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2023 Charity State Registration White Paper

Completely Compliant’s 2023 Guide to Charity State Registration and Compliance

This charitable solicitation white paper contains a detailed overview of charitable solicitation regulations and the charity state registration process.  This examination was compiled by the charity state registration experts at Completely Compliant LLC.  We specialize in charity state registrations and know this area better than anyone else and we are going to share our knowledge with you.

 

Charitable Solicitation Registration Requirements

Forty-one states and the District of Columbia have laws or regulations requiring nonprofits to register in their state if the nonprofit solicits contributions from residents of these states.  Almost any request for donations constitutes a solicitation and triggers a registration requirement.  Emails containing requests for contributions, in-person donation requests, phone solicitation, direct mail, texts, etc. trigger the registration requirement in most states.

 

Charities that hire a fundraising counsel or professional solicitor to fundraiser on their behalf will need to register with almost all states as do nonprofits that fundraise using staff or volunteers.  Similarly, nonprofits that partner with a for-profit in a cause marketing or commercial coventurer arrangement also typically need to file a charitable solicitation registration.

 

In most states, a charity is required to register with the state prior to starting soliciting residents of that state.  So even if a charity does not actually receive contributions from a state, the state may expect the charity to register due to their fundraising and trying to raise money from residents of the state.

 

The charitable solicitation requirements for most states require registration whether the request for donations is sent to individual donors, companies, foundations, and other nonprofits.  Thus nonprofits typically register in a state with a large foundation or corporate donor, even if they do not ask for individual contributions in a state.  Government grants however do not typically require charitable solicitation registration so if the only requests for funding a nonprofit makes is to governmental entities, it should not need to register.

 

In most states the state regulator overseeing charitable solicitation registration is the Office of the Attorney General or Department of Justice.  In several other states the regulator is the Secretary of State.  This can cause some confusion as charities will sometime file the wrong paperwork with a Secretary of State office and accidentally register to do business in the state rather than register to fundraise from residents of the state.  Thus you need to be careful that you have the correct forms and know what you are doing.

 

Along with completing a registration form in each state, charitable solicitation registrations typically require copies of foundational documents such as your organization’s Articles of Incorporation, Bylaws, and IRS Determination Letter.  Once the full application is submitted to a state, the state will review it and will let you know if the registration has been approved.  This can often take a couple months.

 

At the end of this white paper you can view an overview of the charity state registration requirements by state.

 

Charitable Solicitation Exemptions

While the registration requirements apply to almost all nonprofits regardless of mission or whether they are a 501(c)(3) or 501(c)(4), some states offer exemptions for certain specific types of organizations such as religious organizations, hospitals, and universities.  However, these exemptions are not available in all states and are not automatic so a nonprofit will typically need to file exemption requests in those states in which it feels it qualifies and file charitable solicitation forms in those states where it does not qualify for exemptions.

 

Churches, mosques, and temples are the organizations that qualify for exemptions in the most states and after filing exemption applications, typically only need to register in around 2 states.  Other religious organization that are not places of worship can qualify for exemptions in about half of all states and would need to register in the other half if they are soliciting contributions nationwide.

 

While most nonprofits do not fall into categories that will qualify for exemptions from state registrations, they will typically not need to register in four states: Missouri, Louisiana, Texas, and Arizona.  Missouri offers an exemption to all IRS 501(c)(3) organizations and Louisiana does not require registration unless a nonprofit has hired a professional solicitor to fundraise on its behalf.  Arizona and Texas’ laws are narrower and so you will not need to register there unless you are a veterans’ organization or a public safety organization, such as a fire house.

 

If you feel that you qualify for exemptions, feel free to reach out to us at info@completelycompliant.com and we can give you a sense as to which states you can qualify for exemptions in and in which states you likely need to register.

 

Annual Registration Requirements

In almost all states, the charitable state registrations are required annually with the only two exceptions being two states that instead require registration every two years.  These renewal filings continue to be required each year unless you quit soliciting contributions.  After the initial filings that registered the charity, state will want renewal filings submitted each year.  These will typically consist of a completed registration form, a copy of the organization’s IRS Form 990, and copies of the organization’s audited financial statements if these were prepared.  If the organization has an agreement with a fundraising counsel, professional solicitor, or commercial coventurer, these too would need to be submitted.

