0:00  
All right, folks, we're gonna start up soon. This is Tim Sarrantonio, Director of Corporate branded neon one. Happy Wednesday, May 18. My goodness, May. We are excited about today's presentation. Give it maybe another minute or two to let people get in here live. A few housekeeping items. Before we get formally started with Sharon, from labyrinth, hear our friends over at labyrinth. This is being recorded the most popular question of webinars, I would say. So we are definitely recording this right now the recording will be emailed to you tomorrow. And the recording also with the slides and the transcript will be placed on the neon one website as well. If you go to neon one.com. Under resources, we have events and webinars, you'll find the dedicated page for this one. And that's where we put it. So kind of what we're going to do in about a minute, is formally hand things over and introduce Sharon, from labyrinth. And she will be walking us through online and out of state fundraising, how to stay compliant grow donor trust, longtime partners of neon one. And we thought you know what, there's a lot of things changing, there's a lot more that people are doing online now. So let's get people up to speed on on what the rules are. So we're excited for today's presentation. Again, this is being recorded, we have a transcript going as well, if you want to, if you have to turn the sound off, you can read and the slides also will be sent out as well as a special resource from our friends at labyrinth as part of the follow up to by the end of the webinar, I'm also going to place a link for our community connected fundraising community if we want to continue the conversation. There. We have several 100 people who were in a Slack group, we're going to start sending emails and so we want to continue the conversation and questions and things like that in that group. So I'll place that at the end of the webinar. But without further ado, let's go ahead and get started. We got a lot of great information that Sharon Cody, our friends at labyrinth are going to walk us through so excited to have you here today, Sharon and we are going to be answering the chat and things like that. But otherwise the floor is yours. Welcome.

2:54  
Great. Thanks so much, Tim. And thank you all for joining us. My name Sharon Cody. I'm the nonprofit market manager at labyrinth Inc. and I've spent most of my career in the nonprofit sector. I've worked as an attorney as a fundraiser as a foundation executive. I've been a board member and a donor as well. So I have a pretty broad view of fundraising and fundraising compliance. And hopefully I can share that and some insights from labyrinth with you all. Part of my role is to educate nonprofits on fundraising compliance and connect them with resources so they can learn how to be compliant with their fundraising by any method Labra think supports nonprofits by providing comprehensive compliance solution, including state charitable registration reporting to nonprofits across the country. And we've done this for the last 30 years. And up on the screen, you can see some of the wonderful nonprofits that we are very proud to have kept compliant over the last few decades. So let's talk about what we're going to cover today. We're going to talk about state charitable registration regulations. When you're fundraising out of state and online. We're going to review what the registration requirements look like from state to state, and which specific out of state and online fundraising activities, trigger registration and reporting obligations. We'll move on to talk about the value of charitable registration and how to message your fundraising compliance to donors to build trust and giving. And then we're going to talk briefly about the process of charitable registration and renewal and how much it costs. We'll finish by talking about how you can manage and simplify charitable registration reporting in multiple states for your organization. Misha, well, I'll probably speak for about 45 minutes, and then I'll leave 15 minutes. So we have lots of time to answer questions. But of course, we'll continue that conversation after the webinar to in the connected community, as Tim said, Okay, so let's start by talking about a few terms that we're going to be using today in the webinar to make sure we're using shared language. So at its simplest, the word compliance of course means just respect for an adherence to the rules. So charitable solicitation registration compliance is just respect for and adherence to the rules and regulations that govern charitable solicitation, registration and states.

