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If your nonprofit is one of many that use fundraising strategies that cross state boundaries, you may need to register in multiple jurisdictions. However, it’s important to note that registration requirements vary from state to state. So before investing time and money in registering, make sure to determine your obligations.
The first step
The first step is determining whether your nonprofit needs to register in other states. Is your nonprofit soliciting donations or receiving them? You might not need to register in states where you have received occasional contributions from out-of-state donors, specifically if you didn’t ask for the contributions. Social media appeals, such as email and text blasts, may be considered multi-state solicitations as well.
All states have different rules, exceptions, income thresholds, fines for violations, and registration fees. Agencies that regulate charities will also differ by state. There are a handful of states that may not require certain nonprofits to register. For example, houses of worship or nonprofits with an annual income under a certain threshold may be exempt. Some states may require registration but exempt annual filing.
It’s not easy
Registering in every state is not simple. Most states will require you to complete a general information form and submit the following:
- A list of officers/directors,
- A copy of your originating document,
- Your last financial statement, and
- Your IRS-issued tax-exempt determination letter.
The registration fees may range from $0-$2,000.
You may use a Unified Registration Statement in most states if it is your first time registering. Except even those states mandate using individual state forms to submit reports and annual renewals.
There may be consequences
The consequences may be severe if your nonprofit fails to register in states where you raise funds. Your organization and those in it may face criminal and civil penalties. The charity may lose its ability to solicit funds in certain states or even lose its tax-exempt status with the IRS. Nonprofits must list the states where they’re registered on their Form 990s.
For small organizations, cross-state registration requirements and potential penalties may lead to limited fundraising in their states. Contact us at 972-331-5917 for help determining your registration obligations. We look forward to speaking with you soon.