I am not sure that the trade association you describe is acting fraudulently. You seem to be equating “nonprofit” with “charity,” as many people do. Virtually every charity is nonprofit, but many nonprofits are not charities. (See Ready Reference Page: “What Do We Mean When We Say Nonprofit?”) Section 501(c) of the Tax Code, which lists types of organizations that are exempt from federal income tax, now has 29 subsections, each describing a different type of organization. Section 501(c)(3) describes charities. Trade associations are described in 501(c)(6). 

 

Trade associations must be nonprofit and, like most other exempt entities, they are required to file Form 990 tax returns if they normally have revenue of more than $50,000 a year. Since donors are generally not able to obtain a charitable contribution deduction for gifts to trade associations, trade associations usually do not solicit gifts and therefore do not have to register with a state charity bureau before soliciting. It sounds as though your group is filing where required, and not filing where not required.