Charitable Soliciation

Learn about charitable solicitations for nonprofits.

Once you’ve established your 501(c)(3) status as a nonprofit organization, it’s likely that you’ll also need to register with your state and obtain specific permits or licenses to legally fundraise. This is called charitable solicitation registration. 

In fact, the majority of states require nonprofits to register with them in some way prior to fundraising. The registration guidelines and regulations do differ from state to state, with some states not having any stipulations at all. 

Learn about what a charitable solicitation is.

What is a charitable solicitation?

As a nonprofit leader, you already know that the way you fundraise and communicate with your donors can impact your organization’s success. How do charitable solicitations fit into your regular offerings? 

A charitable solicitation, also known as a fundraising or nonprofit solicitation, is any attempt to raise funds from an individual, a group of people, or the public at large.

How do nonprofits use charitable solicitations?

Nonprofits use charitable solicitations to raise funds that will ultimately support their missions. Not only do charitable solicitations result in gifts being donated to your organization, but they also help build meaningful relationships with your donors. 

This is because charitable solicitations can occur through many vehicles and communication channels:

  • In-person meetings and other face-to-face engagements
  • Digital advertising, like ads on Google or Facebook 
  • Email communications, whether direct fundraising asks or regularly sent newsletters
  • Social media posts using different types of media like graphics or video
  • Website content, blog posts, event pages, and donation forms
  • Fundraising events from large galas or auctions to more casual virtual gatherings
  • Direct mail campaigns with written fundraising asks

Organizations cannot simply make the solicitation ask–they have to engage their audience, build a connection with them, and convey why their cause is the best one to support. 

Put yourself in your donor’s shoes and make sure your giving process is streamlined with the right donation solution. And, after a gift is made, follow up with a thank you and with ample appreciation. 

Besides figuring out the best engagement strategies, building important donor relationships, and investing in the right tools, there are some legal requirements and guidelines that might affect your nonprofit status.

How to register for a charitable solicitation

How can nonprofits register for a charitable solicitation?

As we mentioned, the majority of states require nonprofit organizations to register before they start fundraising. In 41 out of 50 states, nonprofit organizations must be registered with their local Division of Charities before making charitable solicitations. To successfully register for a charitable solicitation, you’ll need to go through a couple of steps. 

However, regulations do vary widely from state to state. If you want the most updated information, it’s best to look at your state’s government agency’s website.

Typical requirements

While there are likely different registration deadlines, varied filing fees, and other key differences state by state, there are some common documentation and filings that nonprofits will likely have to submit:

  • IRS Form 990 – Most nonprofits are required to file the IRS Form 990 on an annual basis, especially if they want to maintain their tax-exempt status. However, there are still more variations in this filing process, like being eligible to file a 990-EZ or 990-N form. Some nonprofits hire the accountant/CPA that prepared their IRS 990 to also prepare and submit state charitable registration forms since much of the information required for charitable registration is the same as what a nonprofit reports on its Form 990. Other nonprofits outsource this project to a specialized service provider, usually a law firm equipped to prepare state registration forms.
  • Nonprofit Bylaws – These are legal governance documents that outline the self-set rules your nonprofit must adhere to in its operations. It’ll include items like officer position descriptions, voting procedures, and conflict-of-interest policies. Your bylaws can help you manage your nonprofit and resolve any conflicts that may come up. Filing this information shows both the public and state governments that your organization is dedicated to its mission of charitable funding.
  • Nonprofit Articles of Incorporation – These are another one of your organization’s guiding documents. These articles should officially declare your nonprofit’s name, location, purpose, and initial Board of Directors. 
  • IRS Letter of Determination – This is a letter from the IRS confirming that a nonprofit’s tax-exempt status is approved and it is officially considered a 501(c)(3) organization. This letter includes the organization’s legal name and trade name (if applicable), employment identification number (EIN), and the effective date of its 501(c) status. 
  • List of Officers, Directors, and Trustees – You’ll likely need to list their names, addresses, and official titles at your organization.
  • Audited or Reviewed Financial Statements – Your organization might be required to provide audited financial reports or reviewed financial statements, typically if you spend over a certain amount during a given year. These documentations likely depend on your nonprofit’s total revenue received during a fiscal year, total contributions received, and whether or not you receive grants from the state or federal government.
  • Contracts with Fundraising Counsel, Solicitors, Consultants, and Commercial Co-Ventures – If your nonprofit worked with any independent contractors to help you develop your fundraising strategy, you might need to submit copies of those contracts to your state. This does not apply to your nonprofit’s officers, employers, or legal/financial advisors. Similarly, if your nonprofit partners with a for-profit business to receive a percentage of sales, this might also need to be regulated and the contract submitted.

These are just the most common documents and requirements that your nonprofit might need to submit. Remember, there are also state-specific forms that you’ll likely have to fill out. Visit your state’s dedicated website to ensure you don’t miss out on anything essential.

Possible penalties

 If you fail to comply with guidelines that do apply to your organization, you won’t be able to legally solicit any donations at all and there might even be severe penalties. 

State penalties for unlicensed solicitation vary. They may include:

  • Fines and late fees
  • Civil and criminal action against officers and directors
  • Revocation of tax-exempt status
  • Ban from soliciting funds
  • Loss of donations or other revenue

Beyond just the penalties from the state, your nonprofit’s reputation can also take a hit, damaging relationships with donors, sponsors, and grantmakers. Some states, like Pennsylvania and Virginia, even publish public lists of organizations that are deemed delinquent. 

The best way to avoid these penalties is to stay up-to-date on all charitable solicitation registration requirements where you might fundraise or where your donors are from.

Special considerations

One of the most confusing parts of charitable solicitation registrations is all the special considerations and state-specific rules. Here are some of the top ones to keep in mind:

  • Initial versus renewal registrations. Many states require not only initial registrations but also renewal registrations in subsequent years. Late fees apply, so be sure to note renewal deadlines. Each state will also likely have different renewal timeframes.
  • Multiple state registrations. Charitable nonprofits must submit individual registrations to various state agencies in each of the states where the nonprofit will be soliciting donations. This report by the Council of Nonprofits and Harbor Compliance offers an overview of state laws that regulate fundraising.
  • Unregistering with a state. If your nonprofit is no longer soliciting in a state where it was previously registered, you may need to file specific forms required to “unregister” in that state. If your nonprofit fails to unregister, you may even undergo fines or other late penalties.
  • Disclosure statements. In addition to registration requirements, several states also ask nonprofits to provide “disclosure statements” on written solicitations or confirmation of a pledge/gift. These are used to prove to donors that the nonprofit is registered in the state. Some states have strict requirements for the disclosure statements, such as font size and other presentation details.
  • Online donors. If your online supporters are in a state with especially strict requirements, you may need to register there, even if you don’t physically solicit gifts in that state.
  • Possible exemptions. Most states exempt educational institutions and churches/religious congregations from registering, along with membership organizations that only solicit gifts from their members. 

Taking the steps for charitable solicitation registration is a difficult process. Currently, more and more states are actually moving this entire process online.

Here is the bottom line for charitable solicitation registrations.

Bottom line

Nonprofit organizations run on fundraising. Without a successful charitable solicitation registration, you can’t work towards your mission and help the community you care about.

Remember, it’s still best to check with your own state’s specific guidelines before taking action. Even now, there are still many unanswered questions because state laws don’t take into consideration the new ways nonprofits are using the internet and other new technologies to fundraise. This causes confusion with online donors from multiple states and solicitations from new fundraising tech.

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