5:43  
What's charitable solicitation? Charitable solicitation is just an elaborate word for fundraising. Charitable solicitation is the act of asking for funds for a charitable purpose. And here in the US, while the IRS is the regulator of nonprofit status, the individual states are the regulators of fundraising. And here in the US, 40 states and the District of Columbia have charitable solicitation registration requirements. Each one of those 41 states are going to give DC statehood for purposes of today's conversation. 41 states each have their own unique regulations for fundraising activities. Is this convenient? No, it is not. But it is the reality that nonprofits face. And each state, with one exception requires the nonprofits who are asking for funds within that state's borders to register with the state before before the charity begin solicitation activities. Why did these laws exist, they exist to protect the generous public, they exist to protect the legitimate charitable organizations within that state. And they also exist to protect the reputation and special status that the nonprofit sector as a whole has. And because charitable registration reporting regulations were written with these goals in mind, they are focused on regulating solicitation, not receipt of donations. So it is not the receipt of donations that triggers the need to register. It's the act of soliciting, regardless of whether or not you're successful in your solicitation, regardless of whether or not you get a donation in response. It's a solicitation that the states are regulating. Okay. And that's important to understand that the solicitation is what triggers your need to register an estate and we'll talk about that in more detail a little minute, a few minutes. Okay. So, as we just learned solicitation is the act of asking for donations regardless of the method use to ask. And as every nonprofit knows, there are many ways to ask for donations. solicitation. Fundraising can take many forms from traditional ones like direct mail, phone calls, grant applications to more modern online methods like texts and emails and website donation pages. All of these activities, both traditional and online, are asking for funds for charitable purpose they are all solicitations. Now many nonprofits wonder whether charitable registration reporting requirements in a particular state apply to their organization, and if so, which of the states they need to register it? Nowadays, the chances are about a charity that fundraises has to register and report in at least several states. Most charities nowadays have out of state donors the days where people lived in one state their whole lives are gone. Often these donors are former staff, former board members, former volunteers, or simply donors who've moved at a state and are continuing to support the organization. In addition, most nonprofits solicit donors in multiple states or seek additional donors in multiple states. Even if the charity is only successful in securing donations for some states. Most charities ask for donations from donors in many states, if not nationwide. And as we just learned, the registration requirements of the states are triggered by the act of asking the act of soliciting active fundraising, regardless of whether or not the charity gets a donation in response. Okay. So let's talk a little more about charitable solicitation registration requirements for online fundraising for more modern fundraising methods. Okay, I'm sure many of you have a lot of questions and are uncertain about your nonprofits compliance obligations with fundraising online. Okay, most charities most 501 C three organizations, fundraise online. They accept donations on their websites on a donation page using a donate button. Also, nonprofits typically make solicitations by emails, oftentimes nonprofits ask for donations in their email newsletters that they send out to subscribers. Social media is another common form of solicitation for nonprofits. And more and more nonprofits are also using text to donate and tax to get all of these online solicitation methods. Let nonprofits broaden their circle of supporters with a click of a button. And they are wonderful things they have allowed small nonprofits to broadcast their mission and the good work impactful work they're doing to advance their mission to many, many more supporters than ever before. And it's it's a very exciting opportunity for nonprofits to secure donations for more folks. But this nationwide access to supporters bet.

11:21  
online fundraising allows, raises questions about how charities that are fundraising online need to comply with state registration requirements. Now, of the 41 states, remember, we're including DC and those of the 41 states, eight states have specific laws that govern online fundraising within their borders. The remaining 33 states do not that is because most laws most state laws written long before the advent of the Internet. Okay. So rules and regulations about fundraising that were in these laws don't apply as precisely to online fundraising as perhaps you and I would like, okay. Because of this, when as more nonprofits began to fundraise online, the state regulators realized there was an increased need for clarity and consistency on when a nonprofit would need to register with the state. So in 2001, the National Association of State charity officials also known as NASSCO, this group got together in Charleston, South Carolina to try to develop some guidelines for when a charity would need to register in a particular state. The resulting guidelines that NASSCO came up with are known as the Charleston principles. And what the Charleston principle suggests is that if a charity has a donation page on its website or donate button on its website, and virtually every charity nowadays does, the charity will need to register in a state. If, in addition to having the donate button or the donation page, the charity is also sending emails to residents of that state, or is receiving repeated ongoing and substantial donations from folks in that state. Unfortunately, the Charleston principles do not define ongoing repeated and substantial donation so that is left to everyone's own personal interpretation. Okay. Now, these Charleston principles were not codified into law. In most states, they simply exist as sort of a framework a way to think about when a charity needs to register with your state or not. Remember, there are eight states that do have specific guidance about when a charity needs to register. Generally speaking, fundraising online, is considered soliciting nationwide in all of those 41 regulating states because charity websites charity, donate buttons, emails to newsletter subscribers. Social media asks text messages, excuse me, are all solicitations that may potentially reach donors in any one of the 50 states and DC, okay. And when a nonprofit receives a donation from an out of state donor, they almost always follow up with these out of state donors regularly to ask for additional donations. And whether that follow up solicitation is by letter email phone by traditional method or by more modern online method by I attacks or by an email, nonprofits, once they interact one time with the donor, usually continuously solicit the donor on a regular basis in this state where the donor is located. And by doing this, the nonprofit is repeatedly soliciting within that state borders and subjecting itself to the laws of those states. Okay. Now, sometimes charities ask us at labyrinth, how they should handle an unsolicited donation and whether receipt of an unsolicited donation will trigger registration requirements in a state. And our response is this when it's while it's theoretically possible for charity to get an unsolicited gift from a donor and never again, follow up with the donor, or solicit them ever again, that situation is very unlikely. your development team, your fundraising team and your fundraising volunteers, their job is to engage with donors and to turn a small donor until a large donor and a one time donor into a recurring donor. Typically, these donors enter your database, and then they're subject to the plan that your fundraising team has laid out about how that donor is engaged with and how they continue to be solicited over the year. Okay, so it's very unlikely you would get a one time gift and never interact with someone again. In addition, the state of California requires charities to register within 30 days of receipt of a donation, whether that donation was solicited or not. So you have 30 days from receipt of a donation from a California donor to register in the state of California, it does not matter whether you solicited that donation or not. Okay. So many charities solicit using multiple methods, traditional methods, online methods, any one of these methods may trigger registration requirements in those 41 regulating states. Most nonprofits today, solicit using multiple methods to know where your organization in particular needs to register means you need to take a look at your existing donor database, as well as your solicitation activities in all of the 41 states with requirements. Okay, your online solicitation activities, your donation page, your emails, your email, newsletters, your social media campaigns, your text to give campaigns, your giving day campaigns, all of these things can trigger the need for you to register in a 41 regulating states. Okay.

