Online fundraising has become a key component of a nonprofit’s fundraising strategy.
Tools such as Social media, “Donate” buttons, email campaigns and crowdfunding all allow nonprofits to access a broader audience while making it easy for donors to give, with the click of a button.
While fundraising online comes with a wealth of benefits, it also comes with some unique challenges.
Asking for donations through any online channel constitutes "soliciting" in the states they’re coming from, subjecting nonprofits to state charitable solicitation registration requirements.
Now before you become to concerned, the fact is that very few nonprofits get compliant in all states before raising enough money to support the cost of registration.
Many simply focus on fundraising, then register once they achieve a level of success - a practical approach that is often the ONLY one that's economically possible.
ONLINE FUNDRAISING CHALLENGES
41 out of 50 U.S. states have enacted regulations on virtually every conceivable method of “charitable solicitation” (fundraising) by nonprofits.
Traditional solicitation methods have always made these rules straightforward. Phone calls, mail campaigns, and grants are direct communications to donors in specific areas.
Should a donor from Oregon want to write a check after the inspiring conversation you just had, then you’re soliciting funds in Oregon and you need to comply with applicable state charitable solicitation registration requirements.
Online fundraising is trickier. State laws are still trying to catch up to technology and there’s confusion about what qualifies as a solicitation.
In an attempt to unify the requirements, the National Association of State Charity Officials (NASCO) released a set of recommendations called the Charleston Principles in 2001, which are guidelines for how the state charitable solicitation authorities can regulate online fundraising.
The Charleston Principles recommend that charitable solicitation registration should be required with the following online fundraising activities:
- 1“Donate” button on a web page
- 2Contributions from a state on an ongoing, repeated, or substantial basis.
- 3Email campaigns targeted at soliciting donations from people in a given state
Remember, these are just guidelines, not the law, however, they influence decisions and it’s clear that simple, online fundraising techniques are subjecting nonprofits to state charitable solicitation requirements.
Also, keep in mind that not all states follow these principles and continue to define their own charitable solicitation registration laws, which means no standardization. Therefore, nonprofits fundraising in multiple states are subjected to a confusing patchwork of different regulations and requirements.
HOW TO STAY FUNDRAISING COMPLIANT
First off, you need to analyze your fundraising footprint. Take a good look at your fundraising strategy and know where you’re currently and planning on raising money and what the state charitable solicitation registration requirements are.
Now, create a fundraising compliance plan and prioritize your registration.
If budget is a concern, you’ll want to start with your state of incorporation and then add the bigger states that are likely to be substantial sources of contribution such as California and Texas. You’ll also want to register in the states that are diligent in the enforcement of charitable solicitation laws such as New York and New Jersey.
If budget isn’t a concern, then registering nationally is the goal.
Nationwide compliance helps you sleep at night knowing you’re avoiding penalties, increasing contributions, improving credibility with donors, and being a best practice nonprofit organization.
It’s important to be proactive about your nonprofit’s fundraising compliance.
The penalties for non-compliance are real and range from penalties and fees to damage to your image and credibility.
On top of that, the ever-changing state requirements and paperwork are frustrating, time-consuming and potentially expensive.
This why most nonprofits seek out help with their charitable solicitations registration to keep them on the right side of the law.
If you prefer an easy and affordable solution, then check out our caring, expert partners at Charity Compliance Solutions (CCS). In alignment with our mission, they allow our nonprofit customers to relax and focus on their mission while CCS handles all the details.
Cheers to your mission,
Jacqui Long | InstantNonprofit
PS. Got burning questions about your nonprofit’s charitable solicitation registration requirements? We’ve got you covered. Schedule a FREE consult with a Compliance Specialist here.