Nonprofit 411: Elections: How Holding a Candidate Forum Can Advance Your Advocacy Goals

Nonprofit 411 (2)

by Stefanie Coxe, Nexus Werx LLC

The legislative session wrapped up in most states by July 31st and many nonprofits will find their legislative hopes dashed. Despite co-sponsors and votes in favor, sometimes the issue isn’t lawmakers’ support, it’s the urgency of their support.

Getting commitments from candidates to not only support, but champion, your organization’s goals is much easier when they are running for office and have something to lose than when they’re safely in office. The easiest way to secure this commitment is to hold, either alone or with other groups, a candidate forum.

Holding a candidate forum helps your association, nonprofit, or union:

  • Increase credibility (as long as you do it well and have good attendance)
  • Make your issues campaign issues
  • Get candidates on the record supporting your issue so you can circle back when it comes time to ask them to co-sponsor or vote your way

Despite laws banning nonprofits from engaging in certain political activities, there are certain things you’re able to do. (To receive a cheat sheet about what activity is allowed, click here.)*

You can hold an issues forum or a candidates’ forum without crossing any lines. The trick is to make sure you never endorse or give the appearance of favoring one candidate over another.

If your organization has ever held a conference or other choreographed event, you’ve already got the right skill set to make sure the forum is a success. In addition to common-sense event planning, here’s how to do it right:

  • Get the most bang for your buck: Secure partners, such as other organizations who care about your issues and/or the local newspaper. Send out a media advisory about the event and a follow-up press release about how it went. Have a hashtag for the event and quote and tag candidates as-it-happens.
  • Make sure you invite all the candidates: (Otherwise you risk your c3 status.) Work with them on scheduling a date. Don’t just schedule it when it works well for you.
  • Involve your members: Ask the best public speakers amongst your supporters to ask pre-selected questions. Have them briefly tell the candidates why the issue is important to them (story-telling). Ask your members to tweet out thanks to the candidates for coming and supporting XYZ issues.
  • Keep it professional: Get a well-respected moderator like a reporter to ask the questions. Solicit questions from your members in advance but sort through them and pick the best. Send the candidates information on your nonprofit and your goals ahead of time. If you’re feeling particularly generous, send them the questions ahead of time, too. This way they can adequately prepare. Chances are they won’t come if they don’t already support you, so making it easier for them helps with your goal of relationship-building and rising higher on their priority list.
  • Stay classy: Make sure both you and your supporters have an even, friendly tone in asking questions. The object isn’t for one candidate to “win” over the other; it’s for your nonprofit to win, to increase credibility. Send the candidates hand-written thank you notes afterwards. Tag them in social media thanking them for participating and for any commitments they make at the forum to your issues. Ask your members to thank them via email or social media as well.

When the election is over and legislative and budgetary priorities are being considered in December and January, visit the elected official and (gently) remind them of their commitment. If they saw your organization as one that helped them reach voters and get press, they’ll be much more likely to put more “oomph” behind their advocacy for your priorities.

*Disclaimer: This information is educational only and should not be construed as legal advice.

Stefanie Coxe is the founder & principal of Nexus Werx LLC, a political training company offering the Learn to Lobby line of online and in-person training products including Effective Activism 101, Lobbying 101, and a Community Monitoring Program for membership-based organizations. Sign up for her e-newsletter to get tips on training and mobilizing members and activists.

Nonprofit 411: When “#MeToo” Becomes “Now What?” Nonprofits Have Lots of Options

Nonprofit 411 (1)by Loraine Della Porta and Amy Rebecca Gay, The Mediation Group

The #MeToo movement has increased the sexual harassment and discrimination complaints in the workplace.  Employees are demanding that individuals and organizations be held accountable through formal investigations and lawsuits.  How will your nonprofit respond?  What are your options? How can you protect your organization from further harm and liability?

First, respond swiftly to the complaint. Second examine your organizational culture and climate to see what factors contributed to the complaint.

Respond to the Complaint

Making an allegation takes courage, so take it seriously.  Thank the employee and tell them you will investigate the matter swiftly and thoroughly.  Promptly notify your Board of Directors.  They may provide support and advice and they don’t like to be surprised with bad news.  Notify your insurance carrier and legal counsel and ask how to limit your organization’s liability.

Conduct the Investigation

Investigate all complaints promptly, even if they appear minor or meritless. Complainants, respondents and witnesses must feel comfortable speaking freely so ensure investigators are impartial, properly trained and experienced.

Internal or external investigator? Your HR staff and in-house counsel understand the unique work environment, have “inside” knowledge of the people and circumstances, and can often respond quickly.

