Most nonprofits understand the basics of corporate registration within their state. They register in their desired legal format and learn the rules (and ropes) of compliance with their state’s corporate commission, employment commission, and so on. Then they begin the work to fulfill their mission and, of course, to do so, they need to make some margin. So up goes the “Donate” button on their website and…
They may have already violated several rules about charitable solicitations.
What?! Yes, it’s true. Just as your state’s corporate commission regulates the rules that guide your nonprofit, so too do the rules of each of the 50 United States guide charitable solicitations within that state.
Problems arise, however, in this age of the internet, when nonprofits unwittingly violate state laws by allowing cross-state donations. The laws for each state vary considerably, and although you might think they’d all get together and come up with a reciprocal agreement to make life easier for nonprofits, they haven’t yet found a way to do this.
Instead, your organization must make it a point to do your homework and register with each state when required. Here, we’ve put together a brief guide to what you need to do, but you should also make an appointment with Welter Consulting to get expert insight and compliance guidance.
When Do You Need to Register in Other States?
We mentioned the “Donate” button on a website, and that really gets to the heart of the matter: when to register is dictated by your fundraising activities.
If you run a local charity that only solicits donations from within your state, you may not need to register. Fundraising activities conducted solely within your state such as a local bake sale, car wash, or mailed solicitations to state-specific zip codes might be fine.
However, once you put that button on your website, theoretically you could collect donations from people in other states. And that opens up the can of worms known as “possibly need state registration, but not always.”
I wish it were crystal clear, but it’s not. Each state has its own tangled web of requirements. Some waive the need to register for nonprofits of a certain size, or donations of under a certain threshold. Others have reciprocal arrangements, meaning if you’re registered in one state, it’s fine to solicit donations in their state. And, as we’ve stated, every state is different, with its own unique set of requirements.
How to Be Safe Rather Than Sorry
Well, you could restrict your fundraising activities to within your state, but that would also restrict your ability to grow. A better option is to work with a consultant, or a professional service provider, to help you navigate the labyrinth of fundraising laws by state.
Hiring a professional to navigate state donation rules protects a nonprofit from costly compliance mistakes and ensures it can legally fundraise across state lines without interruption. Because each state has its own registration requirements, renewal deadlines, fees, and mandated disclosure language, managing them internally can quickly overwhelm small teams. A professional service organization streamlines the entire process, handling filings, monitoring changes in regulations, and keeping donation pages compliant, so the nonprofit can focus on mission and fundraising rather than paperwork and legal risk.
Having an experienced consultant helps you navigate these waters is essential for full transparency and compliance. It’s better to do so proactively than to get a “love note” from a state attorney general’s office or the secretary of state and a big fine to boot. This is where an ounce of prevention is definitely worth a pound of cure, and registering with the proper states a smart move. A consultant can help you take care of this upfront and avoid the hassle and headache of problems later.
Welter Consulting
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.
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