 

Renewal due dates will be different in each state.  Many states base their due dates on a nonprofit’s fiscal year end or the IRS Form 990 filing due date.  Other state require all nonprofits to file by the same due date.  Yet other states base their renewal due dates based on the anniversary of when the nonprofit first registered in their state.  Due dates can change from year to year in states so be vigilant to make and check each state’s due date each year.

 

Audit Requirements

About 20 states require large nonprofits to submit audited financial statements as part of their registration packet.  Typically, this requirement kicks in for nonprofits that exceed $500,000 in annual revenue, but each state has its own thresholds.  For those organizations that are below the threshold requiring an audit, but still decent size, a couple states may require them to provide reviewed financial statements or compiled financial statements.

 

Organizations that do not have an audit prepared, but wish to file charitable solicitation registrations with a state may request a waiver of the audit requirement.   Several states will approve these requests if there is a good reason for the request, such as the organization completing its first filing and not knowing that an audit was required.

 

Extensions

Renewal registrations typically require a copy of an organization’s IRS Form 990, but many organizations do not file their IRS 990 with the IRS until late in the accounting year.  Thus for most organizations many state forms cannot be filed by their initial due date.  To avoid late filings and late fees, these organizations need to file extension applications which will extend the due date for these states to allow additional time to file.

 

A few states offer automatic extensions if you extend the due date for your IRS Form 990 with the IRS. However, in most states you will need to file an extension form or go through another process of requesting an extension in order to extend the due date for the charity state registration.  Each state has its own procedures to handle extensions and each will extend the due date a different amount of time.  Extensions can vary from 30 days to as long as 6 months depending on the state.  Two states even allow you to apply for second extensions if the IRS 990 or audited financial statements cannot be completed by the expiration of the first extension.

 

It is important to file an extension with a state if a state’s registration form is not going to be filed in time.  Filing a form late without an extension will put the registration in jeopardy and will typically lead to late fees, fines, and penalties.  Paying hundreds or thousands of dollars of late fees is frustrating enough, but the risk of being barred from raising funds from donors from a state is an even bigger concern.

 

Filing Process

Many states still use paper forms for their charitable solicitation registrations.  These paper forms must be physically signed or notarized and then mailed into the state for processing.  Others use online forms which can be submitted through a web browser.  Some states offer filing using either of these methods and allow charities to decide which they feel will be easier.  While organization may assume the online option is the easiest, be aware that many of these state registration websites are clunky and difficult to navigate and even simple tasks such as creating an account for each state website can be an arduous process.

 

Additional Filing Requirements

As part of their registration requirements, Michigan, North Dakota, and the District of Columbia require organizations to have an in-state registered agent.  If an organization has staff in those states, they can list their staff members, but generally it is best to use a company that provides registered agent service such as CT Corporation or CSC.  If you have a firm, such as Completely Compliant LLC, file your charitable state registrations for you, they will be able to provide you with the registered agent services required and this will make the process easier.

 

A registered agent is a company that will forward mail from the state governmental agency and which agrees to accept service of process, but mainly a registered agent is just an address in the state and just needs to be listed to meet the state registration requirement.  A few states beyond those listed above provide an option to list a registered agent on their forms.  However, there is no reason to pay a company for these registered agents that are not required.  You can just use your own organization as the contact address listed with the state rather than paying for a service to act as a middle man.

 

In addition to registered agents, North Dakota and Washington, DC also require a nonprofit to register to do business in a state if the nonprofit files charitable solicitation registrations.  This requires annual or biennial corporate filings in these states in addition to the charitable solicitation filings.  If an organization is based in one of these jurisdictions it may have already be registered there.

 

If it is not registered to do business in North Dakota or Washington, DC, it will likely need to do an initial filing, typically called a foreign qualification filing in the state.  Foreign just refers to the fact that the organization was not incorporated or organized in that state.  As part of the foreign qualification filing, the nonprofit will need to provide a Certificate of Good Standing, which is a document issued by the state that the nonprofit is incorporated in which states that the organization’s charity state registration is active and up to date.

