FAQ: How Does Charitable Solicitation Registration Work?

As a nonprofit professional, it’s easy to get caught up in the excitement of reaching your fundraising goals and rolling out new programs to make a difference in your community. This is the kind of energy that nonprofit missions thrive on!

But don’t forget the less visible (and perhaps less exciting) but extremely important work that supports all your fundraising and programming. Before you can boldly lead your nonprofit into the future, you have to ensure you’ve got solid footing. This is where nonprofit compliance comes in. 

The world of nonprofit compliance can be complex, and various filing requirements can vary widely from state to state. Solicitation registration is among the most important compliance tasks to keep in mind for all tax-exempt organizations that conduct fundraising.

But if you’re new to nonprofit compliance, you might be unfamiliar with solicitation registration, let alone how it works or how to maintain your compliance over time. This guide will cover all the essentials you’ll need to understand to protect your mission.

What is charitable solicitation registration?

Charitable solicitation registration, sometimes called charity registration or fundraising registration, involves registering your nonprofit with a state government so that you can legally solicit donations from its residents. 

It’s important to know off the bat that solicitation registration is very important. Failing to register or renew your registration can result in hefty penalties, ranging from fines and late fees all the way to civil and criminal action and eventual revocation of your tax-exempt status.

Currently, 41 states and Washington, DC require nonprofits to register prior to conducting any fundraising activities. To register, your nonprofit will need to provide a specific set of documents to the state’s charities bureau under its Attorney General or Secretary of State office. We’ll review the steps of the registration process below.

What’s the purpose of solicitation registration?

Charitable solicitation registration is essentially a way for states to protect their residents from giving donations to fraudulent charities, akin to consumer protection regulations for for-profit businesses. 

Since the federal and state governments grant and recognize tax exemption for 501(c)(3) nonprofits, they need to ensure those nonprofits actually put the majority of their resources towards pursuing their missions. Solicitation registration is a safeguard that requires organizations to demonstrate the nonprofit nature of their activities. The documents your organization provides during the registration process prove a few important things to state governments:

• That your nonprofit was formed and is governed correctly
• That you manage your nonprofit’s finances appropriately
• That any contracts between your nonprofit and third parties are appropriate and don’t represent any conflicts of interest

By proving these things and keeping your registrations renewed over time, you earn the trust of state governments and donors alike and can continue safely pursuing your mission.

How do you register your nonprofit to fundraise in a state?

1. Research your requirements.

First, determine where you need to register. Not all states require solicitation registration, and those that do typically have a unique set of state-specific requirements—check out this directory of state registration requirements to review the process in your state.

Remember, you should be registered in any state where you actively fundraise and from whose residents you collect donations. 

This makes online fundraising a tricky area of nonprofit compliance. Conducting online campaigns is the new norm, but it technically requires you to be registered in any state that you receive donations from. If you’re based in New York but receive donations from donors in California, you should be registered to fundraise in California. 

Registering in all possible states is a lot of work, and registration fees can add up, so this process may be a challenge for smaller nonprofits. There are a few ways you can handle it. You might register in the states with the largest populations and where you expect to have the most donors, then include disclosures on your donation pages that clearly explain which states you cannot legally accept donations from. This approach will help cover your bases, but working with compliance experts to pinpoint your compliance needs and offload the registration and renewals process is often the safer choice.

2. Compile the necessary documentation.

Once you’ve identified where you need to register, begin compiling the specific documentation that each state requires. The exact requirements will vary between states, but they generally include copies of these documents:

• Your latest IRS Form 990
• Your bylaws and Articles of Incorporation
• Your IRS Letter of Determination
• Lists of your officers, directors, and trustees
• Reviewed and audited financial statements
• Contracts with consultants, commercial co-venture partners, and sponsors
• Other state-specific forms as needed

If you’re registering for the first time, it may take you a while to compile all of these documents, but having them organized and easily maintained in one place will simplify the process of registering and renewing in the future.

3. Submit and wait for approval.

Submit your registration materials and complete any additional steps or forms as required by the state. Filing fees vary between states, but they’re usually calculated based on your nonprofit’s total gross revenue in the previous fiscal year.

As you wait for approval, familiarize yourself with the state’s renewal timelines and requirements—go ahead and document these renewal guidelines in a central location for easy reference later. Once you receive approval, save any new documentation in that same location. 

How do you maintain your registration compliance?

Registering to fundraise is not a one-and-done task! You’ll only stay compliant and in good standing with the state if you actively maintain your registration over the years by renewing it on time.

Keep all of your related documents and filings up to date, saved, and clearly labeled for future reference. This best practice applies to any strategic documents, like business plans, that have major impacts on your nonprofit, even if they aren’t specifically required for compliance purposes.

Create a central renewals calendar that lays out the relevant due dates and timelines for all of the states in which you’re registered. This will make it easier for anyone on your team to get involved if necessary, rather than relying on the siloed knowledge of just one person.

For maximum coverage (and simplicity for your team), working with a nonprofit compliance firm is your best bet, especially if your nonprofit is actively growing and expanding operations into new states. These experts can handle the entire registration and renewals process for you and even provide additional compliance support for corporate registrations and registered agents.

Since the state-level regulatory landscape is so unstandardized, expert help can be invaluable at first as you define your compliance needs and lay out a plan. 

But especially if you decide to go a DIY route, understanding your registration requirements will be essential as you get started. Keep researching your states’ nonprofit filing requirements, stay organized, and you’ll ensure that your mission can keep running smoothly for years to come.