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Are private foundations covered by solicitation registration laws?

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Are private foundations covered by solicitation registration laws?

Do the charitable solicitation registration requirements apply to private foundations? There is a private foundation in our area that solicits through donation buttons on their website and other media. They look a little sketchy. There's no indication that they are registered in any states other than where they do business, based on the Form 990 on GuideStar. That made me wonder whether private foundations have a general exclusion from the laws.

Any person (i.e. an individual or an entity of any sort) that solicits charitable contributions in the 39 states and the District of Columbia that have charitable solicitation registration laws is required to register to solicit before asking for contributions in the state, unless exempted or excluded under the state law.  The laws cover anyone, without regard to the tax status of the organization, who asks for charitable contributions or uses a “charitable appeal” in asking for money or purchases.  They cover non-charitable nonprofits and for-profit businesses as well as recognized charities.  There is no generic exemption or exclusion for private foundations. 

Most private foundations probably do not have to register because they don’t solicit.  The major factor distinguishing a private foundation from a public charity is that the private foundation does not receive any substantial public support and most of its income, other than investment income, comes from a single person, family or company.  If you are asking anyone in the general public, including corporations and other private foundations, for contributions, the registration requirements are triggered.  If you are not asking, you don’t have to register.  If the sketchy foundation you are wondering about is soliciting in other states, it would probably have to register there as well as in the state in which it is doing business.

Tuesday, September 29, 2015

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