 

Disclosure Requirements

Several states require certain state specific verbiage be included with all printed solicitations that says that upon request the nonprofit must send copies of its financial report or other disclosure information.  You have likely seen a long paragraph of legalize on the back of a direct mail piece.  These are the state disclosure requirements.  The disclosure requirements tends to increase over time and each year one or two states will change the wording that needs to be included with the written solicitation.  Typically these disclosure requirements have been required for direct mail, but a couple states such as Florida are starting to ask for these to be on an organization’s website as well.

 

Complete Compliant provides copies of the current disclosure verbiage on its website: www.CompletelyCompliant.com and also has a current HTML version of these disclosures that you can use.  A sample of the verbiage requirement as of today is below which includes the wording and some of the formatting required by the state verbiage which requires certain text be bold or upper case.

 

Sample State Disclosure Wording

A copy of the latest financial report, registration filed by this organization, and a description of our programs and activities may be obtained by contacting us at: (123 Main Street, Centerville, DC 11111, (222) 222-2222). (ABC Charity) was formed in (Washington, DC). If you are a resident of one of the following states, you may obtain financial information directly from the state agency: Florida: A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE, WITHIN THE STATE, 1-800-435-7352 (800- HELP-FLA), OR VISITING www.800helpfla.com. REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION BY THE STATE. Florida Registration #33333. Georgia: A full and fair description of our programs and our financial statement summary is available upon request at our office and phone number indicated above. Maryland: For the cost of copies and postage, from the Office of the Secretary of State, State House, Annapolis, MD 21401. Mississippi: The official registration and financial information of (ABC Charity) may be obtained from the Mississippi Secretary of State’s office by calling 1-888-236-6167. Registration by the Secretary of State does not imply endorsement. New Jersey: INFORMATION FILED WITH THE ATTORNEY GENER- AL CONCERNING THIS CHARITABLE SOLICITATION AND THE PERCENTAGE OF CONTRIBUTIONS RECEIVED BY THE CHARITY DURING THE LAST REPORTING PERIOD THAT WERE DEDICATED TO THE CHARITABLE PURPOSE MAY BE OB- TAINED FROM THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY BY CALLING 973-504-6215 AND IS AVAILABLE ON THE INTERNET AT: http://www.state.nj.us/lps/ca/charfrm.htm. REGISTRATION WITH THE ATTORNEY GENERAL DOES NOT IMPLY ENDORSEMENT. New York: Attorney General Charities Bureau, 120 Broadway, 3 Floor, New York, NY 10271.
North Carolina: Financial information about this organization and a copy of its license are available from the State Solicitation Licensing Branch at 919-807-2214. This is not an endorsement by the state. Pennsylvania: The official registration and financial information of (ABC Charity) may be obtained from the Pennsylvania Department of State by calling toll-free, within Pennsylvania, 1-800-732-0999. Registration does not imply endorsement. Virginia: State Division of Consumer Affairs, Department of Agricultural and Consumer Services, PO Box 1163, Richmond, VA 23218. Washington: Secretary of State at 1-800-332-4483 or http://www.sos.wa.gov/charities/. West Virginia: West Virginia residents may obtain a summary of the registration and financial documents from the Secretary of State, State Capitol, Charleston, WV 25305. Registration does not imply endorsement. REGISTRATION WITH A STATE AGENCY DOES NOT CONSTITUTE OR IMPLY ENDORSEMENT, APPROVAL OR RECOMMENDATION BY THAT STATE.

 

Does Online Fundraising Require Charity State Registration?

Over the years states have broadened the list of activities that require charity state registration.  Several states now explicitly state that having a website with a donate button is enough just by itself to require registration.  Other states feel that if a nonprofit only has a donate button and is not fundraising by other means, that this is passive solicitation and does not require registration in their state for that.

