If your business is a nonprofit organization, you should be familiar with the rules in your state for nonprofit fundraising registration.
If you’re not, and your 
principle place of business is one of the 40 locales that require registration, you need to find out about them, and fast.
States That Require Fundraising Registration
The following 39 states (and the District of Columbia) require nonprofit organizations that solicit contributions from their residents to register with a state agency:
| Alabama | Illinois | Missouri | Oregon |
| Alaska | Kansas | Nevada | Pennsylvania |
| Arkansas | Kentucky | New Hampshire | Rhode Island |
| California | Louisiana | New Jersey | South Carolina |
| Colorado | Maine | New Mexico | Tennessee |
| Connecticut | Maryland | New York | Utah |
| District of Columbia | Massachusetts | North Carolina | Virginia |
| Florida | Michigan | North Dakota | Washington |
| Georgia | Minnesota | Ohio | West Virginia |
| Hawaii | Mississippi | Oklahoma | Wisconsin |
That state agency may be the Secretary of State, the Attorney General, or some other governmental unit. To find out what office regulates charitable contributions in one of these states, you can go to the website of the National Association of State Charity Officials or the Multistate Filer Project, which provides links to information about filing requirements. You can also find information from the IRS.
Why Registration is Important
States have a desire to protect their citizens from scams and misleading or fraudulent fundraising activities. Therefore, many have enacted rules and regulations regarding how, when and where a charity or nonprofit organization can ask for or solicit money or other donations. These rules require an organization that wants to solicit for donations to register their organization and declare their purpose and intended use of the funds raised as well as the means by which the fundraising will take place. Registration is typically required before a nonprofit begins fundraising activities in that state.
Nonprofits that don’t register can be subject to penalties and fines that could be very costly. Fines can range from $100 to $25,000 depending upon the infraction. In addition, a state could order your nonprofit to cease soliciting in their state until your registration is complete. Or, bar your entity from soliciting altogether.
Fundraising Via Your Website
Traditionally, fundraising, or soliciting for donations, was done in pretty basic ways. Among them direct mail, telephone calls, door-to-door, and advertisements. Now, with the advent of the internet, soliciting is also being done via email and through websites. Both of these new activities are considered soliciting and would necessitate registration in the state in which the organization is principally located even if the organization never receives donations via a particular method.
But, did you know that organizations that ask for contributions in states other than the one in which they are domiciled may be required to register in the other states as well? If the underlying purpose of the solicitation is asking for a donation, then that would be considered a regulated activity by the 40 states listed above and thus, would require that the organization register.
And now that we have the ability to fundraise via the internet and websites, the general consensus appears to be that having a website that asks for donations constitutes a “charitable solicitation” that would impact a person in any state who has an internet connection. Whether the request is for small contributions or very large ones, the amount does not matter.
Consequently, those states that regulate solicitation activity may take the position that your nonprofit has to register if your website is soliciting donations because this is activity that impacts the residents of their state. Other states may not be as aggressive but it’s still a risk not to register.
The Charleston Principles
In an effort to address the issue of internet fundraising and the need for registration, the State Attorney Generals have developed a set of guidelines called the “Charleston Principles.” The Charleston Principles are internet fundraising guidelines and were developed to help states develop their own regulatory approach to the internet and internet fundraising.
The Principles specify that a nonprofit that uses the internet to solicit donations MUST register in the state where it has its principle place of business – which may not necessarily be the state in which it is incorporated. They also specify that a nonprofit with an interactive website that asks for donations (for example with a “Donate Here” button) must also register in other states if it specifically targets residents of those states or receives contributions from residents of those states on a regular basis, or receives significant contributions from residents in those states.
The Principles are not binding on any state. Yet at least two states – Colorado and Tennessee – have formally adopted the Principles and approximately two dozen more use the Principles as a guideline for their own regulations.
What Should Your Organization Do?
Your first step should be to register your nonprofit in the state in which you are domiciled. Next, determine which other states, if any, your nonprofit is most actively soliciting in and/or where your major supporters live and make sure to register in those states if registration is required. Lastly, determine from which state or states your larger percentage of contributions are coming and be sure your organization is registered in those states as well.
The situation is indeed, rather complex. There is no clear cut answer. You can talk to a nonprofit attorney or other nonprofits in your area to see how they are handling the issue of registration. But the bottom line is, if you are activity soliciting donations in a state, you probably need to register.
How has your nonprofit organization handled registration for fundraising in other states? Leave me a comment and let me know.