Organizations that receive online donations from individuals residing in states other than their state of domicile may be required to register for charitable solicitation in those other states. While charitable solicitation laws vary from state to state, the following guidelines generally apply:
• A nonprofit that specifically targets persons within another state for donations through its website must register to solicit for charitable donations with that state. For example, if a nonprofit advertises through direct mail, television or radio ads in another state and directs potential donors to its website, the nonprofit must register for charitable solicitation with that state. In addition, if the website includes an explicit or implicit reference to soliciting donations from that state, the nonprofit must register for charitable solicitation with that state.
• If the nonprofit’s website is interactive in that it accepts donations electronically (through a “Donate Now” button, for example), and the organization receives donations from individuals in another state on a repeated or ongoing basis or a substantial basis through its website, registration within that state is probably required.
• If the website does not allow online donations, but specifically invites further offline activity to complete a donation, and the organization receives donations from individuals in another state on a repeated or ongoing basis or a substantial basis, registration within that state is probably required.
• Registration with another state is not required if the website makes clear that the fundraising focus is limited to a particular state (and the organization is registered in that state), even if the organization receives limited donations from other states.
• An organization cannot directly solicit a person for donations by e-mail, telephone or direct mail or by directing that person to its website in any state in which it is not registered (except for those states that do not have charitable solicitation requirements – see below). For example, if an organization receives a donation from a person in another state through its website and now has the person’s geographic location through the billing address provided, this organization may not be able to directly solicit additional contributions from that person if it is not registered in that state and such state requires registration.
Some states do not require any charitable registration for solicitation of donations. These states are: Hawaii, Idaho, Indiana, Iowa, Montana, Nebraska, Nevada, Texas, South Dakota, Vermont, and Wyoming. If an organization receives Internet donations from one of these states, there is no need to register in that state.
Davis & Hodgdon Associates CPAs has been assisting nonprofits, individuals and businesses with tax and accounting services in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].