Nonprofits often rely on donations from the general public to support their important contributions to society. Given the more than 1.5 million nonprofits in the United States, donors have an overwhelming number of options. Nonprofits must acquire and retain donors by asking for contributions from those who care most about their mission. There are numerous ways to fundraise including direct mail, tele-fundraising, email, website, social media, text-to-donate, peer-to-peer campaigns, events, cause marketing, fundraising platforms and more.

To ensure transparency and protect the nonprofit sector and the general public from fraud, thirty nine (39) states and the District of Columbia require charitable organizations to register prior to asking for contributions from state residents. In addition, there are a few states that require specific types of charitable organizations, such as veterans organizations, to register. Most states define “charitable organization” broadly so that it generally encompasses 501(c)(3) organizations, 501(c)(4) organizations (in most cases), and may include other IRS classifications as well depending on the organization’s purpose and activities.

Where does the organization need to register? The Charleston Principles are a helpful resource when trying to determine the states where an organization should register. State charity regulators issued the Charleston Principles in 2001 in order to provide non-binding guidelines for the enforcement of state charitable solicitation laws. According to the Charleston Principles, a charitable organization should register in its state of domicile and any state where its non-internet solicitation activities (e.g., direct mail, tele-fundraising, events, etc.) target state residents. When it comes to online fundraising, a charitable organization should register in any state where it either specifically targets individuals using the internet (e.g., through geo-targeted advertisements or messaging on social media or its website) or simply receives substantial or repeated and ongoing contributions from a state’s residents via the internet (e.g., through its donate button or another online fundraising platform). For more information about online fundraising and state registration, see this article.

States exempt certain types of charitable organizations from the registration requirement. Common exemptions include exemptions for churches and (in most states) a broader category of “religious organizations,” educational institutions (including, in some states, affiliated foundations), membership organizations that limit solicitation to membership, organizations raising less than a certain amount annually (most common threshold is $25,000 based on gross national receipts), nonprofit  hospitals, and certain political organizations. Some states allow an organization to rely on its own determination that it is exempt from the registration requirement while other states require an organization to apply for an exemption.

Registration requires that the organization provide information detailing its mission, programs, finances and operations. The state will require the organization to submit the state’s registration form along with organizational documents, including, articles of incorporation, bylaws, IRS determination letter, Form 1023, financial statements, and Form 990. Organizations must renew the registration annually by submitting the state’s renewal form and the organization’s most recent Form 990 and financial statements (in some cases, audited financial statements are required).

States also require that charitable organizations disclose and, in many cases, submit contracts with professional fundraisers, fundraising counsel and commercial co-ventures (to read more about fundraising counsel and registration, see this article). The contract must include certain provision as required by state solicitation statutes. Professional fundraisers, fundraising counsel and commercial co-ventures are also required to register and file contracts in certain states. Therefore, it is important to have a conversation with fundraising vendors to determine whether a contract needs to be filed, whether it includes the appropriate state-required provisions, and in which states it should be disclosed.

Finally, many state solicitation statutes require charitable organizations to make certain disclosures at the point of solicitation. Disclosure often takes the form of identifying the charitable organization and providing the recipient with the charity’s contact information or the contact information of the state regulatory office where more information about the charity can be found. Some states require point-of-solicitation disclosure language to use the exact wording found in the solicitation law. For more information, please see this list of the disclosures required by each state and model disclosure statement.