Most 501(c)(3) nonprofits rely on public support for a sizable portion of their annual income. For any organization, a comprehensive and well-planned fundraising strategy is essential to acquiring and renewing commitments from individuals, corporations and foundations.
Charitable solicitation activity is independently regulated in each state. A majority of states require annual registration, donor disclosures, independently prepared financial statements or a combination of the three. Because each state’s requirements vary, nonprofits and their accounting firms are tasked with navigating a complex regulatory landscape.
Despite logistical challenges, charitable solicitation compliance should underpin any organization’s fundraising strategy and be viewed as a way to safeguard public trust in the sector.
State registration and reporting
Forty-one states require nonprofits to register and report annually with a charity official, usually the attorney general or secretary of state. During registration, an organization submits a detailed application describing its mission, program, and fundraising activities. In a majority of states, the organization will need to submit supplementary documentation, including:
- Form 990, 990-EZ, 990-PF, or 990-N;
- Unredacted Schedule B, if applicable;
- Financial statements, which may need to be audited, reviewed or compiled;
- Charter documents, such as articles of incorporation and bylaws;
- Copies of federal determination status;
- Copies of contracts with paid…