By Tracy Boak, Esquire
Partner, Perlman & Perlman, LLP
Navigating the financial, compliance, and reporting requirements for charitable fundraising can be a daunting experience for charities and their fundraisers and sponsors. Currently, 45 states and the District of Columbia have statutes regulating charitable solicitation activity conducted within their borders.* Many states require registration and reporting of financial and other information by charitable organizations, professional fundraisers (also known as commercial fundraisers or solicitors), professional fundraising counsels (or consultants), and/or commercial co-venturers.
Although an organization that solicits contributions nationally may find compliance with registration requirements to be burdensome, the penalties for noncompliance can be harsh. Fines, “cease and desist” orders, and sometimes intervention in an organization’s operations by the state charity officials can be imposed. Making matters worse, there are a few watchdog groups which take such information and generate negative publicity. Unfortunately, this may result in a loss of faith by the public and donors.
The state solicitation laws are intended to provide the public with information relating to persons who solicit charitable contributions in order to (1) prevent deceptive and dishonest practices in the conduct of soliciting funds for or in the name of charity and/or the improper use of contributions intended for charitable purposes, and (2) improve the transparency and accountability of organizations that solicit funds from the public for charitable purposes so that donors can make better, informed giving decisions.
It is essential that charitable organizations and their advisors have a basic understanding of what constitutes a charitable solicitation and the extent to which the various entities are subject to the state’s charitable solicitation laws. Knowledge of the regulatory framework governing charitable solicitations will make it easier to identify compliance issues and prevent potential fines, penalties, and other consequences for the organization.
To learn more, I invite you to come to a Thursday Ignition Session at the 2016 Independent Sector Conference, aptly entitled A Road Map to Charitable Fundraising Compliance.