All Posts in Category: fundraising registration

Fundraising in the New Normal

If your annual gala, donor breakfast, or poker night benefit is responsible for more than 30% of your annual operating costs, it may be time to overhaul your organization’s fundraising plan. COVID-19 has taught us many lessons, one of which is that the unexpected can and does happen. Limitations on in-person gatherings have shuttered many key fundraising events heavily relied on by nonprofits. In the aftermath, some are now struggling to keep their doors open.

The good news is that there’s never been a better time to go virtual. We now have the tools and technology at our disposal to effectively pivot fundraising efforts to a wholly online or hybrid platform. Along with this shift comes the potential to expand our reach indefinitely without the inhibitions of locality-based events. And virtual fundraising opportunities can create even more touchpoints of opportunity to tell your story and steward supporters but fundraising online also comes with new responsibilities such as registration.

Virtual Fundraising Options

Microphilanthropy. The rise of social media together with improvements in financial technology has given rise to the surging popularity of micro philanthropy, or donations between $0.25-$10 received at scale over time to accumulate serious cash. According to GoFundMe, Gen Xers and Millennials composed nearly 50% of givers through the platform in 2017, with 68% percent of funds raised from donations of $50 or less. generation of givers looking for a closer relationship between their activities and the causes they care about.

Virtual Events. Events such as auctions, galas, and luncheons can successfully be moved to an online platform. High-quality tech tools, along with thoughtful planning of all the details that make for an engaging and memorable event (like shipping party favors and champagne to participants) can help nonprofits maintain relationships with current donors and win over new ones.

Peer-to-Peer. Did the Komen foundation throw up their hands and shutter their doors when COVID put the brakes on their iconic walk for the cure? Rather than cower in the face of change, they took the walk virtually, touting their new slogan “Walk Where You Are.” Participants are encouraged to walk their neighborhood on the official day of the challenge. A custom mobile app, that includes messaging functions, activity challenges, and virtual badges and medals for participation, allows participants to replicate the camaraderie and excitement of the in-person event.

Merchandise Sales. Print-on-demand providers, such as Bonfire, can make merchandise sales a no-fuss and low-risk fundraising opportunity. Not only do merchandise sales help pad your nonprofits’ coffers, but wearable or highly visible merchandise serves a double-packed punch by increasing your visibility to others. Many merchandise vendors also serve as an online storefront for your wares, further expanding the reach of your nonprofit’s message and fundraising efforts.

Key Steps for Taking Fundraising Online

If you want to pivot your fundraising efforts to take advantage of new virtual opportunities, you’ll want to take a few preliminary steps before launching your first event.

Make a Plan. What are your fundraising goals and objectives and how can you really leverage virtual fundraising opportunities to meet these objectives?

Prepare. Before launching your virtual fundraising event or strategy, you’ll want to make sure you have the right tools, technology, and staff in place to do so successfully. Considerations may include a good online giving platform, effective mobile giving tools, a robust but useable CRM or client relationship management system, marketing software, an optimized website, and adequate staffing and training in using these tools.

Get Registered. If you are soliciting online donations, it’s highly likely that you will need to register in any state in which you solicit donations. Forty states and the District of Columbia require a “charitable solicitation registration” in advance of engaging in any fundraising or solicitation activity. Failure to register can result in fines and penalties against directors and officers and even being barred from further fundraising activities within a state. Caritas Registration can help with your charitable solicitation registration needs. Contact us at cynthia@caritasregistration.com for an estimate. Caritas Law Group serves nonprofits of all types and sizes and files registrations in all states that require them.

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New Jersey Charitable Solicitation Law Update

According to the Center for Non-Profits, the state association of nonprofits in New Jersey, effective May 1, the  New Jersey Division of Consumer Affairs is requiring all annual charities registration renewals and extension requests to be filed through a state-run online portal. New Jersey requires most charitable organizations that solicit funds in the state to register and file annual financial reports. There are exceptions for small organizations that raise less than $10,000 annually and do not use a professional fundraiser, religious organizations, and educational organizations. The Center for Nonprofits has asked the Division to revert to accepting paper filings due to concerns about the online portal, including vague instructions, lack of available context-sensitive assistance, limited responsiveness to inquiries, difficulty in locating and uploading information, recordkeeping and processing backlogs at the Charities Registration office which can prevent access to key areas of the portal, and that it fails to meet the statutory requirement to incorporate Form 990 information by reference.

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Fundraising – When to Seek Permission

Fundraising to carry-out a nonprofit’s charitable purpose is necessary for the survival of the organization.  However, holding a 501(c)(3) tax exemption does not give unlimited permission to fundraise.  Many nonprofits are unaware of charitable solicitation laws within their own state much less other states where they may be asking for and/or receiving contributions.

Nonprofits that solicit donations or funds (directly or indirectly) must register in its home state if its home state requires registration. Nonprofits may also be required to register outside of their home state depending on where the donors its solicitations are reaching reside the amount and frequency of donations. Examples of fundraising that could trigger the duty to register include the following:

Traditional Fundraising

Traditional fundraising techniques include direct mail, telephone solicitation, door-to-door fundraising, individual asks, special events, grant applications, and corporate solicitations. If a nonprofit conducts any of these direct methods of fundraising, it must register in its state of domicile and any state its solicitation is targeted to reach if those states regulate fundraising.  Some states may not require an organization that solicits grants solely from foundations and governmental units to register if that is the only method in which it solicits donations in the state.

Media Fundraising

Fundraising through radio, television, newspaper and magazine ads raises special compliance considerations. If the solicitation is distributed or aired locally or regionally, the organization must register in each state where the residents of such state can encounter the broadcast or periodical.  If the advertisement or program is distributed or aired nationally, the organization must register in all states that require registration.

Internet Fundraising

Internet fundraising includes solicitations delivered via email, a website, or social media. While email is digital and included in the list of Internet based fundraising methods, for registration purposes email is treated like direct mail.  Therefore, the organization would be required to register in the state(s) where the individual(s) receiving the email is located.

For online solicitation mediums such as having a donate now button on the organization’s website or the website of a fundraising intermediary, or being the beneficiary of a social media or crowd funding promotion, registration may be required.

Some states follow the Charleston Principles which offers a guideline based on repeated, substantial or ongoing donations received through these methods.  However, the organization may be required to register with those states that have not adopted the Charleston Principles and where it has met the Charleston Principals repeated, substantial or ongoing donations test. If the organization receives an unsolicited donation via a donate button on its website it may not trigger a duty to register in states that follow the Charleston Principals. However, once the organization takes that individual’s contact information and sends a request for a follow-up gift, that is considered a solicitation and triggers state registration requirements.

Auctions, raffle/bingo, vehicle, cause-related marketing

Many states restrict raffles, bingo and other forms of gaming. Violations of gaming laws can result in criminal liability. Some states offer exceptions for nonprofits but the rules must be strictly adhered to. Many such states require nonprofits engaging in gaming activities to obtain state and local licenses.

Contracts with Professional Fundraisers

If the nonprofit organization engages professional fundraisers (Professional Solicitor, Professional Fund-Raising Counsel, Commercial Co-venturer) to assist with fundraising or strategy for any of the methods listed above, the nonprofit and the professional fundraiser may both be subject to filing requirements depending on the state and type of assistance provided. For more information, see our blog post on Working with Professional Fundraisers.

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