An Introduction to Nonprofit Fundraising Registration

In most of the states in the United States, a nonprofit organization has to register before it starts solicitation. There are some states in the country in which an unregistered nonprofit organization cannot collect donations from residents. Therefore, it is important for a nonprofit organization to be aware of the documents and legal proceedings involved in nonprofit organization registration. It is important to comply with the rules and regulations set by IRS and the state government. Those days are gone when nonprofit organizations used to get by without complying with some of the IRS requirements. Your nonprofit organization will be affected by the rules and regulations of IRS and state governments.

Following are the states in which you need not register your nonprofit organization:

ArizonaIndianaIowaNebraska
South DakotaTexasVermontMontana
DelawareIdahoWyoming

 

Apart from these 11 states, in the remaining states of the country, a nonprofit organization has to apply for registration and comply with all the IRS and state government rules and regulations to solicit funds from state residents. Following are the states in which it is your legal obligation to register your nonprofit solicitation.

AlabamaAlaskaArizonaArkansas
KansasKentuckyLouisianaMaryland
MassachusettsMaineNew JerseyNew Mexico
New YorkUtahVirginiaSouth Carolina
WashingtonWest VirginiaCaliforniaNorth Carolina
ColoradoMichiganConnecticutMinnesota
North DakotaOhioOklahomaOregon
Dist. of ColumbiaFloridaGeorgiaMississippi
MissouriNevadaPennsylvaniaRhode Island
HawaiiIllinoisNew HampshireTennessee
Wisconsin

 

Once your nonprofit organization is registered, you can use different types of digital mediums to request donations from people. These mediums allow you to receive funds from residents living in different states. You can reach and encourage residents using advertisement, phone, email, social media and the internet. Receiving funds over these medium simplifies donation for both the nonprofit organization and residents contributing to the noble cause of the organization.

Why Is It Important To Register Nonprofit Organization? 

It does not matter whether you are running a small, mid or large-sized nonprofit organization; you can’t ignore even a single IRS rule or regulation. According to some experts, approximately 90% of the nonprofit organizations fell short in getting registered especially when it comes to registering in more than one state. These nonprofit organizations failed in registration because states didn’t have resources required to enforce laws and regulations. However, things are changed now.

After the IRS has redone Form 990, it is essential for a nonprofit organization to provide information about its state registration. Therefore, it is important to pay attention to rules, regulations, and requirements of IRS. Not paying attention to the requirements results into scrutiny from the IRS. This will make it difficult for the nonprofit organization to receive funds from donors.

If you are running your organization without nonprofit registration, you are not only disobeying the IRS. You are also breaking state laws. An unregistered nonprofit will have to pay fines and penalties. And, that fine will be substantial. $1,000, that’s the minimum amount of fine an unregistered nonprofit organization in Pennsylvania have to pay.

The state is most likely to disallow the nonprofit organization to collect donations from the residents if it is not registered.

How to Register a Nonprofit Organization? 

Though nonprofit organization registration laws vary from state to state, it is very easy to register a nonprofit organization in states. To get registered in a state, the nonprofit organization first of all files an application with that state. The organization will also have to pay a registration fee. The nonprofit organization is required to provide the financial information the state agency is asking for, and that information has to be accurate and up-to-date.

The nonprofit organization will have to file IRS form 990. The IRS form 990 provides the IRS with an overview of the financial information, governance, and activities of the nonprofit organization. Apart from registration, a nonprofit organization is required to file form 990 at the time of annual renewal/financial reporting.

Every state has a different nonprofit solicitation registration application. So, the nonprofit organization has to register with each state individually. And, the organization has to meet the requirements of that particular state as requirements also vary from state to state. So, if you want to conduct fundraising in multiple states, you will have to do more registration work. In some states, registration is known as a registration statement, and in some states, it is called license. Solicitation permit and certificate are the other names used in some other states.

Why Are Some Nonprofit Organizations Exempted From Solicitation Registration?

Some of the nonprofit organizations can avoid the hassles of fundraising registrations as these are exempted from the most states. Nonprofit educational, hospitals and religious institutes, and very small nonprofit organizations collecting funds are exempted from fundraising registrations.

In the state of Michigan, a nonprofit receiving fund from ten or less than ten states is exempted. There are some other states offering this relaxation to nonprofit organizations. However, it is not easy to figure out whether your nonprofit will be exempted or not. It varies from state-to-state. A state exempted in one state might not be exempted in some other state. A nonprofit receiving less than $25,000 annually is exempted in New York but not in California. A nonprofit should look into the state law to find out whether it qualifies for state charity registration exemption or not.

Is Charity Registration Possible without Professional Legal Services? 

Almost all medium and large-sized nonprofit organizations rely on law firms for charity registration. These law firms have specialized teams to take care of charity registration in more than one state. The services of these law firms are often very expensive. However, there are some law firms offering charity registration services to small and medium-sized nonprofit organizations. And, services of these law firms are also very affordable. However, if you can understand charitable solicitation registration laws of different states, then you can register your nonprofit fundraising on your own.