 

If however, you conduct any active soliciting online such as emails asking for contributions, this would require charitable solicitation registration be file in all states.  The same is true for donation requests sent by text.  These also would require registrations and are treated the same as requests over the phone or by mail.

 

The exact threshold that triggers registration requirements is ill-defined by some states and changes over time.  In 2001, the National Association of Attorneys General (NAAG) and the National Association of State Charity Officials (NASCO) came together and created rules to govern internet solicitation and to hash out how to regulate what was at the time a relatively new fundraising practice.  In theory this framework called the Charleston Principles lay out how to regulate online regulation, but much of the framework is out of date and has not kept up with changes in the internet since 2001 and in addition many states never signed on to the Charleston Principles and agree to use it to guide their regulation in this area.

 

Unified Registration Statement

The states also came together to try to create a single form that could be used to file in all states.  This form, called the Unified Registration Statement or URS Form, was released in 1995.  The form was used for the next decade, but states moved away from allowing this form and began requiring addendums to the URS Form so that it became harder to file with the URS form and addendum than filing with the state-specific form.

 

In recent years, with some states moving their registration online, the move away from the URS has increased and so very few filers try to use the URS Form these days.  The URS form is also out of date and the latest version URS v. 4.01 was released back in 2010.  The.  Most states prefer their own state forms any way so at this point we would definitely recommend just using state forms and avoiding the URS and the complexities it brings.

 

Failure to Register

If a nonprofit fundraises from residents of a state, but fails to register there, it risks significantly penalties and consequences.  There can be significant fines for fundraising without a license or for fundraising after a nonprofit’s license has expired.  Like so many things about the charitable solicitation registration requirements and process, the penalties vary from state to state.  They typically start with cease and desist letters and fines which can range into the thousands of dollars per state. They typically escalate from there and can end up with a nonprofit being enjoined or barred from ever fundraising from residents in a state in the future.  As nonprofit rely so heavily on fundraising this can be a huge loss to the organization year after year and the loss of being able to fundraise in even one state can far exceed the costs of registering and complying with the law.

 

In addition, legal issues in one state can lead to problems in other states.  State regulators communicate and can let each other know if a nonprofit flouts the law.  In addition, several states ask if the organization has ever filed in a state without a license or if it has ever been enjoined.  Thus from then on, the organization would need to disclose this in a series of publicly available filings.

 

The longer an organization is out of compliance, the bigger the risk is.  Several states issue fees and penalties for each year of missed filing.  Failing to file for a year in South Carolina, Mississippi, or Hawaii for instance typically lead to penalties of $2,000 to $4,000 and can also lead to legal action by the states.  Some states, such as Maryland can have even higher fees.

 

There is also reputational risk to the organization for failure to file or to keep compliant with state laws.  Donors are more aware than they used to be about these registration requirements and look to support nonprofits that comply with the law.  While a typical donor may not withhold a donation due to an organization’s failure to file, a foundation or a corporation certainly might.  In addition, commercial coventurers, fundraisers, and solicitors almost certainly would not work with a charity that is not in good standing with a state as the fundraiser would need to report a list of all their clients to the states and the state would penalize them if they did work for an unregistered charity.

 

Nonprofits should be aware of these risks and the precarious situation that they may be putting the future officers and directors of the organization by taking the risk of fundraising without a license.  An organization’s board really ought to vote on whether to register or not register rather than just let things slide by without a decision and take a risk without an adequate discussion.  An organization can sometimes slide by for a couple years before states notice that they are fundraising without a license, but eventually it will catch up with the organization.  You can think of fundraising without a license to driving through a red light.  It can be convenient and you may be able to do it a handful of times without negative repercussions, but there is a big risk that if you continue doing it that there will be catastrophic consequences.

 

Bringing In Experts to File the State Registrations

Filing all 40 detailed state registration forms correctly and including all the correct attachments is a very challenging.  Filing these on time and without them being rejected by the states is even more so.  The registration forms are very complex and require in-depth legal and accounting knowledge in addition to the specific niche of charity regulations.  State regulators can be very picky and reject filings for minor reasons which lead to the application fee being forfeited and require the organization to start over from square one.  Outsourcing your charitable solicitation registrations makes sense in terms of minimizing organizational risk and making sure these important filings are done correctly.