External investigators offer three key benefits:

  • Impartiality & independence – they have no stake in the outcome or preconceived impressions.
  • Credibility and integrity – they demonstrate the allegations are taken seriously and the organization is willing to face the consequences.
  • Experience – a quality outcome is necessary to withstand judicial scrutiny should the matter be litigated.

To learn more about conducting a workplace investigation, attend our Free Wednesday Webinar on September 5 from 10:00-11:00 am hosted by the Massachusetts Nonprofit Network.

Other Steps

Protect the safety and well-being of the complainant, respondent and witnesses. First, if the allegation is severe, consider placing the alleged wrongdoer on paid leave pending the investigation’s outcome.  Why paid? Presumed innocence is a cornerstone of our justice system. Without evidence, s/he should not be financially harmed.  Second, consider alternative work assignments so the complainant is neither working with nor supervised by the alleged harasser.  Consult with the complainant beforehand so the complainant does not feel punished for making a complaint. Third, be sensitive to the emotional needs of the complainant and grant paid time-off during the process.  Finally, ensure everyone understands that retaliation will not be tolerated.

After the investigation, determine whether the conduct violated the organization’s policies and if so, what to do. Although not all inappropriate workplace conduct meets legal definitions of discrimination and/or harassment, it might still violate the organization’s policies.

Afterward, Look Deeper

Ask what organizational structures and processes contributed to the incident. Typical issues include:

  • Unclear or outdated policies regarding prohibited workplace conduct
  • No redress mechanism for complaints
  • No shared understanding of workplace norms and behaviors
  • Inadequate performance management to address bad behavior

Even with tight resources, a deeper look increases your chances of preventing future claims. Simply being curious can clarify a lot. If after you’ve talked to all the people involved about how management and the organization created circumstances that led to the complaint and you have more questions, consider conducting an organizational climate assessment to get objective data and recommendations for changes.  Typical interventions we see for our clients include mediation, training, and performance management improvements.


With the right process and leadership, a sexual harassment or discrimination claim can spark important organizational changes that improve the workplace for all employees.

Nonprofit 411: Capitalizing on Now – Even More Effective Free Advertising Tool From Google

by Gail Snow Moraski, Results Communications and Researchdownload

I considered titling this piece, “The Good, The Bad, and The Ugly of Recent Google Nonprofit Ad Grant Changes,” but ultimately, I believe the revisions will cause nonprofit Grant recipients to achieve better ad campaign results. So, really, it’s all good.

If you’re not familiar with the Grant Program, whether you’re responsible for creating awareness or causing service use among populations you serve – or for growing donations or volunteers – you may be missing out on a free, extremely-effective means of accomplishing these objectives. Incredibly, Google awards nonprofit organizations world-wide, who meet its eligibility requirements, with $120,000 in FREE annual Google Adwords “search” advertising. And, the advertising Grant is indefinite and simply requires recipients to complete an annual survey.

Based on my own and other marketing experts’ experiences, Grants ARE being regularly awarded to eligible nonprofits who follow the slightly complex application procedures – Grants aren’t unicorns or pipe dreams! You can learn more about minimum eligibility requirements at

The type of advertising awarded is “text” vs. “image.”  Ads appear at the top or bottom of Google search engine results pages when an individual enters terms relevant to a nonprofit’s services and mission in the search engine. In the case below, ads are being presented to searchers entering terms such as “help coping with sudden illness.”


While the $ amount associated with the annual advertising budget awarded remains the same, Google made a significant policy change to make 2018 Grants more valuable. With Google AdWords, advertisers bid against each other to have their text ads shown for terms they believe their audiences will be searching on, known as “keywords.” Grant recipients used to be restricted by how much they could bid to have their ads shown for desirable keywords, which often meant that for-profit or nonprofit organizations with deeper financial pockets had their ads shown far more frequently than Grant recipients’. The great news is that the cap has been removed related to how much a nonprofit can bid, using their free advertising $ pool.


While Google has made it easier for nonprofits to have their ads shown more often to appropriate “searchers”, to take advantage of this opportunity, Grant recipients now must:

  • Achieve a minimum of a 5% click-thru rate on their ads, i.e., at least 5% of the individuals to whom a Grant recipient presents ads must click on the ad to land on the recipient’s website.
  • Use more advanced AdWords features and results tracking, such as “site links” (links that appear below ad copy that reference and point to unique Grant recipient website pages) and conversion tracking that tallies when desired outcomes, such as clicking on a certain link within a page, occurs.
  • Complete additional Grant application steps, such as registering with TechSoup.

