Charitable Solicitation Registration

Charitable Solicitation Registration

Did you know that approximately 41 states require charities to register before soliciting contributions in their states? State charitable solicitation registration can be complex and time-consuming for nonprofits to navigate. 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. The penalties for failure to comply with state registration and renewal laws can be severe. This is why it's important for organizations like yours to stay up to date with charity registration paperwork, and remain compliant with state fundraising registration laws.

Importance of Charitable Solicitation Registration

Your nonprofit can only succeed in achieving 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 fines and other penalties. The damage to your nonprofit's reputation could be irreparable.

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Table of Contents

 
▶ Charitable Solicitation Registration
▶ 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
▶ Nonprofit Foreign Qualification
▶ 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 charitable registration

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.

Veteran Organization Charitable Registration

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

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.

501(c)3 charitable registration

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

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

Most nonprofits are required to file the IRS Form 990 on a yearly basis. It includes information on the nonprofit’s purpose, governance, programs, detailed financial information, etc. Form 990 is generally used by the IRS and stakeholders to evaluate a nonprofit’s operations. There are different types of 990s depending on the organization's size and whether they are a public charity or a private foundation.

Click here to view frequent asked questions about IRS Form 990.

Nonprofit Articles of Incorporation:

Articles of Incorporation function as a constitution for a nonprofit organization. Some organizations such as trusts and unincorporated associations may have a different founding document such as Articles of Organization. In order to be eligible or be granted tax-exempt status by the IRS, nonprofits must contain a statement of purpose and statements indicating that the nonprofit organization will not engage in political and legislative activities and that all its resources will go towards its cause under 501(c)(3).

Bylaws

A nonprofit’s bylaws are legal documents outlining rules it must adhere to in all operations. It addresses activities such as how a board of directors must be appointed, voting procedures, rules that govern the organization's activities, etc.

IRS Letter of Determination

This is simply a letter from the IRS confirming a nonprofit organization’s tax-exempt status under section 501(c)(3) has been approved.

List of Officers, Directors, and Trustees

Carefully selected board of directors or trustees are vital to the success of any nonprofit. Many states require a list of these when submitting your annual registration paperwork. It is important that roles and terms of these individuals are defined by your nonprofit organization’s bylaws.

State-specific Forms

States have specific forms for initial charity registration, reporting requirements for new nonprofits, annual filing requirements for existing organizations, employment filings for organizations with employees and state-specific statutes governing charitable solicitation.

Audited or Reviewed Financial Statements

Your organization might be required to provide audited financial reports or reviewed financial statements depending on your annual revenue, if your non-profit receives grants from the state or federal government and other factors.

Commercial Co-venture Contracts

Similar to contracts with professional fundraisers, at least 22 states require commercial co-venture agreements with a for-profit company to be submitted to the appropriate state office.
 

Contracts with Fundraising Counsel, Solicitors, and Consultants

Most states require nonprofit organizations to submit copies of fundraising contracts they have with professional fundraisers prior to starting any fundraising campaign. While fundraising professionals are responsible for their own registrations, nonprofits that have contracts with them are advised to do their due diligence by verifying their compliance status.