17:57  
All right. Now, I also wanted to mention that there are some other types of solicitation that are regulated by states, okay. These include applying for foundation grants, collecting membership dues, and collecting donations from a charities website. Also collecting donations by participating in a third party platform that's sponsoring an online giving day. Okay? Remember, it's the solicitation that's regulated activity. So if you're the one asking even if someone else is receiving temporarily on your behalf, and then forwarding that money to you, right, as it is, in the case with many third party platforms, you are the solicitor and therefore you are subject to the laws in the state where folks can access that solicitation. And if that's online, that usually means in every state and the District of Columbia as well. Okay. Now, there are special requirements that apply to fundraising Council and professional solicitors, types of fundraising solicitors, as well as corporate partners who engage in cross marketing campaigns, also known as commercial co ventures or CCV. All of these partners with nonprofits, their solicitation activities, also trigger fundraising registration reporting requirements in many states. And the for profit entities and the fundraising professionals that are assisting nonprofits with fundraising will often need to register with the state and follow up with reports. And although the registration or reporting requirements are the fundraising professional or the cost marketing, corporate partners responsibility, it's important that you ensure that all the people you hire partner with are up to to date with the registrations, it's also important that you know that hiring a fundraising professional, or working with a cause marketing corporate partner, will bring extra scrutiny to your organization. Because when those folks register in a state, they provide information about who they're working with on that fundraising campaign. And who they're working with is you. So now the state knows that you are soliciting folks within that state. So before your fundraising Council, your fundraising professionals, your cost marketing partners, register with the state, and let them know that they'll be soliciting on your behalf in this state, you need to make sure you are first registered in that state. Okay. Hiring these folks is a great idea. It can bring a lot of extra revenue for your organization, but you need to make sure that you are appropriately registered in all the states where they are going to register. Okay.

21:05  
All right. Let's take a look at the states that we've been talking about that regulate fundraising here in the US, okay. This map shows the states that require charitable registration. All right, you may want to book map of mark this state map for your later use. You can see down at the bottom right corner under the map, the link to where this map can be found. It's Labyrinth inc.com, forward slash state dash map. Okay, that's where you'll find it. And on that page, you'll also find links to what the fundraising rules and regulations are in all the states that are up here on the map. Okay, so the 41 states that are shaded in either orange or dark blue, all require nonprofits to register before soliciting. Okay, except California, which gives you 30 days after receipt of gift. Okay, but dark blue and orange require charitable solicitation registration before solicitation begins. Okay. The two states on the map that are in light blue, do not require registration, but they do require charitable disclosure statements be included on solicitations. And that's the difference between the states in orange and blue. The dark blue states only require charitable registration in the states and orange require charities both to complete charitable registration in the state and also require states. Those states also require nonprofits to include disclosure statements. So in total 41 of the 51 states 50 states and DC require charitable registration. 25 of those states also require nonprofits include a charitable disclosure statement on the solicitations. Okay. And we'll talk a little later in the presentation about charitable disclosure statements. Let's talk more about charitable registration in detail right now. Okay. All right. So by now, you probably realize your nonprofit needs to register in multiple states, and you want to determine which state you need to register in. Okay. So given what you now know, that it's the act of soliciting that usually triggers registration requirements, and that states require you to register regardless of whether or not you're receiving a donation or in response. Let's take a look at something else that's important to understand. And that is solicitations occur where the donor receives them. So if you are not certain where your donor is receiving your solicitation, right, as you happens, when you send emails or you have a donation page on your website, you are technically soliciting everywhere, everywhere in the US everywhere in the 41 regulating states. Okay. So in order to determine where you need to register, need to first determine where you are soliciting,

24:26  
whether you're soliciting by traditional means but a letter or a phone call. And of course, your development team should have that list. And then you need to determine what your solicitation activities are both, okay, and both traditional and online ones and what states you're interacting with. And if you don't know the state you're interacting with and you are fundraising online, then you are fundraising out of state in all states, okay? This means your nonprofit needs to generally register in all those states. or file an exemption from registration if you're entitled in all of the 41 regulating states. Now, keep in mind that state requirements and saving exemptions, and your specific activities may well change over time. Okay, so you need to repeat this step regularly, annually or semi annually. And certainly before you begin a major fundraising initiative, like a capital campaign, a major virtual or hybrid fundraising event, or any other type of large fundraising initiative. Okay. Now, let's talk a little bit about exemptions. I just mentioned, exemptions from registration. Typically, state fundraising registration exemptions are based on the type of nonprofit, how its soliciting and how much money it's raising. The rules vary from state to state on which nonprofits are entitled to exemption in a particular state, they are very irregular, from state to state. The most common exemptions that states offer are for very small nonprofits. And these are nonprofit with total annual revenue, total annual revenue from all states, okay, total annual revenue, say of less than 10 $15,000 a year. Okay, the amount of specific amount depends on the state. So these are very, very small nonprofits. Those nonprofits are frequently exempted by states. In addition, specific types of schools, certain hospital and healthcare institutions, and houses of worship are also often exempted in states, but not every state. Okay? Not every state offers each of these exemptions. And it's important that your organization check carefully in each state to see if you may be entitled to an exemption, it's essential to understand that exemptions may need to be applied for and they may need to be renewed as well. Because as nonprofits revenue changes and increases, you may no longer be entitled to that's an exemption and a particular state.

