Many states require any nonprofit organization that plans to solicit donations for a charitable purpose within the state to register with the state (and pay a filing fee) for consumer protection purposes prior to soliciting donations. A “charitable” purpose is generally defined much more broadly for these purposes than it is for federal income tax purposes. Although this can become onerous and expensive for organizations that solicit donations in multiple jurisdictions, it is required and organizations should check the laws of any state in which they have even minimal contacts. Some states more rigorously enforce the registration requirements, and interpret how much contact is necessary for the state to have jurisdiction to require registration. The registration requirement generally includes both the filing of a registration statement and certain financial disclosures.
Organizations can file solicitation registration statements in most states using the Uniform Registration Statement, which was developed by the National Association of State Charities Officials and the National Association of Attorneys General, as part of an ongoing effort to encourage compliance with the states’ solicitation registration requirements. The most recent version of the Uniform Registration Statement was released in May 2010, supports 37 jurisdictions (36 states and the District of Columbia), and requires (and includes) supplemental forms for 13 jurisdictions.[1]
Practical Tips:
Determine where the organization is soliciting funds. If a tax exempt organization is soliciting funds through any means, including in person, or by print, phone, television advertising, or mail, the organization will likely be subject to the registration requirements of that state. The internet causes complexity with respect to determining the nexus for requiring registration, but if the organization sends any solicitation materials into the state as a follow-up to internet solicitation, the state may assert jurisdiction for requiring registration.
Assess the organization’s activities in each jurisdiction. The organization should assess whether its fundraising activities in a particular state are not significant enough to justify continuing to solicit funds, and registering to solicit funds, in the state. The organization can also adjust its internet solicitation follow-up activities to avoid establishing nexus with a state solely as a result of a mailed thank you letter with a subsequent appeal.
[1] http://www.multistatefiling.org/. In addition to these 37 jurisdictions, Colorado, Florida, and Oklahoma have solicitation registration requirements, but do not currently accept the Uniform Registration Statement.
