A charity has received a six figure unsolicited contribution from a donor advised fund located in another state in which the charity is not registered to solicit charitable contributions. The donor/adviser, who lives in a third state where the charity has not registered, found the charity online. Each of the states has a charitable solicitation registration law that would require the charity to register. Where should the charity register because of this gift?
The 39 states and the District of Columbia that maintain charitable solicitation registration statutes require charities (unless excluded or excepted from the requirements) to register before they solicit potential donors within their states. Therefore, the receipt of the gift from the donor advised fund will not, by itself, require the charity to register in that state. If the charity wants to solicit the donor advised fund for future gifts, (or if it is already soliciting other potential donors in that state) it will want to be registered. It may want to register in the state in view of the gift, but receipt of the unsolicited gift, by itself, will not create a requirement if the charity never intends to solicit the donor advised fund sponsor again.
Assuming the donor/adviser decided to recommend the gift solely on the basis of the charity’s website and didn’t follow-up with any personal email or telephone contact, the same logic applies to the individual donor/adviser, and most states will give the charity a pass on registration if it never solicits the donor/adviser for additional gifts. (If it doesn’t re-solicit the donor/adviser, of course, it is wasting an incredible opportunity and those who make such a decision probably ought to be relieved of their responsibilities.) A few states might take the position that the donor/adviser was already solicited because of the material on the website and registration was already required. But it makes sense for the charity to register in the donor/adviser’s state to be sure that it can solicit the donor/adviser for more.