There is great advantage to gaining non-profit status from the IRS that makes donations to your organization tax deductible, allows you to not pay sales tax on items purchased and other perks. But, with the benefit of this status comes some requirements.
In addition to annual nonprofit solicitation registration filings with the federal government, most states have their own filing requirements. One surprise to many nonprofit administrators is that state charity registrations are required in every state in which donations are solicited. The federal filing requires a certification of compliance and list of states for which registration is completed. After some highly publicized abuses, many states have established more aggressive enforcement and penalties for non-compliance.
With the advent of the internet nonprofit solicitations are frequently made well beyond the borders of the organization’s home state. Note that the requirement refers to nonprofit solicitation without regard to actual donations received. 39 states and the District of Columbia require state charity registration. The goal of each is to protect the public against fraud, and to help citizens make informed decisions on donations. Many states provide the nonprofit solicitation registration data online.
Apart from basic goals, there is little uniformity across states. Each state establishes and maintains its own laws and process which may change year to year. In addition to the initial state charity registration, most states require annual reports with a widely varying data. Each state offers exemptions to all or some of its registration and reporting requirements to certain types of organizations based on function, size, or dollar volume.
Each organization which holds nonprofit status should:
- Review its solicitation practices,
- Identify the states in which solicitations are made,
- Research the requirements for nonprofit solicitation registration, and reporting
- Take steps to ensure ongoing compliance.
Nonprofit Support Services recognizes the burden placed on organizations by the state charity registration patchwork quilt. NPSS provides a low cost, fixed price service to obtain and ensure ongoing compliance for each state. For many organizations this service provides ready expansion of fund raising into new states and for all organizations it provides regulatory peace of mind.