Publications & Products
Volume 3, Issue 11


Get Compliant with Charitable Solicitation Laws

Community college advancement leaders should ensure that their institutions are compliant with complex charitable solicitation laws before fundraising outside of their home state.

As of May 2014, 39 states and the District of Columbia have enacted charitable solicitation laws. The particulars of these laws vary from state to state—including how they treat educational institutions and their related foundations—but they usually require organizations to register before they can solicit contributions from the state's residents. What constitutes a solicitation varies from state to state as well, but it can range from a direct call to a resident to the mere inclusion of an envelope for contributions along with the mailing of an institutional publication.

Recent CASE research suggests most community colleges are only registered to solicit funds in their home state; however, this is likely to change in the near future as more community college leaders look to expand their fundraising operations, says Brian Flahaven, CASE's director of legislative, foundation and recognition programs.

Flahaven says that—although no two states' solicitation laws are alike—compliance is a must for CASE-member institutions. The IRS Form 990 filled out by nonprofit organizations requires them to list the states in which they are registered to solicit funds or have been notified they are exempt. As a result, he notes that negligence of these laws is no excuse.

Flahaven suggests that advancement leaders consult legal counsel to help them determine the applicable state laws concerning the charitable registration of their institution or related foundation. He also suggests determining if the institution itself will fill out the registration paperwork or if an external vendor will do so.

In preparation for a phonathon, officials from the Kirkwood Community College Foundation in Cedar Rapids, Iowa, recently went through the process of garnering compliance to solicit in every state. Sarah Peters, Kirkwood's senior accountant, says that the foundation paid for outside legal counsel from a firm with expertise in this area to determine compliance procedures and assist with filling out the appropriate paperwork for initial registration.

"It wasn't cheap, but we felt better working with someone that was very informed in nonprofit law," she says. "They made us feel very comfortable."

Now, Peters says she is armed with the knowledge to keep the foundation up to date on compliance issues—as state laws on solicitation can change yearly—and fills out any necessary re-registration paperwork on her own. She runs a check on these issues annually at around the same time the foundation's finances are audited and IRS Form 990 is completed.

Peters says that Kirkwood is keeping an eye on the return on investment of maintaining compliance in all 50 states—as some states require the payment of fees to maintain registration. At the moment, she notes that the foundation sees value in doing so but will reevaluate in the near future as it continues to solicit from far-flung alumni.

In an effort to help simplify what can seem a daunting and complicated process, there is an effort under way to create a unified registration process. As of May 2014, 36 states and the District of Columbia—all but three of the jurisdictions with registration laws—accept the Unified Registration Statement. Organizations can use it as an alternative to filing all of the respective registrations forms produced by each of the cooperating states. However, many of the cooperating states require supplemental forms to this shared document. Also, some cooperating states will only allow the unified statement to be used for initial registration and not for renewal or in place of further reporting requirements.

Many states have various exemptions to their registration and reporting requirements for education institutions, institutionally related foundations and membership organizations. A 2011 CASE white paper, available to premier members, outlines the application of these statutes to educational institutions and their institutionally related organizations. CASE also offers a management and governance checklist for institutionally related foundations, including information on how to ensure compliance with these laws.

CASE advocates that states exempt educational institutions, institutionally related foundations and alumni associations from charitable solicitation registration and reporting requirements. In 2011, CASE successfully urged the Hawaii Attorney General's Office to support an amendment to a bill doing just that. Flahaven encourages members to contact CASE in the event that their home state is exploring revising its charitable solicitation laws. He can be reached at flahaven@case.org or 202-478-5617.

Consider the following resources from outside of CASE for information on charitable solicitation regulation:

  • Nonprofit Fundraising Registration: The 50-State Guide by Stephen Fishman and Ronald J. Barrett outlines how to fundraise legally in any state, learn Internet fundraising rules and understand the Unified Registration Statement. The second-edition of the book was published in 2012.


This article is from the May 2014 issue of the Community College Advancement News.

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