27:31  
In addition, if your nonprofit changes its structure, its mission, its programs, or any of the original criteria for exemption, you may need to then registering a state where you were previously exempted, you need to keep an eye on that becoming compliant. And everyone in the 41 regulating jurisdictions requires research of the specific registration requirements and the exemption requirements in every single state where your nonprofit is soliciting, often in all 41 regulating states. Okay. A great first step about doing all this is to educate leadership at your organization, that this is required. So everybody understands the complexity of what's required. And you can have an organization wide conversation about how you're going to prioritize this, how you're going to take care of this and because registrations need to be renewed, usually annually, how you're going to manage this on an ongoing basis. Okay. All right. Now, there are two practical purchase that those of you who are fundraising online can take to become registered. The most comprehensive way is to register or if you're entitled file an exemption from registration, and all of the 41 regulating states. Okay. This is a method pursued by many nonprofits, particularly large nonprofits and nonprofits that are about to launch major events or capital campaigns, because it allows the nonprofit to fundraise Without Borders anywhere, anytime by any method they see fit, without risking any fines or penalties or losses associated with not being appropriately registered in the regulating states. These organizations view this as an investment in capacity. Their fundraising, compliance is an investment in their capacity and their ability to fundraise. But understandably, not every organization has the ability to do this. Some don't have the need to do this. Let's be honest, budgetary constraints are pretty common for new and very small nonprofits and Are these nonprofits, a different approach may be better, the nonprofit can register in its home state. It can fundraise there and in the 10 states that don't have any regulations, and then as many other states as it chooses to register it, then that nonprofit needs to be very careful not to undergo any fundraising activities in any states where it is not registered. The nonprofit typically put specific language on all their solicitation materials, including on their online donation page to exclude certain states, the states where they're not registered the regulating states where they're not registered from those where it can accept a donation. Okay, these are the two paths that nonprofits can take to be compliant. Ultimately, the nonprofit has to weigh the cost of registering in each state against the opportunity cost of not being able to accept donations from donors in that state. Okay, we encourage all of you to pursue one of these two paths, and focus on becoming compliant and not risk trying to evade the attention of the authorities in the state. We encourage everybody to take one of these to pass that compliance, okay. Now, it's important to understand that your charitable registration status is publicly available to all in every state where you are registered. And in every state where you are not registered. Charities need to be compliant, of course, in every state where their fundraising and organizations that are raising funds and all 41 states should be registered in all 41 states, it is an investment. But it's the upside is tremendous. And that is because your 990 filing requirements, your 990 are publicly available and are an opportunity to broadcast information about your mission, and how you're working to impact your mission, how you're fulfilling that mission. The same thing is true of your state charitable registrations. These two are publicly available documents.

32:23  
Every state has an online website, where folks can go and look to see if a particular charity is registered in that state. Okay, these online state databases reflect your registration status. And they're available to donors, grantmakers, corporate partners, sponsors, anyone at any time, okay, 24 hours a day, seven days a week. For these reasons, you want to make sure that you are appropriately registered in all the states where you're fundraising because very often, one in three, folks research online to see if a cherry is legitimate before giving this is particularly true of large donor savvy donors. And first time donors they want to say, if you're legitimate, and this is how they see if you're legitimate or not, they do this research. So you want to make sure you're correctly listed on every website were in every state every jurisdiction where you're fundraising, okay. And being appropriately registered, and then messaging, the fact that you are appropriately registered nationwide, if you're registered nationwide or in multiple states, if you're registered in multiple states, is a good idea that results in revenue increases, no responsible donor wants to give to an organization that is not legitimate following the law. Studies have shown time and again, the charities that register and promote the registration status to prospective supporters get a better rate of return on their fundraising requests. Of course, it is a trust factor, it reinforces donors decision to give. donors want to know that you are legitimate and compliant. So if you are registered nationwide, let folks know about that. Let them know particularly on your online donation page, where folks will be going to gather more information about you. Okay. Now, let's talk about another less pleasant reason why compliance should be a priority for your organization. Okay. Charitable registration requirements have existed for many, many years, but states now are becoming stricter than ever with enforcement. Why? Because charities are fundraising more broadly, by many means, including online means and sadly,

