Charities Across Borders, Part One – Soliciting Across the U.S.A.: Multi-State Filing

Volkova Law Group PLLC on June 6, 2012

We often hear how the Internet has changed everything. And it has, especially for non–profit organizations who get donations from supporters throughout the U.S. and abroad via online outreach. Today’s world offers non-profit organizations a multitude of ways to reach new donors and thank goodness for that, considering other sources of funding have dried up in recent years.

A few notes of caution for those lucky orgs:

First, when receiving donations from supporters across the U.S. states, the non-profit needs to make sure it is in compliance with charity registration requirements in the states from which it receives donations. Otherwise, depending on the amount solicited, a non-profit may suffer penalties or prohibition from soliciting in that particular state.

Here is an illustration.

Non-profit is a theater company in New York City that promotes Russian past and present playwrights. They have complied with New York laws and have registered with the Charities Bureau at the New York Attorney General’s Office. Every year, they pay the annual fee and file the necessary documents to keep their status current.

Now, this non-profit also has a touring company and they travel across the U.S. and perform their shows. They get donations from supporters, small amounts between $10 -20 per person. Usually, they raise about $2,500 per state. One would think, these are small amounts, so the non-profit does not need to register with the charity bureau in each state, right?

Well it depends. In some states, there are exemptions based on the amount solicited, but in many states, non-profits must register, even if the amount solicited is small. The time and resources required to comply with each state’s registration process would make any person’s head spin, much less a small non-profit with one part-time administrator who is really a volunteer anyway. So, for many small out-of-state non-profits, soliciting donations in the more restrictive states is not possible.

The only silver lining is that there is a project organized by the National Association of Attorneys General (NAAG) and the National Association of State Charities Officials (NASCO) that compiles each state’s charity registration requirements. In addition, they have created a unified registration statement (URS) that some states accept. Here is the website for the Multi-State Filer Project, Inc.

There is still a lot of legwork required to complete each state’s registration, but at least there is a reliable starting point.

Stay tuned for our next article about soliciting donations overseas.

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