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Can we expand our fundraising methods?

Your Legal Questions Answered

Can we expand our fundraising methods?

In our Form 1023 application for recognition of exemption as a public charity, in answer to the question about fundraising, we said we would only solicit foundation grants. Foundation grants may not be enough for us in these times.  None of the other options, like mail, email, personal solicitations, website, and government grants, was checked as a possibility. Does that mean we cannot solicit with the other kinds of fundraising listed on the form? I am especially concerned with whether we can apply for "government grant solicitations."  Would we need to amend the application, which was submitted and approved in 2005?

I wouldn’t worry about expanding your means of charitable solicitation.  A 1023 application is an estimate of future activities envisioned at the time it is filed, but things change over 15 years and the IRS does not prohibit organizations’ changing with the times.  It is hard to imagine an organization that doesn’t solicit with email or accept donations on its website today, perhaps because so few such groups have survived.

There actually isn’t a way to amend you 1023 once it has been approved.  The Form 990 annual tax information return has questions in Part III asking whether the organization has undertaken new services or made significant changes in the way it conducts its old services that have not been previously reported to the IRS.  The Instructions say that answering these questions is the only way to notify the IRS what new or different things you are doing and that it won’t issue a separate letter saying the new activities are okay.  If there isn’t a way to amend your 1023 as to your basic charitable services, I wouldn’t worry about trying to amend on catching up with the times on fundraising techniques.

If you are expanding your general public solicitations, remember the requirements of 39 states and the District of Columbia to register before soliciting citizens in their jurisdictions.  (See our charitable solicitation registration webinar in our store.) If you are only seeking governmental grants, however, that activity is generally excluded from the definition of solicitation and would not require your registration.  Apparently state legislatures felt that the government could protect itself in vetting grant seekers, even if the general public couldn’t.

Friday, April 17, 2020

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