Awardees must have a staff member or engage a marketing consultant who:

  • knows the “ins and outs” of Google AdWords and how to employ and optimize advanced features and tracking
  • can both interpret the Grant application process and has the capacity to deal with some of the hiccups that will likely occur

As alluded to in my intro, despite recent Grant changes, I believe using expert staff or consultant time to apply for and maintain a Grant will still render a very positive ROI. Given that ad click-thru costs often range from $0.30 – $5.00, a $120,000 budget goes a long way toward creating awareness or causing other desired outcomes such as service use, and event ticket sales. Thus, ongoing, annual financial benefits should far outweigh the costs associated with obtaining and effectively employing a Grant.

Nonprofit 411: Supporting or Opposing Ballot Questions: Beware Campaign Finance Rules

My Post-2by By M. Patrick Moore and Brad Bedingfield, Hemenway & Barnes LLP

Increasingly in Massachusetts, policy issues are being put directly to voters on the ballot, rather than being resolved by their representatives on Beacon Hill.  In 2018, voters may be asked to address transgender rights, tax rates, minimum wage, paid family and medical leave, and even hospital staffing.

Nearly all of the Commonwealth’s nonprofits are affected by these issues, and many have well-developed viewpoints on them. So, what role may nonprofits play in this active arena?

Stages of a Ballot Initiative

Any ten residents may propose a ballot initiative, subject to its certification by the Attorney General as suitable for the ballot. Then, proponents of an initiative must gather signatures, totaling 3% of  those who voted in the last gubernatorial election. At that point, the Legislature may intervene and pass the initiative or something like it. If the Legislature does not act, proponents must obtain a smaller number of additional signatures. Then, the initiative will be placed on the ballot in the next statewide election. From time to time, opponents of the initiative will bring a legal challenge to its suitability for the ballot; typically such challenges are resolved in the months before the election.

Federal Tax Law

Federal tax law generally treats activity pertaining to ballot initiatives as lobbying, considering the voting public are the legislators — at least once the measure is circulated for signatures. While 501(c)(4) organizations can participate in an unlimited amount of lobbying, 501(c)(3)’s (other than private foundations, which are prohibited from lobbying) must limit themselves to an “insubstantial” amount (or, by election, to certain dollar amounts permitted under the tax code). Nonprofits should be careful to ensure that support for a particular ballot initiative is not disguised support for or against a candidate for public office, something that 501(c)(4) organizations can do to some extent but that 501(c)(3) charities cannot do at all. Within these relatively broad constraints, federal tax law allows direct or indirect participation by nonprofits in ballot initiatives.

State Campaign Finance Law

Federal tax law is only part of the picture, though, as state ballot initiatives implicate state law on campaign finance. Under that law, known as G.L. c. 55, support for or opposition to a ballot initiative may be considered political activity, which may trigger the need to create a political committee, with detailed recordkeeping and disclosure requirements.

This is an area in which grey predominates; the few black and white rules are as follows. First, a nonprofit entity may not raise money to support or oppose a ballot initiative. If it raises money for that purpose, it must form a separate political committee. Second, a nonprofit entity should tread carefully in spending any amount of money to support or oppose a ballot initiative. As interpreted by the state’s campaign finance regulator — the Office of Campaign and Political Finance, or “OCPF”) — a nonprofit may spend up to the lesser of $15,000 or ten percent of its gross revenue to support or oppose a ballot initiative without forming a separate political committee. But that interpretation is currently being challenged before the Supreme Judicial Court and may change at any time. Third, a nonprofit entity must not be used to shield the identity of donors who wish to spend in support of or opposition to an initiative. OCPF’s largest enforcement actions in recent memory were against two nonprofit entities that attempted to do just that in 2016 (regarding the charter school and marijuana legalization issues that were on the ballot). One such entity was shut down; the other was the subject of a substantial fine.

Nonprofits need not shy away from ballot questions altogether. Involvement in legal challenges to ballot certification, for example, is likely fine under both federal tax law and Massachusetts campaign finance rules. As in other contexts, education and issue advocacy may be allowable if done consistently with the nonprofit’s typical activities and not as disguised support for a particular ballot question. However, nonprofits that desire to communicate directly on the wisdom or folly of a ballot initiative should tread quite carefully.

