Charitable Solicitation: Register Before Asking For Money 

Your church, school, college, or camp outreach may span several states, resulting in out-of-state charitable donations. Most states require nonprofits to register before receiving contributions. For organizations big or small, or those which span multiple states, compliance for online contributions and professional fundraising events can be complicated.

Look before crossing state lines

With the ease of online banking and the growth of multi-state ministries, camps, and educational institutions, more organizations are receiving donations from across state lines.  Professional fundraisers are assisting nonprofits in larger building and renovation projects to help generate funds. 

While both of these situations provide benefits to religious organizations, often leaders are not aware that receiving solicited/unsolicited funds and using a professional fundraiser may require the organization (or fundraiser) to register in different states.  The stakes are high if the church, school, or camp fails to comply with charitable solicitation laws. Noncompliance can result in fines or the ability to solicit. In some states, an organization can even lose recognition of its tax-exempt status.

Approximately 40 states have enacted some form of charitable solicitation statutes. According the IRS, state solicitation statutes generally serve two important purposes:

1. They allow the public to get basic information about organizations asking for contributions so donors can make better, more informed charitable giving decisions.

2. They help protect state residents from charitable solicitation fraud and misrepresentations.

State statutes usually require organizations to register with the state before soliciting its residents for contributions. In most states, certain nonprofits are specifically excluded or exempt from the registration requirements. Exemptions vary from state to state. A organization can learn about its state’s registration requirements for charities, taxation, information for employers, and more from the IRS.  

Is your fundraiser registered?

Some churches, colleges, and schools hire outside consultants, while others hire staff members to administer fundraising activities. Your organization may use a combination of the two. How a nonprofit chooses to handle staffing for its fundraising activities can have important ramifications.

Professional fundraisers—organization employees and independent contractors hired by the organization—are regulated and required to register in all applicable states. The National Council of Nonprofits offers guidance on how to properly classify workers and other registration requirements in its Professional Fundraising Consultants and Grantwriters guide.

Additional help

An organization is encouraged to register with all states it solicits or receives donations from, as necessary. If a church, school, or camp receives donations from a significant number of states, organization leaders may be able to use a third-party vendor to help with registrations.

While Brotherhood Mutual does not endorse any particular vendor, Harbor Compliance registers religious organizations in applicable states and will maintain the registration. Check with other religious organizations and nonprofits in your area to see if they could recommend a third-party vendor, too.

Brotherhood Mutual's legal team specializes in helping ministries answer questions from an insurance and risk management perspective. See if the Legal Assist team’s guidance can help you. You can review FAQs, ask a legal question, or obtain an attorney referral for your area—it’s a free service we offer to the religious organization community

Brotherhood Mutual is pleased to provide this complimentary legal assistance service. The services we offer through Legal Assist are intended to provide general legal information to our current and prospective policyholders. It does not constitute legal advice. We intend to provide information that is helpful, but you should not consider information offered through Legal Assist to be a substitute for the advice of a licensed attorney in your area.