The Nonprofit FAQ
| Does Fundraising on the Internet Require Registration in Every State? |
Some resources on this question:
Jenny Hansell, Assistant Director, HEAVEN, wrote to CYB-ACC on July 31, 1998, to ask: I'm new to this listserv, and am hoping for some help with an issue I'm researching for my nonprofit, which is called HEAVEN - Helping Educate, Activate, Volunteer & Empower via the Net. We are planning several online fundraising activities over the Internet, including:
I understand that in many states "professional fundraisers" must register. My questions are these:
Chip Watkins of Webster, Chamberlain & Bean in Washington, D.C., answered later that day: In response to your questions, 1. Charities that are raising funds are generally required to register in 36 states and DC. States are asserting jurisdiction over fundraising over the Internet, just as they do with respect to mail and telephone solicitations, because their jurisdiction is predicated on the location of the person who is being solicited. Some argue that internet fundraising is different, because the charity does not purposefully direct the solicitation into a state--instead the recipient calls up and locates the website (which may be hosted on a computer in another state). In the long run, I suspect that the regulators will win this fight, because the charity can certainly foresee that a recipient will be physically located in another state. I'm sure that several on this listserv will disagree with my analysis, and there are not yet any reported cases on the point. Several services and law firms offer to assist charities in fulfilling their registration requirements. 2. In my view, a charity that is raising funds for another charity, without compensation, and that is itself registered as a charity, need not also register as a professional solicitor. This is both because it is a charity and because it is acting without compensation. 3. See #2. To the best of my recollection, all states that require registration of charities or fundraisers treat sales of products in the same manner as a solicitation for a contribution. And Barnaby Zall of North Bethesda, MD, added further advice: As part of your research on state fundraiser/fundraising registration and regulation, you should get and read a copy of Bruce Hopkins book, The Law of Fundraising, John Wiley & Sons, 1991 (may be a later edition). He gives a description of each state's laws and general information about compliance. There are other publications on the same type of topic, but Hopkins is a good general introduction and reference manual. There are no really simple answers to your three questions. Your issues are complex, in part because they involve the Internet - which in theory has no location, but sometimes is considered to be subject to regulation everywhere. Some time ago we discussed on this list the nature of state and federal regulation of fundraising via the Internet, but I fear that discussion is dated now. Having said that, you can begin with some of these ideas:
The best bet is for you to get knowledgeable legal counsel, especially if you are planning to engage in non-"charitable" commerce. Warning: not every lawyer who pitches in to help her local nonprofit is qualified to handle tax-exemption and fundraising questions. There are a number of good nonprofit lawyers who haunt this group, and others can be found in the American Bar Association's Tax Section Committee on Exempt Organizations. Yes, they cost money, but so would answering lots of unnecessary state regulators' and IRS questions. Best to use some preventative counseling. The public policy issues raised by these questions have been discussed quite a bit. One view is contained in Putnam Barber's column that was published in the Chronicle of Philanthropy in November of 1997 and is available online at . Further commentary is obviously welcome. http://www.putnambarber.org/articles/chron9711.html. Posted August 1, 1998; additional resources added 7/25-26/01 and 1/28/03; minor corrections 4/19/05, 2/23/06 -- PB |