Yes, but only if the non-profit is soliciting donations and funds from these states. In the United States, the majority of states expect charitable nonprofits that solicit donations in their state to register with the state to report the nonprofits’ fundraising activities. However, note that all states have varying rules, income thresholds, exceptions, registration fees, and fines for violations. Even the agencies that regulate charities differ by state.
Every non-profit is expected to first register in its home state unless you are exempt or it is established in one of the 11 states that do not require registration. But, if a non-profit is looking to conduct any sort of activity outside its incorporated state, some requirements will have to be met to maintain state-level compliance.
In the United States, to be considered as operating in multiple states, a non-profit is expected to be carrying on its tax-exempt activity outside its incorporated state. For example, if the aim of the non-profit is to provide children with public speaking lessons in New York and decides to expand its lessons to children in Maryland, and then the non-profit is operating in two separate states.
Owing to that, the organization will have to file a Certificate of Authority in the state of Maryland so it can legally carry out its mission in that state. Have it in mind that this process is mandatory for every state outside the original incorporated state (though each state varies in its regulations and filing process).
Presently, a good number of states are beginning to ask for a Certificate of Authority if the organization will host an event or anything that would mandate the organization to have liability insurance. For instance, a 5K fundraising event may need a Certificate of Authority, in addition to Charitable Solicitations registration.
However, an organization can hold or participate in events and fundraising activities in another state without being considered operating within that state. For these sorts of activities, the organization will need to file for charitable solicitations. Have it in mind that being registered for charitable solicitations lets a non-profit legally solicit funds.
Presently, in the United States, 40 states mandate organizations to register for charitable solicitations. Since states have varying compliance requirements, a non-profit is expected to find out and meet the standards of each state independently.
If your non-profit fails to register in states where it solicits donations, the consequences can be brutal. Your organization, officers, and board members may be faced with civil and criminal penalties. In addition, your charity might lose its ability to solicit donations in some states or even lose its tax-exempt status with the IRS.
Nonprofit Regulation in the United States
In the United States, the amount of regulation required differs by state, as does the level to which state regulations protect the privacy of individual donors. To properly function in the United States, here are basic non-profit regulations to note.
It is imperative to note that every state has different governing authorities and agencies administering charitable solicitation registration laws. Have it in mind that these agencies vary from divisions within the state executive branches, such as the Attorney General and Secretary of State.
In some states, various departments and authorities sanction non-profit charitable activity, but organizations more or less deal with only one agency or authority when registering to solicit contributions, renew their registration, and report annual financial statements.
In the United States, 10 states require no charitable solicitation registration, but four of these states are known to have laws relating to charitable solicitations, even if they do not mandate nonprofits to register to solicit.
Note that in the 40 states and District of Columbia where it is required, non-profit groups or organizations, unless exempt, are always expected to register with the state to meet charitable solicitation registration requirements. Have it in mind that any non-exempt non-profit, in any state, looking to solicit in any of those 40 states with registration requirements will have to also register, coupled with anyone looking to solicit in the state on behalf of a non-profit.
In the United States, non-exempt nonprofits include traditional charitable organizations like the Red Cross or Habitat for Humanity, educational or policy organizations like the American Civil Liberties Union, or issue advocacy groups like the League of Conservation Voters, though exemptions tend to differ by state.
Note that in almost all states with registration requirements (except for California); organizations will have to register right before soliciting or receiving contributions. In California, they have 30 days to register following the receipt of their first contribution from a recipient in a state
Have it in mind that in almost all states with registration requirements, there are certainly exempt from having to register. The categories of groups exempt will also still vary as does the nature of the exemption; in some states, organizations are expected to apply to be exempted, since the exemption is not automatic.
- In the United States, 28 states have exemptions for organizations getting gross annual contributions under a predetermined threshold.
- In 16 states, that amount is $25,000, but in Connecticut, it can be as high as $50,000.
- There are also varying rules about what counts towards the financial thresholds. In some states, government grants do not count towards the amount limit, while in some, like Michigan, nonprofits are exempt if they get contributions from fewer than 10 people. There are 11 states, nonetheless, that have no exemption for organizations receiving under a certain amount.
- A good number of tax-exempt religious organizations and churches are exempt from registration in all states, with caveats. There are 15 states where charitable solicitation laws don’t apply to religious organizations at all.
- There are 15 states where hospitals and public health organizations are exempt.
- There are 34 states where educational institutions and organizations are exempt. However, note that what counts as educational differ from state to state, but most accredited institutions and their foundations are exempt in all the states.
- Membership organizations, where the only form of charitable solicitation is membership fees and solicitation of members themselves, are exempt in 24 states.
- 18 states exempt political parties, candidates, and political action committees that are expected to file with the Federal Election Commission or state election commissions.
- In 24 states, certain appeals for individuals are exempt, that’s if all money goes to the person named in the charitable effort.
Ideally, the necessary documents needed during initial registration vary from state to state. Generally, organizations are expected to include copies of their articles of incorporation; bylaws; an IRS determination letter; and they are most recently filed IRS Form 990 or 990-EZ. Some also require copies of fundraising contracts.
Have it in mind that the registration fee varies massively from one state to another, ranging from no fee in some states to as high as $425 in one state. In a good number of states, fees are not the same for all groups but tend to be determined on a sliding scale depending on a group’s fiscal year contributions. Registering in every state would more or less cost an organization over $1,500.
Note that in the 40 states that mandate registration, organizations in all but 8 can leverage either the Universal Registration System (URS) form or the individual state form. Just only 8 states that mandate registration does not use the URS. Nevertheless, in 12 states, organizations choosing to use the URS are expected to complete supplemental forms.
Organizations are expected to more or less file annual financial reports with governing agencies in their states and the states in which they are registered. In a good number of states, reporting requirements are met by following the renewal steps, even though the process is practically different.
In all but 6 states, registrations are known to last only one year and will have to be renewed. There are 20 states where non-profit organizations will have to decide if to use the URS as a method to renew. However, in 2 states, organizations will have to use the URS.
Indeed, if you are not careful, your non-profit will be legally expected to register in states from where you only receive a few dollars in donations. If your non-profit has been around for a while, extensively analyze your fundraising history to note which states a good percentage of your contributions come from.
However, if like most nonprofits, your non-profit is a local or regional organization that only solicits donations from residents of one or a small number of states, then you may only have to register in those few states. But you may want to register in many states if your non-profit actively solicit donations nationally by sending emails or other fundraising materials to residents of all of those states.