Nonprofit Registration Strategies for Small Organizations
Yes, charitable registration laws really do apply to small charities, but there are nonprofit registration strategies that can help keep small organizations in compliance. Many states have minimum fundraising thresholds, but those thresholds generally apply to funds raised by the organization nationwide, not in that specific state (a common misconception!). Therefore, unless your charity is so small as to be practically non-existent or fits into another common exemption (e.g., churches), it is still likely required to register in most states with registration requirements.
One approach for small organizations with online fundraising operations is to review nonprofit registration strategies that incorporate the organization’s specific activities. A strategic registration requires the charity to review its fundraising and determine where it is currently soliciting. Next, the charity must determine which states regulate fundraising and whether the states in question have exemptions that may apply. Based on that analysis, the charity can then register in only those states.
Further, if the charity has a “Donate Here” button on its website, several states refuse to follow the Charleston Principles and interpret that as a solicitation in their state. Accordingly, the charity should either state on its website that the solicitation is not directed toward residents of those states or it should register in those states.
Donations that come in from states where the charity is not soliciting do not trigger registration. It’s the solicitation that triggers the requirement to register, not donation. However, any good fundraiser worth his or her salt will want to follow-up and ask for more. At that point, the charity is once again soliciting in a new state and will have to evaluate its registration strategy.
The key to making nonprofit registration strategies work is staying on top of solicitations and ensuring that registration requirements are considered whenever solicitations are directed to a new state.