34:58  
online fundraising is subjected to abuse by illegitimate actors who are asking folks for donations when they are not a charity at all. So state regulators pay a lot of attention to online fundraising more than ever before. Fundraising abusive is the most common enforcement area for a charity regulator. So okay. And charity regulator offices that once really just accepted registration forms now half prosecuting attorneys, they have auditors on staff to investigate folks that are fundraising in their jurisdiction without being appropriately registered. So it's important that you become appropriately registered. Now, oftentimes, we're asked how the state charity regulators are going to know if you're fundraising in a state without being appropriately registered. And I will tell you this, the most frequent way they find out is because someone you solicit, looks you up online, on the state database, sees that you are not registered there, and calls the state secretary of state or Attorney General, whoever the regulator is, and asks if your charity is legitimate, and registered because they can't find you online. This, of course, alerts the charity officials that you are soliciting within their borders. And this is very often how folks come to contact labyrinth, think about our charity registration services, because one of their own clients called the state to see if they were legitimate charity, and this alerted the state charity regulators that they were fundraising there. Okay. So please be aware that there are consequences, fines and penalties for not being registered in every state where you should be, okay. States are doing this to protect the legitimate charities in their state. They're not trying to penalize legitimate nonprofits. So if you realize that you should be registered in a few more states than you currently are, right, and that perhaps you should have been registered in a few more states than you currently are a year or two or three or 10 ago, we would urge you all to approach the state. And let them know that you now want to become registered and that you may need to catch up with some past registrations in order to do that, because the state's going to ask for your IRS Form 990s And how long you've been fundraising in the state. So you may owe the state several years of registration in order to become appropriately registered in our state. But in our experience, being proactive, and approaching the state about these registration gaps, before the State approaches, you is a very good idea. Okay? Now, it's your opportunity to be proactive and register in every state where you should be and avoid these risks of non compliance. I'm going to read you a quote from the former Pennsylvania Director of the Bureau of charitable organizations, he gave a speech who group of nonprofits and here is what he said, If you were coming in voluntarily, even if you had been violating the law for 10 or 15 years, you always got to pass. The bottom line is you want to try to register voluntarily. Okay, states want to encourage nonprofits to fundraise and to register to fundraise as required and maintain the fundraising compliance, they don't want to chastise the charity who's trying to do the right thing, even if they're a little late doing so. So in our experience, states are more apt to resolve a misregistration through an informal resolution like a settlement, rather than through fines or penalties or any kind of litigation. So if you're not registered, where you should be reach out to the state and get registered. All right. Don't wait for the state to contact you. All right. Now, earlier, we talked about the fact that there are 25 states here in the US that in addition to requiring charitable registration, require charitable disclosure statements. So let's talk about that briefly.

39:33  
25 states require these they are different from the IRS disclosure where you give your ID number and say that you're a legitimate 501 C three registered by the IRS. These are an additional requirement, and they vary the language varies from state to state, okay. The state mandated disclosure statements provide information to donors about where they can Find more information about your nonprofit on those online databases, right. So these disclosure statements are generally required to be on all solicitations that you're sending out. And in some states on donor correspondence, including appeal letters, emails, website donation pages and pledge reminders and donor receipt letters as well. The disclosure statements vary greatly from state to state, they change relatively often, your organization needs to make sure that you task somebody was staying up to date on what the most current charitable disclosure languaging rules are in each one that states for soliciting. Okay. Oftentimes, when you submit your charitable registration materials in the state as part of the process, the Attorney General Secretary of State's office will go to your website to your donation page. To make sure your charitable disclosure statements can be found there, the current correct charitable disclosure statements can be found there. If you are fundraising in multiple states or nationwide, and your donation page doesn't have room to list all the many charitable disclosure statements of the different states for your fundraising, it is certainly fine to have a link on your donation page to where donors may find those disclosure statements. Okay, you can see at bonline Pennsylvania's disclosure statement, which is pretty typical. Many states now have gone from providing a phone number, where folks can find out about a particular charity to providing both a phone number and a website address with a link to those online databases a charity that folks can search about charities that are registered in a particular state. Okay. So maintaining your charitable compliance, your fundraising compliance is not only the law, it's also nonprofit best practice. And for those of you that are members of your state associations of nonprofits, it is a significant area of the nonprofit standard of excellence code of ethics and accountability. All right. fundraising and licensing compliance are essential aspects of any organization, any corporation that's doing business and particularly so in a sector that's holding itself out as being above and beyond the fray. Okay. It helps protect you and it helps protect the nonprofit sector special status and reputation. Okay. Again, communicating to your paid leadership and to your board members both about fundraising compliance and letting them know why it should be a priority for your organization. We found many times board members are unaware of this requirement. And they need to be aware, because in some states, they are held accountable for their organization's fundraising compliance. California, for example, nonprofit board members are the ones who need to pay the fees if charity is not appropriately registered in the state of California. To make matters worse, the board members may not pay the fees out of the nonprofit general fund. The rules in California are the nonprofit board members must pay these fines out of their own personal pockets. So the board members need to know about the risks and penalties involved and about the requirements for your organization. This is particularly the case since you're going to have to build paying for your charitable registration in multiple states into your budget. You're gonna get questions then. So you should educate the board members before budget time about why this is in your budget and the importance of this, okay.

