If your foundation solicits donations, it is most likely required to register for fundraising activities in one or more states.
Fundraising activities are regulated by state law. The majority of states (40)* require charitable organizations, as well as any paid professional “fundraising counsel,” or consultant hired to assist with fundraising activities, to register with the state before the nonprofit solicits any donations from residents of that state. This requirement is known as "charitable solicitation registration."
What is required?
Fundraising regulations can be quite different state to state, and no matter how your foundation is fundraising (through a donation app on your website, Instagram, texting, phone calls, or old-fashioned snail mail and personal “asks”), if the underlying activity is “solicitation” – defined as asking for a donation – that's a regulated activity in most states.
- Each state has a different process and registration fees which can add up quickly.
- Most states require not only initial registration, but annual or bi-annual renewal filings. Late fees apply, so be sure to note renewal deadlines.
- Many state registration forms require signatures by more than one corporate officer, so allow time to collect the necessary signatures well in advance of filing deadlines.
- In addition to registration requirements, several states also require foundations to publish "disclosure statements" on written solicitations or confirmation of a pledge/gift.
- Crowdfunding and giving days can trigger registration requirements in multiple states, since one hoped-for result of such activities is that individuals forward a link and encourage their friends and family to donate. Often those friends and family members are in other states.
- If your foundation will no longer be soliciting in a state where it had previously registered, there may be special filing forms required to “un-register” in that state. If your foundation fails to unregister it may be assessed late filing penalties.
At Foundation Launch, we facilitate the solicitation registration process for our clients to ensure that they are compliant and don't receive penalties.
*States not currently requiring registration: Arizona, Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Vermont, and Wyoming.
