Can a nonprofit take its fundraising efforts outside California? The short answer is yes. Organizations that plan to solicit donations beyond California’s borders will need to pay attention to the requirements of local law in the states where solicitations take place. Although many states have harmonized their rules governing charitable solicitations, there are important exceptions.
State legal regimes governing charities vary quite a bit. Most states require nonprofits operating within their borders to register and submit reports. The California Attorney General’s Registry of Charitable Trusts oversees the process in our state.
Whether an organization is required to register and submit reports depends on how state laws treat the nonprofit’s activities within the state. Untangling each state’s regulatory regime can be a time-consuming process—in other words, it can be expensive. Nonetheless it is an important process to complete. Failing to comply with local rules can expose an organization to fines and other penalties.
Understanding compliance requirements is not always straightforward. States have different definitions of important concepts. For example, the concept of “solicitation” can vary from jurisdiction to jurisdiction. Some charitable purposes, like churches, may enjoy exemptions in some places but not in others.
For nonprofits that plan to solicit donations online. Because websites don’t take state borders into consideration they can reach potential donors far from home. The National Association of State Charity Officials (NASCO) offers guidelines on soliciting donations online. The guidelines aren’t binding law, but they do provide a helpful way to think about online solicitations and how they can implicate out-of-state registration requirements. Among other things, registration may be required if an organization specifically targets individuals in a state, receives regular contributions from there, or conducts other activities within the state.
In an effort to reduce the administrative burden on nonprofits, 37 states (including California and the District of Columbia) have adopted an alternative registration scheme called the Unified Registration Statement, or URS. The URS is a single form that, with a variety of state-specific addendums, can be used in every state that accepts it. Only a few states (Colorado, Florida, and Oklahoma) do not accept the URS.
The Church Law Center of California provides legal counsel to religious and secular nonprofits. We work with clients to ensure comprehensive compliance with applicable regulatory regimes and can help your organization cover its out-of-state registration obligations. Call us today at (949) 689-0437 or reach out to us through our contact page.