Does your homeschool group accept donations on your website? Lots of nonprofits do and its a handy way for donors to send a donation.
But did you know that having a donation button on your website could mean that your organization would need to register as a charity in almost all 50 states? What a load of paperwork!
Generally, the Charleston Principles assert that registration (with each state) should only be required if:
- non-internet activities alone suffice to require registration, or
- the nonprofit solicits contributions through its interactive website or specifically invites further offline activity to complete a contribution, and either:
- Specifically targets persons physically located in the state, or
- Receives repeated or substantial contributions. (“Repeated” and “substantial” are left up to each state to define.)
The principles leave a lot of room for interpretation, which brings us to some practical state-specific pointers.
Top 5 Tips When Soliciting Donations Online:
As you prepare to solicit donations online:
- Always register in your state of incorporation.
- Following-up with fundraising contacts residing in unregistered states may trigger registration. For example, you receive an unsolicited and insubstantial contribution through your website from a resident of a state in which you are not registered. If you then solicit that contact via e-mail, phone, mail, or any other medium, that will be treated as solicitation triggering registration. E-mail is generally treated the same as a mail or in-person solicitation.
- Soliciting through a charity portal alone such as www1.networkforgood.com does not trigger registration. That is because it is a donor-advised fund that exists to distribute funds to other nonprofits. Technically the donation is given to the fund as the payee. Scrutinize any website before assuming it is a donor-advised fund; their fine print may pass the burden of charitable registration on to you.
- Your nonprofit may consider hosting a non-interactive websites that encourage donations through third-party sites or offline means. This may still trigger registration – it is not a loophole.
- You can use social media to send out information about your nonprofit’s activities without needing to register. When your language invites solicitation, you do need to register. A fan promoting donation independent of the nonprofit does not trigger registration.
Thanks to Harbor Compliance for this helpful information.
My source: https://www.harborcompliance.com/information/online-fundraising-charleston-principles
Carol Topp, CPA