Keeping your state attorney general happy can be a challenge for nonprofit leadership. Armanino is pleased present the first article in a two-part series on key compliance issues for charitable organizations.
Failing to Properly Register Your Nonprofit
One of the quickest ways to raise the ire of a state attorney general is to drop the ball on charitable solicitation registration. That means not registering to solicit funds in that state, failing to renew your registration or hiring an unregistered third party to solicit funds on your behalf.
Currently, three-quarters of states require charities, fundraising professionals or both to register and file annual financial reports. Many nonprofits mistakenly assume that registration is required only for the state in which the organization is incorporated. The reality is that if your charitable solicitations have the potential to cross state lines, you may be required to register in multiple states.
“A number of attorneys general assume you are soliciting in their state if you simply have a ‘donate’ button on a website that can be accessed by residents of that state,” explains Michelle Boyer, owner of Charity Compliance Solutions. Boyer’s company helps nonprofits navigate the complexities of charitable solicitation registration.
In the eyes of a state attorney general, any invitation to make a donation—whether it’s by Twitter, text, phone or old-fashioned snail mail—becomes a regulated activity. With that in mind, nonprofits may want to take these steps to avoid trouble:
California Penalties are High
Many of our nonprofit clients are based in California, so we also want to ensure they’re aware that new regulations effective in California as of January 1, 2016, substantially increase the penalties for noncompliance. Each call, mailing or other solicitation constitutes a separate violation—regardless of whether it results in a donation. Penalties may accrue at a rate of $100 per day until the violation is corrected. For more details, download the full text copy of documents related to this amendment on the California Attorney General’s Office website here.
If you have any lingering questions about your state registration compliance, do not hesitate to reach out to your local Armanino expert. In part two of this series, we will discuss other common nonprofit practices that may set your state attorney general down the warpath.
June 12, 2016