44:12  
Now, I do want to mention that in a few states, there are some state prerequisites for charitable registration. Some state as a corporation, even though you're a nonprofit corporation, before you do business in a state, and that includes fundraising in the state. You don't have to have a physical office but you're conducting business in the state by fundraising. You have to take care of some state prerequisites before you file your original charitable registration documents in the state. Okay. In some states, a few states you need to qualify for and qualify as an out of state nonprofit corporation. And in some additional states, you will need to also appoint a registered agent So it's a registered agent for service of process. And it is a business address within that state where they will accept legal documents and service Process on behalf of your organization. That way, the state, and those suing, you don't need to come to you in your state, they can just serve you at your official address within that state. So the registered agent really is just your official agent who accepts all those documents and then forwards them on to you. Okay? But understanding that these prerequisites exist in a certain number of states, and you need to take care of them before you file, your charitable registration documents, we'll make sure that your charitable registration forms are not rejected by those states, which they will be if you do not take care of the foreign qualification or registered agent in the states that have this requirement. Okay. All right. So let's talk quickly and briefly about what exactly is involved in the charitable registration process. Okay, so the steps or details are very different from state to state to state. But in general, you can think of the process as being broken down into four phases, research, apply, monitor, and renew. So let's start with research. It's important that you understand what your current status is. With regard to registration in the state. Before you file anything, you need to know whether you are registered and compliant or never registered in that state. Or perhaps were once registered, and are now in bad standing because you did not keep your renewals your reporting up to date.

47:00  
Okay, and if that's the case, you obviously need to get caught up before you can move forward with being currently registered. Depending on the state, generally, you have a specific application, a fee that you'll have to pay that's based on your revenue, your organizational revenue, and a bunch of supplemental documents that you will need to submit these documents will include your IRS determination letter, a board list, usually and your most recent IRS Form 990. Okay. As we mentioned, in some states, there are prerequisites that you will need to take care of as well. And then, once you've done the research, you've taken care of their prerequisites, you found out the forms, fields and documents you need, it's time for you to apply in all the states or your fundraising. Okay, all the regulating states. Be careful. Read those application forms very carefully to you don't get your application rejected. And make sure that you are including all those supplemental documents that you should be. Nowadays, most states accept the applications and supporting documents, either by email, or through an online portal. Unfortunately, each state has a different online portal that you need to use in order to complete your charitable registration there. Some of you may have heard of the Unified registration statement or urs This is a document that was created with the goal of trying to streamline the charitable registration process in all states. It was a wonderful goal. However, unfortunately, like most aspects of government, the state sort of couldn't get it together on the registration statement. And so not all states accept it. And many states require not just the unified registration statement, but a state specific additional supplement that needs to be included with the unified registration statement. The unified registration statement itself is very long, much longer than most states own forms. And as a result, examiner's tend not to prefer the unified registration statement. And so they will more quickly approve applications done on their state specific form rather than the unified registration state. That's been our experience. So we at LibraryThing do not use the unified registration statement. Okay. Once you apply by whatever method you choose to the At various state, you need to make sure you monitor your registration status in every single state to make sure that your Applications are accepted and approved by all those states. Some states will take just a couple of weeks to process the application. Other states may be several months to process the application. Okay, but it's important that you ensure that your application was received and is being processed and is then approved. Unfortunately, some states are very particular and are known for rejecting applications with pretty regular frequency. Okay, so should this happen, and you need to correct and resubmit an application, be careful to make sure that you monitor that resubmitted application through to make sure it is received and approved as well. Okay. This is a time consuming process. But by paying attention to detail, being careful taking care of prerequisites and applying in a careful, thoughtful, intentional way, you can minimize your time from application to receipt of your registrations. Okay. It varies from state to state, but efficient management of the process really does help.

