Avoid Fundraising Compliance Penalties and Raise More Money

The world of nonprofit organizations is filled with wonder and possibility. Passionate individuals with ideas of how they might benefit their community are inspired to launch nonprofit organizations and make those dreams a reality. With a few well-placed fundraising requests and some impactful programs, the possibilities are endless, aren’t they?

In fact, building a thriving nonprofit organization can be a challenge. A skyrocketing number of organizations are competing for funding while demand for programs and services continues to grow. There are several factors to consider when you’re moving your organization from sustainable to thriving. Planning plays a key role – whether you are contemplating strategy or ruminating on marketing and succession. Recruiting and grooming a strong board of directors is also important. And then there is fundraising.

Fundraising – and the need to do more of it – is generally top of mind for nonprofit professionals. Growing demand for services leads to planning for program expansions, which inevitably sparks conversation about how to bring more dollars in the door. Managing public funds – whether from a community of individuals or a mix of public and private grantors – is a privilege. Securing and maintaining financial gifts requires relationships built on credibility and integrity. When any funder invests, they want to know your mission and vision. They also want to know that you are building your vision on a solid foundation. Many factors contribute to the success of your fundraising program. A key element of that success is compliance with state fundraising requirements.

In most states, nonprofit organizations are required to register prior to soliciting. Your organization is likely incorporated or fundraising in one of those 41 states. Solicitation is what triggers registration requirements, not just receiving funds. Whether you are mailing letters, sending emails, or applying for grant funding, it’s your responsibility to understand fundraising registration requirements before making a solicitation.

What are the risks of noncompliance?

• State agencies have embraced their expanded role enforcing charity regulations and pursue noncompliant organizations.
• Soliciting without registering may result in costly penalties that pull dollars away from your mission and may even result in losing the right to solicit at all.
• Your organization’s reputation and trust built with funders are at stake when you fundraise without being registered.

You want to cast a wide and effective net as part of your fundraising strategy, building on program successes as well as donor loyalty and relationships. Don’t trip over technicalities as the money comes rolling in. When that generous donor sends you a gift – because one of your devoted donor asked them to – you are going to add them to your pipeline, grow the relationship, and ask again. You are soliciting – so make sure you’re meeting all of the necessary requirements.

What are some best practices? Let’s keep it simple. There are four key steps to remember if you want to stay on track.

1. Research: You need to know your status in each state. Once you know that, you can easily map out your path to compliance, including which applications to complete and what fees may be charged.
2. Apply: Each state has its own application process, so make sure you are preparing the correct forms in the most streamlined and cost-effective manner.
3. Monitor: As with any other submission you make, you’ll want to follow these applications through to approval, for your – and your donors – peace of mind.
4. Renew: Mark your calendar so that once you’re compliant, you stay compliant. Track due dates and fees so that your renewals are on time and complete.

Embrace the rewards of compliance! Fundraise broadly and boldly, without concern for borders. Build a community of funders who are confident in your ability to manage their investment in your mission. Most of all, enjoy an increased rate of return on your solicitations and leave no dollar behind.