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‘Donate’ Button May Trigger Registration Requirement

Charitable solicitation statutes exist in 38 states and the District of Columbia

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Ministries that have a “Donate Now” button on their website should evaluate whether they may need to register in each of the 38 states and District of Columbia with a charitable solicitation law.

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According to a webinar hosted by the Pennsylvania Association of Nonprofit Organizations and Don Kramer’s Nonprofit Issues, the “Donate Now” button that is ubiquitous in the Christian charity world may trigger the registration requirement.

Attorney Karl Emerson, who advises charities on compliance with state charitable solicitation statutes, recommends that charities start by checking to see if their home state has a charitable registration statute.

Charitable solicitation laws were first passed in the 1960s before the internet and its access to a vast array of resources existed. The registration requirement was meant to provide the public with a way to learn whether a charity was legitimate and to learn more about its purposes and use of funds.

These laws generally require the charity to provide a copy of governing documents, IRS determination letter, a registration statement, and pay a fee. Some have minimal fees and others have fees based on the charity’s annual contribution receipts. The registration must be renewed annually in most states.

Emerson pointed out that the solicitation statutes apply to direct or indirect appeals, whether the charity is successful in getting contributions or not.

He also suggested that charities carefully review its list of donors and make sure it is registered in any states with active contributors.

“Don’t wait until a state catches you,” Emerson noted, instead encouraging voluntary compliance. He said that usually a state gives a charity an opportunity to register and comply with the law before imposing a penalty, but sometimes the penalties can be steep. Some states can fine a charity up to $1,000 per violation.

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When asked about groups that only have email addresses for those from whom it solicits donations, Emerson said that not knowing the donor’s location could be a true defense. But once they give a donation, the charity now has the donor’s address and will likely solicit another donation.

Charitable solicitation statutes often exclude bona fide religious organizations—like churches—from the need to register.

MinistryWatch asked if a ministry that has obtained a church or association of church status from the IRS that exempts it from filing the Form 990 would be excluded. Emerson replied that it depends on the facts of the situation, but they are probably excluded.

Many states give exemptions to educational institutions and groups that only use volunteers to do any fundraising. However, an exemption in one state does not assure a group it will be exempt in all states, Emerson noted.

Ministries who use an outside professional fundraising consultant or solicitor need to consider whether they are also registered with the state.

In addition to the registration, the contract with the consultant or solicitor must be provided so that the public can see the remuneration the fundraiser is receiving.

Emerson advised that a nonprofit also ensure that its solicitation materials are truthful and free of false statements or omissions and that they contain any required disclosure statements.

California has recently passed a law requiring that charities who use crowdfunding be registered in the state. “Charitable fundraising platforms and platform charities shall only solicit, permit, or enable solicitations, or receive, control, or distribute funds from donations, for charities in good standing,” the law says.

Platforms like GoFundMe and Facebook will not permit fundraising unless the charity is registered in California. Emerson pointed out that there is a huge backlog to process registrations based on this new requirement.

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Kim Roberts

Kim Roberts is a freelance writer who holds a Juris Doctorate from Baylor University. She has home schooled her three children and is happily married to her husband of 25 years.

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