51:27  
Now, once all your registration applications and all those states have been approved, it's important that you understand that the charitable registration process doesn't end with state approval. states require registrations to be renewed almost every one of the 41 regulating states requires annual renewal. Two states District of Columbia and Georgia renew by annually every other year. But in the remaining 39 jurisdictions, renewal is required every single year. Now, tracking all of these registration, renewal dates, and making sure your renewals are filed on time is very important. Unlike your initial application, renewals have a specific set deadline that you must adhere to. And states will issue fines and late fees if you do not adhere to them. Okay. So make sure that you get those renewals on time and be aware that you will need your most current years 990 In order to redo your state charitable registrations. So work with your tax preparers and auditors to get your 990 submitted on time or even early so it is available to you so you can renew your charitable registrations and all those states, okay. Cost state fees to register all 41 jurisdictions, not just one all 41, if you were to register nationwide, will be somewhere between 15 109,500 For most organizations, okay? That's all a total of all annual state fees. And that is something you will be paying every year as you register. Okay. It's based on your annual revenue. So the annual gross revenue for your organization is say $100,000 or less, your state fees to register in all 41 states would be close to the $1,500 a year amount. If you have more than $10 million in gross revenue every year, you will be paying closer to that 9500 amount to renew and all 41 regulating States every year. Okay, and nonprofits whose annual gross annual revenue is somewhere in the middle. There fees to register in all 41 jurisdictions will be somewhere in the middle. If you register in fewer than 41 jurisdictions, your fees will be reduced appropriately. Okay, depending on how many states you need to register in, but just to give you an idea of the cost, okay. Yes, this is complicated, and I'm sorry, it is it's every state has their own rules and regulations. So due dates, fees, forms, it is a lot to manage, and you need to make sure that you task responsible staff to do it. And that more than one person knows how to do it, that you calendar it you have a due date system that's reminding both of those people maybe additional people have when their deadlines to make sure you meet all these obligations, or your risk, fines, late fees, penalties, and even loss of the rightness lesson in a state till you're up to to date with your registrations and renewals there, okay? So not every nonprofit is appropriately staffed to do this, and some nonprofits prefer to focus on mission driven work. And outsourcing is an option for organizations. So for those of you that are interested, that is what LibraryThing does, we fully manage the compliance fundraising compliance process for our clients, we take care of all state requisites, we manage every step of the registration process in all states. From Research to application preparation to compilation of documents, we kept the stakes, the checks for state fees, we send out the registration renewal packages, we get extensions if they're needed.

55:52  
And take care of every step, monitor the approval of all of this for you, and then provide you with your final fundraising license in all these states. We make sure that all of you do as little as possible, so that your team can focus on your mission driven work. We provide full service state management, at a flat rate, hourly, per state fee, or a flat rate per state fee, we do not bill hourly, it's just a flat rate per state, depending on the number of states where you want us to manage your registration renewal. Okay, if you're interested in learning more, you can schedule a time to talk with me or one of my colleagues and we can outline what your individual nonprofits path to compliance is. Okay. So here's the takeaways. Fundraising occurs regardless of the fundraising method used, regardless of whether you get a gift and occurs wherever the prospective donor receives your solicitation. And that means that you need to register if where they received a solicitation is a regulating state and so online fundraising may meet nationwide solicitation, right. And that charitable solicitation registration is a good thing. It boosts donor trust and confidence and giving and so please let your donors know, if you are registered to fundraise in the state that you are registered to fundraise there, okay. And then make sure you appropriately staff and appropriately budget, the resources and the time that staff needs to take care of this very complex process. Okay. And if you are not staff to take care of that, realize that outsourcing your state charitable registration, renewals is an option. Okay, that can be cost effective. And can let you return your focus to Misha Bhatt is that email address where you can reach us and schedule a time to talk you can get a free pathway that unique to your organization and estimate of cost if you're interested. Now, let's take your questions. I see we have quite a few questions that came up over the time.

58:18  
Yeah. Yeah. What we'll try to do is, is maybe answer a few of these. And then folks, I'm going to also drop the connected fundraising community sign up as well, if we want to continue the conversation, or other conversations. Sharon, let's try to hammer out a few of these for time. Everything that you talked about this is an earlier one that we got. But is this how does this impact 501 C fives or C sixes like?

58:49  
So we're talking about 501 C three C three. So these rules and regulations, there may be rules and regulations that a different type of licensing rules that apply to others, but we're talking about public charities that are soliciting. That's what

59:05  
I thought somebody did ask about Kentucky. Now we did link to the map in the chat. Angel. So that's probably a good starting point to understand what's up to date, because that's what labyrinth focuses on is making sure they're up to date on that. So yeah, anything that you know of a Kentucky off the top of your head that may

59:27  
Yeah, if you if you go to the labyrinth, there's direct links to Kentucky that that can provide that information. Oh, I see. There's a question about annual audit requirements. And that's important for folks to understand. Yeah, let's get that one. You know, most states when you complete your registration or your rolling new will there want your IRS Form 990 And if you are large enough nonprofit if your gross annual revenue is above a certain threshold and that varies from state to state, you will need to also submit I've compiled are audited financial documents and the audit threshold where you need to get audited documents to submit with your registration depends wildly from state to state and you need to keep an eye on what your gross revenue is, and plan ahead so that you should you need to engage an auditor in time to make sure you have that audit in hand when the registration renewal is due.

1:00:24  
And that that does connect to an interesting question from Kylie in terms of is it based off of what's on like not just the fundraising line item, but it's the entire line item on the 990. So for instance, their Habitat for Humanity affiliate, they're getting homeowner mortgage payments, for instance, that counts, right?

1:00:46  
Yeah, so it depends on the state, some states count gross annual revenue. And that's what they use to determine the audit threshold. Other states, its total annual contributions that determine the audit threshold. Most states its gross annual revenue, right from your 990. So whatever that line on your 990 is, that's what triggers the audit and the state in most states.