 

Charity state registrations can also take a lot of time as many state regulators demand additional information after the initial filing is completed.  Often a nonprofit’s officers and senior staff have other important tasks they need to attend to rather than spending months filing paperwork for these filings.  Bringing in a company that specializes in these filings can save countless hours and headaches and allow the nonprofit to focus on its mission.

 

A nonprofit completing all their filings on their own only files one time in each state per year.  There is no way that they can keep up with all the changes to the state laws and regulations and keep apprised of changes in due dates, state fees, and forms.  A specialist who files thousands of forms each year is better positioned to make sure the forms are filed correctly and on time and they know the meaning of each question on each form and the techniques for completing the forms in a way that the states will approve.

 

About Completely Compliant

Completely Compliant is the leader in charity state registrations.  Completely Compliant specializes in charitable solicitation registrations and this is the only thing the company does.  Completely Compliant strives to make the entire registration process easy and handles the entire process from determining the states to file, completing the forms, signing the forms and filing them with the states, sending the payments to the states, filing the extensions, and answering all requests from the states for further information.

 

Completely Compliant is also known for their excellent customer service.  You will always be able to get a person on the phone or get a near instantaneous answer to any emails you send.  We walk you through the process and we truly care about making sure you are satisfied.

 

For more information about Completely Compliant or for a free quote for our charitable solicitation registration services email us at info@CompletelyComplant.com or call us.

 

An Overview of Charitable Solicitation Requirements

States Charity Registration Required? Initial Fee for Registration? Extensions Available? Can Charity File Online? Registered Agent Re- quired? Disclosure Statement Re- quired?
AlabamaYes25YesNoNoNo
AlaskaYes40NoNoNoNo
ArizonaNoN/AN/AN/AN/AN/A
ArkansasYes0YesNoNoNo
CaliforniaYes25YesRenewal OnlyNoNo
ColoradoYes10YesYesNoNo
ConnecticutYes50NoYesNoNo
DelewareNoN/AN/AN/AN/AN/A
District of ColumbiaYes412.50NoYesYesNo
FloridaYes10-400YesYesNoYes
GeorgiaYes35YesYesNoYes
HawaiiYes0YesYesNoNo
IdahoNoN/AN/AN/AN/AN/A
IllinoisYes15YesNoNoNo
IndianaNoN/AN/AN/AN/AN/A
IowaNoN/AN/AN/AN/AN/A
KansasYes35NoNoNoNo
KentuckyYes0YesNoNoNo
LouisianaYes25NoNoNoNo
MaineYes50NoYesNoNo
MarylandYes0-300YesNoNoYes
MassachusettsYes135-2,000YesNoNoNo
MichiganYes0YesNoYesNo
MinnesotaYes25YesNoNoNo
MississippiYes50YesYesNoYes
MissouriYes15NoNoNoNo
MontanaNoN/AN/AN/AN/AN/A
NebraskaNoN/AN/AN/AN/AN/A
NevadaYes0NoNoNoNo
New HampshireYes25YesNoNoNo
New JerseyYes30-250YesYesNoYes
New MexicoYes0YesYesNoNo
New YorkYes25YesNoNoYes
North CarolinaYes0-200YesYesNoYes
North DakotaYes75YesNoYesNo
OhioYes0-200YesYesNoNo
OklahomaYes15 or 65NoNoNoNo
OregonYes0YesYesNoNo
PennsylvaniaYes15-250YesNoNoYes
Rhode IslandYes90YesNoNoNo
South CarolinaYes50YesYesNoNo
South DakotaNoN/AN/AN/AN/AN/A
TennesseeYes50YesYesNoNo
TexasYes950YesNoNoNo
UtahYes75NoYesNoNo
VermontNoN/AN/AN/AN/AN/A
VirginiaYes100YesNoNoYes
WashingtonYes60YesYesNoNo
West VirginiaYes15 or 50YesNoNoYes
WisconsinYes15NoNoNoNo
WyomingNoN/AN/AN/AN/AN/A