Several years ago I had the pleasure of serving as Board chair of an American Friends organization. As we were joining with another, it was necessary to legally dissolve our organization. To my dismay, I discovered that like far to many American Friends groups we were sloppy in our required filings to the State of New York (where we were registered). We were lucky in finding an attorney who graciously gave of her time to complete twelve years of over-due forms. Now, whenever the opportunity comes up, I remind organizations here in Israel to be certain their American Friends groups are compliant.
I was reminded of this again last week while having lunch with a friend who holds a senior position in an organization utilizing the Internet for fundraising. Our conversation turned to compliance with registration laws in the various states. She was not familiar with any requirements to register. Now, in fairness, she indicated they had a U.S. based attorney who was looking out for their interests. What his/her knowledge was of state registration regulations, though, was not known.
If you are raising any money online, this must-read article is step one. Step two, forward and discuss with you legal/financial adviser and learn what your organization should be doing. Step three? Now you’re ready to make an informed decision.
State charity registration laws have been ignored for decades. Until earlier this year, I wouldn’t have been given space to write about them. There is no penalty for breaking most of them and the few states that have penalties rarely enforce them, so there’s been no incentive to comply. Until the IRS stepped in.
This year, the Service’s vastly revised Form 990 comes into effect, with a few hundred new questions and a score of new schedules. With this first update in about 30 years come two questions asking explicitly about your organization’s compliance with laws where you must register.
The state registration laws – different in every state and the District of Columbia – agree on one thing: you register in states where you solicit. ‘Solicitation’ means different things across the states, but the various definitions fall into a few categories.
In a lot of states, like Arizona, Florida, Illinois, New Jersey and New York, the mere existence of a website that accepts donations is a solicitation. Do you offer your donors online giving? Then your non-profit must register in those states and others.