1:01:09  
So if somebody fits, somebody asked, we have online fundraising activities didn't realize we need to do register. If we're registering in the first time, but we've already solicited are they in trouble? Basically,

1:01:22  
this is why we suggest you go proactively to state and say, oh, gosh, we're so sorry, we didn't realize we needed to be registered or interested in getting registered. As part of that application process, you're usually asked how long you've been soliciting in the state, you will provide the state with that information. And then you will negotiate with the state how many past years of registration, you need to get caught up on to be appropriately registered in the state. But our experience, we have not seen nonprofits get fined or penalized if they go proactively to the state and tell them what happened and ask to register and get caught up on past registrations that they neglected to file.

1:02:04  
And there's there's kind of a two parter question that Kurt, Kurt asked he has two different questions that I want to touch on. First, how does one approach the state auditor? Regulators? I think you did cover that pretty pretty extensively in the talk, but and also folks, the follow up email, there's going to be a whole guide that Labrinth has put together that they're offering for folks. So you'll see that in the follow up email, we made sure to include that. So just a nice resource for you. So okay, here's the here's the real one, though. Here's the real talk, Sharon, how likely is it that a small nonprofit is going to be audited?

1:02:40  
By state regulators? Yeah. Yeah. You know that, that really depends. I ran a small foundation that was audited by the IRS, the week before our 10th anniversary celebration, and I was pretty surprised to hear about it. We were sort of selected at random. The state regulators really you? It depends on who they hear from, right? You never,

1:03:10  
you never know that. There's no real rhyme or reason to it.

1:03:15  
And I will tell you most of the time, and I mentioned this earlier, you solicit somebody in the state, that person looks online for your name to see if you're legit. They don't find it. They call the state the state's like, Well, why is this person fundraising here, and that's how they find out that you're fundraising in this state. The states also have volunteers who collect all the email solicitations and mail solicitations they receive and forward them on to the state, the citizen volunteers provide that information to the state and the state review. So those also to see who is soliciting in this state without being appropriately registered. So in case you get caught, that's how you get caught.

1:03:54  
Let's go you get caught. So what we'll do two more questions real quick one, because I actually don't know this one. What about donations from overseas? Who's paying attention to that?

1:04:06  
Yeah, so the most countries have the same rules and regulations, the US does. And that is you need to register with the country and sometimes with the candidates with the province before you begin soliciting donors there. Right. Yeah. And that's the the rules and regulations. So

1:04:28  
Canadians are very tight about this, and in particular, to the to the extent that some of our clients have actually established an outright Canadian based organization branch to make it easier to manage. I've seen that so Okay, final final question because we're a little bit over time. If a donation is received by mail, so we talked about online giving, but I have a feeling similar answer here but if a donation is received by mail or given in person from out of state Due to my organization, is there any difference?

1:05:05  
So, solicitation is fundraising by any method and the regulated activity is soliciting. So, however you're soliciting out of state, whether it's by traditional means by sending a letter or calling that person, right, or whether it's by an online method you are still soliciting within. That's why Google

1:05:27  
Google advertising going all the way back to wills question that counts.

1:05:32  
That's right. And same thing was use of third party platform. So a lot of people say, Oh, I'm participating in a giving day and our community foundation is accepting the donations, and then issuing us the check. Well, are you promoting that given day? Are you letting everybody know all your donors know to give dirt that giving day if you're the one soliciting, right, if you're the one asking for donations, and suggesting folks donate to you through the Giving Day, then guess what? You need to be registered to fundraise. And if that given day is national, or is online, where donors all over the country can do it great, you're gonna get donations from folks in a whole bunch of states. And that's a good thing. But you will need to become registered there, right.

1:06:20  
This is why we do this, because it's, it's the the, the logistics that sometimes people need need a little primer on. So Sharon, really, really thankful for your time today, folks, we always have great content like this, on our website coming up, you can see what we have coming up later this month. Where are our donors. So in terms of where you might be soliciting these people, we actually have something that connects to that with our friends at big duck and then really excited for a session next month, with the folks from the Institute for Sustainable philanthropy, talking about how to love your donors, even more so great content like this, Sharon, we're going to be getting this all put together, we're going to put the transcript up, we're going to put the slides up in an email folks is going to go out tomorrow with that resource that you can download, as well. Sharon, any final words for the crowd today?

1:07:18  
Now please feel free to reach out to me if you have any questions and you know, continue the conversation. I'm always happy to talk to our nonprofit friends, especially especially the neon folks.

1:07:29  
Yep. Yep. And yes, this is, I saw that last question that came in, it can seem overwhelming. Hopefully. This is why we work with folks like labyrinth to make it easy to make it easy. So definitely utilize these resources. So you're at least up to date. Get your board on board with this type of thing too. So they're not surprised. Thanks, folks. Thanks for coming out. We'll see you then at the next one. And have a lovely rest of your week. Thanks, Sharon. Talk to you soon. Yeah,

1:08:00  
thanks, everyone.

Transcribed by https://otter.ai