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Must we register nationally to solicit?

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Must we register nationally to solicit?

A 501(c)(3) pre-K through 12th grade private school solicits contributions on its website actively; however, between July 1, 2014 through May 1, 2015, 1018 out of 1046 donations come from within its state. They had one donation from London and one from Mexico. The most donations from any other state was 4. Although technically they are actively soliciting, given the de minimis activity, is it really necessary to register throughout the U.S.?

It is not clear what you mean by the soliciting “actively.”  Although the so-called “Charleston Principles” are not being followed as closely as they once were, the state Attorneys General got together many years ago to say that they would not recommend requiring charities to registration if they had a “passive” website that had a “donate now” button available to anyone, but did not actively solicit in the other states or attempt to drive traffic from those states to the website.

Assuming that you are registered, if required, in your home state, you have several different choices for dealing with the other states.  First, you should determine whether you are required to register before soliciting in the other states.  Many states exempt certain types of educational institutions and you may be exempt in those states.

Second, you can merely say thank you for the out of state contributions and not ask them for any more in your receipt or some later solicitation.  I know that goes against the grain of most fundraisers, but some are able to do it.

Third, you can choose to take the risk in not registering where required.  A lawyer cannot ethically tell you to do that, but many clients decide to take the risk if they are soliciting only a couple of people in the other states and then worry about it.

Fourth, you can register where required, expand the solicitation program, and sleep well at night.

Tuesday, May 26, 2015

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