State Solicitation Registration

Posted on Wednesday, June 28, 2017

Nonprofits are required to register in states where they solicit contributions, but what does that exactly mean?  Which states are you required to register with, when, how and why? 

For starters, the definition of “solicitation” is very broad across the states.  It generally includes any request of any kind for charitable contributions.  The request can also be made by many different means – mail, telephone, website, email, etc.  Nonprofits are required to register with specific states to protect residents of their state from fraudulent solicitations.

The requirements, filing deadlines, filing fees, exemptions, initial registration, annual renewals and penalties very by state.  A majority of states require some type of registration; however, Indiana does not.  Some states have exemptions for religious organizations, educational organizations and/or private foundations.  Others exempt smaller charitable organizations from registering.  The states that do require registration, require an initial registration prior to soliciting contributions that includes a statement of charitable purposes, how the organization intends to solicit in the state, how the solicited funds will be used, copies of articles, bylaws, IRS determination letter, most recent Form 990, most recent financial statements, and board of directors listing.  Initial fees vary, with some states charging nothing while others charge $100 or less.  Once the organization is registered, the annual filing deadline also varies by state.  For some states, the deadline is 4 ½ months after the organization’s year end.  For others registrations are due on the anniversary date of the initial registration or at a fixed date.

In an effort to unify the registration process, the Unified Registration Statement (USR) was created.  The theory is that instead of obtaining each individual state’s form to file, an organization can complete the USR once and submit it to each state.  However, it’s not that simple.  A majority of states do accept the USR but not all.  In addition, specific requirements are still different by state so different states require different attachments to the USR. 

So how do you know which state to register with?  The Charleston Principles released by the National Association of State Charity Officials (NASCO) tries to answer that question.  These Principles attempt to provide guidelines for nonprofit state registration requirements.   The more contact a nonprofit has with a state, the more likely they are required to register with that state.  Organizations should register with the state in which their principle office is located and other states where residents are targeted or the organization has “ongoing” and “substantial” activity.  “Ongoing” and “substantial” is not defined by the Principles. 

Nonprofits can face penalties, which of course vary by state, for not registering with a state.  In addition, the core form of Form 990 asks to “list the states which a copy of the Form 990 is required to be filed” and Schedule G asks to “list all states in which the organization is registered or licensed to solicit contributions or has been notified if it is exempt from registering or licensing.”

To meet state solicitation requirements, nonprofits should make sure they are registered with their home state as well as any other states that may be required.  If unsure, contact the appropriate state agency or visit the NASCO website.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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