Charitable Solicitation in the Digital Age: Determining Your Fundraising “Footprint”

When you send letters out to a mailing list, it’s easy to define your charitable solicitation registration “footprint,” the territory where you are soliciting funds. The zip codes and states are included on the list! But what about when you send an email greeting to your newsletter subscribers? Or post pictures from your 5K run in a Facebook post?

Fundraising in the digital age presents challenges for nonprofits that want to reach out and spread the word about their work without running afoul of state and federal laws. Being proactive and knowing the basics are the best ways to ensure that your fundraising efforts are legal. Basically, a compliance plan begins with the following considerations.

1. When Is Registration Required?

Every state governs charitable solicitation registration independently. In 41 states, nonprofits must register to solicit funds. In most cases, registration must be done before fundraising begins.

Most states also require separate registration whenever you use professional fundraisers or advisors or engage in commercial co-ventures (CCVs) in which you share revenues with a commercial vendor. Special registrations are also usually required for games of chance.

Some hospitals, schools, religious organizations, and membership organizations that only solicit from their members may be exempt from charitable solicitation registration. They may still need to apply for an exemption from registration, however.

Most registrations and exemptions need to be renewed annually with filing dates varying by state.

2. What Counts As Solicitation?

While state laws vary, solicitation generally includes:

• Asking for a donation via mail, email, or phone, regardless of whether you get a response
• Applying for grants
• Receiving a donation, whether you asked for one or not
• Advertising on TV and radio
• Hosting events
• Placing a “Donate Now” button on your website
• Requesting donations publicly through other online media

3. Where Do You Need to Register?

Once you’ve determined which of your activities qualify as solicitation, you can define your solicitation footprint, those states where you’re engaged in solicitation (asking for or receiving donations). When doing this, it helps to remember that in every case, the registration requirement follows the state where the donor or potential donor resides. If you send an email to someone who lives in Nevada, Nevada law applies. If you broadcast a radio message that reaches viewers in New York and New Jersey, the laws of both states apply. If you receive a donation from a Colorado resident, even though you’ve never solicited there, Colorado law applies.

Unfortunately, when it comes to online fundraising, that’s a wide net. Basically, if you solicit online through something like a “donate now” button on your website or a post on your public Facebook page, your message is going out to people everywhere. As such, you’ll need to investigate the requirements and potentially register in all of the 41 states that require fundraising registration.

4. What Are the State Requirements?

Once you’ve defined your footprint, you’ll need to determine the registration requirements for each affected state. Some states won’t require you to register unless your donations from that state surpass a certain level. Others require registration automatically, regardless of whether you have donors there. Because the laws vary and the requirements can be complex, many nonprofits find it safer to register as a matter of course in all 41 states.

5. Additional Requirements to Consider

There are additional requirements in many states that you’ll want to consider early in your fundraising planning.

Foreign Qualification: Some states require nonprofits from other states to file for permission to operate as a “foreign” nonprofit before soliciting funds. To do so, you will also need to appoint a registered agent located within the state. States that require foreign qualification include Colorado, the District of Columbia, Illinois, Michigan, Nevada, North Dakota and Oregon. California, Florida and Georgia strongly encourage, but do not require, foreign qualification.

Reports and Disclosures: Most states require annual corporate status reports to maintain good standing. In addition, 24 states require fundraisers to publish a disclosure statement in written solicitations and other communications. You may also need to submit an annual financial audit in some states.

For more information on the state charitable solicitation registration requirements, download our Charitable Solicitation White Paper!

How Do You Track Your Donor Database as It Grows and Changes?

So how do you manage a donor database that’s a mishmash of email subscribers, direct mailing lists, incoming website inquiries, phone contacts, and more? Bloomerang’s donor management system makes it easy to manage donor information, including tracking your solicitation footprint and managing online giving. In fact, their user-friendly software is a powerful tool for managing all aspects of donor relations and boosting donor retention.

The Bottom Line: Your Mission

Fundraising is an exciting and rewarding part of nonprofit operations, since it gives people an opportunity to engage with your organization and put their money behind a cause they really care about. While it can be challenging, being fully compliant is well worth it because it safeguards your fundraising activities and positions your organization for successful outreach and growth.

If you need help with fundraising, feel free to contact the specialists at Harbor Compliance or leave us a comment below! We’ve helped thousands of nonprofits set up and manage their compliance programs, and we would be happy to talk.