State Charitable Solicitation Regulation: Negotiating the Maze - PDF document

State Charitable Solicitation Regulation: Negotiating the Maze 2014 BMWL National Nonprofit Conference Orlando, FL October 31, 2014 Stephen H. King Gammon & Grange, P.C. 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 1 Regulation of Charitable Fundraising -- Why?  Prevent Fundraising Fraud  Promote Disclosure of Information for Prospective Donors  Discourage High Fundraising Costs 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 2

Current Status of Regulation  47 states and the District of Columbia specifically regulate charitable solicitations  39 states (plus DC) have registration requirements for soliciting charities  Most states also have registration requirements for professional fundraisers/counselors  The maze of state-specific regulations can be a challenge 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 3 State Authority to Regulate: Jurisdiction  States may regulate charitable solicitation activity even if the charity is not physically present in the state  Commonwealth of Pennsylvania v. National Federation of the Blind (370 A.2d 732, Pa. 1977)  American Target Advertising, Inc. v. Francine A. Giani (199 F3d 1241, 10 th Cir. 2000) 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 4

Determining State Registration Obligations Is the Organization Soliciting in the State? Typical definition of “solicit”: a request, either directly or indirectly for a contribution on the plea or representation that the contribution will be used for charitable purposes 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 5 Determining State Registration Obligations Is the Organization Soliciting in the State? Includes:  In-person requests  Telephone solicitations  Media appeal or campaign  Direct mail  Charitable sales promotions 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 6

Determining State Registration Obligations Does a Website Solicitation Affect Registration Obligations?  “Charleston Principles” adopted as advisory guidance by state regulators  Register if (1) specifically target persons physically located in a state for solicitation, or (2) receive contributions from a state on a repeated and ongoing basis.  Charleston Principles found at: http://www.nasconet.org/wp- content/uploads/2011/05/Charleston-Principles-Final.pdf 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 7 Determining State Registration Obligations 11 States That Do Not Require Charitable Solicitation Registration Arizona Iowa South Dakota Delaware Montana Texas Idaho Nebraska Vermont Indiana Nevada Wyoming 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 8

Determining State Registration Obligations Is the Organization Exempt from Registration in Any States?  Available exemptions from registration vary significantly from state to state  Typical exemptions:  Religious Organizations  Educational Institutions 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 9 Determining State Registration Obligations Is the Organization Exempt from Registration in Any States?  Typical exemptions (continued):  Libraries  Museums  Health Care Institutions  Solicitation of Members Only  Small Organizations  Solicitations for Specified Individuals  Veterans’ Organizations 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 10

Determining State Registration Obligations Religious Organization Exemptions and Exclusions:  Every state has a religious organization exemption or exclusion, but what qualifies as “religious” varies significantly among states  Sample definitions of religious organization:  A person that is exempt from filing a federal annual information return under section 6033 (a) (3) (A) (i) and (iii) and (C) (i) of the Internal Revenue Code [churches; conventions & associations of churches, integrated auxiliaries, religious orders] (Wisconsin) 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 11 Determining State Registration Obligations Religious Organization Exemptions and Exclusions:  Sample definitions of religious organization:  Any corporation, trust or organization incorporated or established for religious purposes, or established for charitable, hospital or educational purposes and engaged in effectuating one or more of such purposes, that is affiliated with, operated by or supervised or controlled by a corporation, trust or organization incorporated or established for religious purposes, or to any other religious agency or organization which serves religion by the preservation of religious rights and freedom from persecution or prejudice or by fostering religion, including the moral and ethical aspects of a particular religious faith (Kansas) 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 12

Determining State Registration Obligations Religious Organization Exemptions and Exclusions:  Sample definitions of religious organization:  This article shall not apply to corporations organized under the religious corporations law, and other religious agencies and organizations, and charities, agencies, and organizations operated, supervised, or controlled by or in connection with a religious organization (New York) 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 13 Determining State Registration Obligations Religious Organization Exemptions and Exclusions:  Sample definitions of religious organization:  “Religious institution” means a church, ecclesiastical or denominational organization, or established physical place for worship in this state at which nonprofit religious services and activities are regularly conducted and carried on and includes those bona fide religious groups that do not maintain specific places of worship. The term also includes a separate group or corporation that forms an integral part of a religious institution that is exempt from federal income tax under s. 501(c)(3) of the Internal Revenue Code and that is not primarily supported by funds solicited outside its own membership or congregation (Florida) 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 14

Determining State Registration Obligations Religious Organization Exemptions and Exclusions:  Legislative intent language in recent amendments to Florida registration statute: “The Legislature respects the diversity of activities conducted by religious groups and therefore, through this act, intends that the definition of a ‘religious institution’ apply to bona fide religious groups.”  www.nonprofitcpa.com/new-florida-law-tightens- rules-charitable-solicitation/ 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 15 Determining State Registration Obligations Is the Organization Exempt from Registration in Any States?  Determine whether a particular exemption from charitable solicitation registration must be affirmatively claimed.  Good summary chart (although already a bit out of date): www.nacua.org/nacualert/docs/CharitableSolicitation/2013 _JurisdictionalRequirementsCharitableSolicitation.pdf 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 16

The Nuts and Bolts of State Registration: Process • Each state has its own registration forms • The Unified Registration Statement (“URS”) is accepted by most states, but some states only accept the URS for initial registrations • States that do not accept the URS include Florida, Oklahoma, and Washington • The URS is found at http://www.multistatefiling.org/ 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 17 The Nuts and Bolts of State Registration: Process Several States Only Permit On-Line Registration: Colorado Hawaii New Mexico Ohio An increasing number of states are implementing an on-line registration option 2014 State Charitable Solicitation Registration• Gammon & Grange, P.C. • www.GG-Law.com • 703-761-5000 • 10/31/2014• Slide 18