register before soliciting contributions in their states? Charitable solicitation registration can be complex and time-consuming. Statutes governing charitable registration vary from state to state. It is not uncommon for states to make yearly changes to forms and to their statutes regulating charitable registration. Therefore, it is important for your charity to stay up to date with your registration paperwork, and compliant with state fundraising registration laws.
Importance of Charitable Solicitation Registration
Your nonprofit can only succeed or achieve its goals if all stakeholders trust that your organization will operate in an ethical and transparent manner.
The risks associated with not complying with charitable state registration laws go beyond penalties that your nonprofit might incur. The damage to your nonprofit in terms of reputation could be irreparable.
Table of Contents
▶ Importance of Charitable Solicitation Registration
▶ Charitable Solicitation Registration Regulations
▶ 501(c)(3) Nonprofit Tax-Exempt Status
▶ What Charities Are Required to File
▶ Unrelated Business Income Tax (UBIT)
▶ Charitable Solicitation Disclosure Requirements
▶ Multi-State Nonprofit Registration
▶ Types of Charitable Solicitation
▶ The Charleston Principles
▶ Unified Registration Statement
▶ How to Approach Fundraising Compliance
▶ Renewing Charitable Solicitation Registration
▶ Application for an Extension
▶ Things to Consider When Determining Where to Register
Charitable Solicitation Registration Regulations
Charitable organizations classified under 501(c)(3) of the IRC, have specific rules for incorporating, dissolving, determining a legal structure, applying for tax-exempt status, and obtaining the necessary licenses and permits before they can legally operate or solicit for donations within a state. Prospective donors are less likely to donate to a charitable cause if they do not trust a charity to ethically and efficiently represent the cause. State and federal regulations exist to protect the public from unethical nonprofit practices. Nonprofits could incur fines, lawsuits, or even loss of their tax-exempt status if they intentionally or unintentionally break laws.
State governments are the regulators primarily responsible for regulating charitable fundraising. Currently, 41 states plus the District of Columbia, require charities to register with the states by filing copies of the charity’s organizing documents, IRS Form 990, and audit with the appropriate state authorities. There are 13 states that require fundraising solicitation to include disclosure statements written. The state authority in charge of charitable registration is typically the Office of the State Attorney General or the Office of the Secretary of State.
Regardless of what office is in charge of nonprofit regulation, each state has specific statutes on the formation of a nonprofit, how the nonprofit should be run, and rules on how a nonprofit must proceed if it wants to cease operations.
501(c) Nonprofit Tax-Exempt Status
The Internal Revenue Service categorizes nonprofit organizations into several categories.
Some of the common categories are:
Social Welfare Organizations Charitable Registration
Described in IRC section 501(c)(4), are nonprofits that operate solely to promote social welfare. Social welfare nonprofits are required to file Form 8976 which is a declaration to operate with goals of attaining social welfare goals. To claim 501(c)(4) status, Form 8976 must be accompanied by the nonprofit’s articles of incorporation, articles of organization and articles of association. The organization may also file IRS Form 1024 Mohave the IRS issue the 501(c)(4) designation. A good example of a social welfare organization is an association that works to improve public services such as affordable housing.
Veterans Organization Charitable Registration
Described in IRC section 501(c) (19), and 501(c)(23) these are nonprofits that exist to benefit past and present members of the United States Armed Forces. To qualify for exemption as a trust or foundation for a veterans’ post or organization, the charity must be an organization of present or past members of the United States Armed Forces. The charitable organization must exist to fully support the social welfare of past and present members of the United States Armed Forces. To apply for recognition as described in IRC 501(c) (19), an Application Form 1024 must be submitted to the IRS.
Labor and Agricultural Organizations Charitable Registration
Described in IRC section 501(c)(5), these are organizations that exist to improve conditions of labor, agriculture, or horticulture groups. Labor organizations are usually associations of workers who have combined to protect or promote the interests of the members, through bargaining collectively with their employers.
Charitable or Religious Organizations Charitable Registration
Described in IRC section 501(c)(3), are nonprofit organizations organized and operated for charitable or other purposes such as scientific or educational. That means none of its proceeds can go to private individuals or stakeholders. To apply, the organization is required to submit a Form 1023 application along with the appropriate fee. Most nonprofits are 501(c)(3) organizations.
Business Leagues Charitable Registration
A business league is an association of people with a common business interest formed with the purpose of advancing common interests other than making a profit. Described in IRC section 501(c)(6), this comprises organizations such as trade associations, chambers of commerce, real estate boards, and professional associations such as professional football leagues. The primary activities must be geared to a group and not individual benefits. To apply, the organization must submit a Form 1024 along with the current filing fee.
What Charities Are Required to File
IRS Form 990
Click here to view frequent asked questions about IRS Form 990.