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Must we register to solicit donors who move?

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Must we register to solicit donors who move?

Our 501(c)(3) social service agency has an aging donor base. Some of our donors who originally lived in our area have relocated to other states following retirement. We continue to solicit and receive donations from them. Do we need to register to solicit in those states, even though we are not soliciting from a wider population within the state?

Thirty-nine states and the District of Columbia have charitable solicitation registration laws, and you should check out the law of any state in which you solicit. Unless you are exempt or excluded, you are legally required to register in order to solicit in those jurisdictions. 
 
As a practical matter, some organizations that solicit only a few donors in a state will make a business judgment not to register, especially if the cost would outweigh the return. A lawyer cannot advise you to do this. An organization that solicits without registering where required runs the risk of an injunction and/or a fine if caught, plus the adverse publicity. 
 
Other organizations decide the risk of soliciting without registering isn’t worth it, and simply do not solicit donors in states in which they would have to be registered. 
 
Others that run broad-based solicitations register everywhere they solicit because it is easier to do all the registrations at once (and better to continue to receive new contributions) than to pick and choose the registrations and worry where the letters are being sent. It is especially important not to lose contact with donors if you have a planned giving program through which you might receive significant bequests or life-income gifts.
Saturday, April 9, 2011

Comments

No, generally a nonprofit is required to register in states where they conduct significant fundraising activities, such as holding an event or a direct mail campaign. A nonprofit is not required to register if it is not actively solicting donors in a particular state. For example, if a nonprofit regularly solicits donors in New York City and a donor moves to Florida, the nonprofit is not required to register in Florida unless it conducts fundraising activities there

Unfortunately, that is not correct. According to Karl Emerson, former Director of the Pennsylvania Bureau of Charitable Organizations and now an attorney with Montgomery, McCracken in Philadelphia, unless the organization meets the criteria for one or more of a state's exclusions or exemptions, it is supposed to register if it is "soliciting"contributions for a "charitable purpose." You don't get to wait until you are conducting "significant fundraising activities". You also don't get to wait until you are "actively soliciting" before registering. The typical registration statute requires registration before sending the first piece of mail into the state or making the first phone call to a state resident.
 
You would be correct that if a donor moves to a different state and a solicitation letter is just forwarded without the charity's knowledge, the requirement to register in the new state would not be triggered. But it would be triggered when the charity becomes aware of the donor's new address and subsequently sends another solicitation to the new address.

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