If you’ve heard anything about state charitable solicitation registration, you may be a little confused – I know I have been! Simply put, it is a requirement of most states that nonprofits seeking donations from their residents must submit specific financial and organizational information, usually on an annual basis.
This is not just for fun. States use this information to give the public access to information about charitable causes soliciting from them; ensure that these organizations are accountable and transparent; and protect their consumers and good-faith nonprofits. To accomplish this, state forms often require information on your finances, board of directors, legal status, mission, programs and organizational structure.
In Kentucky, nonprofits are required to register with the Kentucky Attorney General prior to solicitation, and there are a few exemption categories. Registration consists of the IRS Form 990 plus the IRS Determination Letter and the Articles of Incorporation. Annual filing of the IRS Form 990 is due when the same form is submitted to the IRS with no need to submit any IRS extensions. There is no fee for either initial registration or the annual follow-up. In Kentucky (and in any state in which you solicit), you will need to separately register professional solicitors and consultants – if you use them.
Thirty-nine states and the District of Columbia require that charities register to solicit in their state whether or not they are located in that state, unless they are in certain state-specific exempt categories (e.g., organizations with annual contributions of under $25,000, hospitals, and educational and religious institutions. Please note that this refers to exemption from registration and not tax-exemption). This means an organization with solicitation campaigns in multiple states may need to register in all of them. The exceptions are Arizona, Delaware, Idaho, Iowa, Indiana, Montana, Nebraska, South Dakota, Texas, Vermont, and Wyoming – these states do not require filing. Overall, for initial registration, states require a completed registration form, financial documentation (IRS Form 990 or variation and reviewed or audited financial statements for larger organizations), organizational documentation (by-laws, articles of incorporation, and IRS Determination Letter) and a fee. Annually thereafter, most states will require a renewal form and annual financial reporting, plus a fee.
Sounds simple, right? Well, it’s not. The increased use of the internet as a solicitation tool, as well as efforts like KY Gives Day, has made state registration a big issue. Years ago, a group of state charity officials (NASCO) developed an outline known as the Charleston Principles, of how states may wish to carry out their registration requirements for online solicitation. In general, it says that organizations that have a way to solicit money immediately on their website or social media page (i.e., have a “donate now” button and a way to collect payment) and/or target residents of a particular state (or states) or get substantial, multiple or repeated donations in a state (or states) must register in the state – even if they do not have physical presence in the state. This also applies to follow-up emails to donors, sign-ups for newsletters and emails, and to email campaigns. Therefore, organizations that receive online donations may have to register in all states for which these actions apply. To make things more challenging, different states may have different definitions of “targeting” and “substantial.” Importantly, there are some readings of New York and New Jersey requirements that state that ANY online donate now button is a solicitation in their state and requires registration.
Overwhelmed and confused? Well, you don’t need to be any longer because KNN is excited to announce that we’ve teamed up with a new online service, Simple Charity Registration to make the charitable solicitation registration process easier for our members! Simple Charity Registration helps your organization determine where you need to file, has you complete a questionnaire that auto-fills the appropriate forms and provides instructions on how and what to file and any fees required. Later, users receive email reminders of upcoming deadlines and can use their stored information for their next year’s filing. With KNN members-only pricing and an overall cap on the fees, this new benefit will save many of our KNN members hundreds of hours and potentially thousands of dollars
Executive Director/ CEO