Fund raising is governed by the respective ‘state solicitation law’ of the respective state where the organization is either physically “present” or it raises funds.
If an organization raises USD 5000 or more, it is required to obtain a solicitation license or an equivalent registration from the office of the Attorney general the state. After registering most of the states insist on annual reporting requirements for the registered organization.
Registering is a month long drawn process. The process becomes all the more time consuming if an organization plans to raise funds from multiple states, where it will have to register in each of the state where it plans to raise funds.
Exemption from obtaining the registration
Religious organizations and select few educational institutes are also exempt from getting themselves registered with the AG office for solicitation of funds.
What constitutes ‘charitable solicitation’?
All ‘charitable’ organizations conducting a ‘solicitation’ in a state is required to register before soliciting.
The soliciting organization may not be physically located in the state and even a letter, promotional mailers, phone call, or advertisement seeking support from state’s residents would be construed as soliciting and registration would be required.
The only exception is online fund raising where all the existing laws and the geographical distinctions get blurry.
As to what constitutes solicitation – the deciding question would be – “Has someone purposefully attempted to or directed a solicitation offer to a resident of the state?” If the answer is “yes” , the organization is required to register.
Simplifying multi state registration process
Realizing that registering with multiple state before fund raising can be a daunting task, the National Association of State Charities Officials and the National Association of Attorneys General have initiated a multi state single registration process to standardize, simplify, and economize compliance under the states’ solicitation laws. More details about this multi state filing project can be found at – http://www.multistatefiling.org/