Nonprofit 411: Tax Reform and Its Impact on Nonprofit Giving

Hatch, MichelleBy Michelle Hatch, CPA, BlumShapiro

In December 2017, comprehensive tax reform was passed.  In working with nonprofit organizations, many are concerned with how the new tax laws will impact charitable donations in 2018 and beyond.  The concern comes from the fact that, in the past, charitable donations were deductible for individuals who itemized deductions on their individual tax returns.  While this deduction is still allowed and the limits have actually increased under the new tax law, the concern is that the standard deduction increased, therefore resulting in less people estimated to be able to itemize their deductions in 2018 and beyond.

While the tax changes impact everyone differently, as I have talked to people in the last couple months I have observed the following:

  • People donate to nonprofit organizations for different reasons, but for the most part, they donate because they believe in the mission of the organization and not just for the tax deduction.
  • Organizations don’t know which of their donors get a tax benefit (deduction) from their current donations, so hard to tell how they will be impacted going forward.
  • Some individuals will still be able to itemize and therefore get a tax deduction for their contributions. This is because of the following: to itemize as a married couple, you would need to have over $24,000 of deductions to benefit from itemizing, versus the standard deduction.  Under the new tax laws, your state tax deduction (which includes state income taxes, real estate taxes, excise taxes, etc.) is limited to $10,000.   The next deduction typically taken by individuals who itemize is mortgage interest.  To reach the $24,000 standard deduction, you would need to have $14,000 in mortgage interest.  This would equate to a $350,000 mortgage at 4%, which isn’t unheard of in Eastern Massachusetts.  In this case, an individual would benefit from itemizing and receive a deduction for the value of their charitable donations.  A majority of other itemized deductions under the old tax laws are no longer allowed.
  • Some individuals may bundle multiple years of donations into one year under the new tax law to get the benefit or set up a donor advised fund to continue to donate to their favorite charities each year.

While we can’t say for sure how the new tax law will impact each organization or each donor, I believe most individuals give to organizations from their heart and not based on their tax return.

Michelle Y. Hatch, CPA is a Tax Partner at BlumShapiro. She can be reached at BlumShapiro is the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with over 450 professionals and staff, offers a diversity of services which includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services such as succession and estate planning, business technology services, employee benefit plan audits and litigation support and valuation. The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.

Nonprofit 411- Taking Your Financial Temperature: Three Indicators to Track

By Debbie Nguyen, Impact Catalysts

DNHeadshotHow is your financial health these days? If you are a nonprofit leader, you probably think about this at four o’clock in the morning. If you are a board member or funder of a nonprofit, you may struggle to sift through an array of financial reports to get to an answer.

At Impact Catalysts, we begin every client engagement with a scan of documents and interviews with staff and leadership to establish our foundational understanding of the organization, its strengths, and challenges. Although we are not auditors, we do place a heavy emphasis on reviewing financial documents because a strong financial foundation is essential for nonprofit organizations to do their work effectively. We begin by looking at the following indicators.

  • Net Income, also called net profit or the bottom line:
    • Definition: Net income provides the first indicator of the financial health of the organization. Net income is calculated by subtracting an organization’s total expenses from its total revenue.
    • Benchmark: Nonprofit organizations often aim to bring in just enough revenue to cover their expenses, but healthier nonprofit organizations aim to have a positive net income to build their cash reserves. As with all financial indicators, it’s the historical trend that matters more than any fixed moment in time, like the end of a fiscal year. We consider both the historical annual net income and the past year’s monthly net income results. The monthly results give us a clear sense of the financial ebbs and flows and how the organization manages them.
  • Cash Reserve, also called operating reserve or cash on hand:
    • Definition: The cash reserve is the organization’s emergency funding, used to cover unexpected expenses, such as building and equipment repairs; loss of a revenue stream; or investment in an innovation or some other opportunity.
    • Benchmark: Although different organizations have different cash reserve needs, we believe healthy organizations have enough cash reserve to cover at least three months of their operating budget—more if the organization depends primarily on private sources of revenue, such as philanthropy. Groups with long-term government contracts can work closer to three months and often make use of lines of credit to manage short-term cash flow.
  • Revenue Sources:
    • Definition: We also stress test the organization’s revenue streams. We look at an organization’s reliance on a single revenue source, which, in our minds, is distinct from simply looking at the mix of revenue categories. We understand that for some nonprofit organizations, their missions and models will predispose them to specific funding markets, such as a strong dependence on government contracts. Rather than look at the revenue mix, we seek to understand whether a single grant, individual donor, foundation, or contract contributes a significant portion of the budget.
    • Benchmark: Unfortunately, there is no hard rule about what portion of the budget might represent a risky concentration of revenue. In our work, we highlight any single source representing over 20 percent of revenue to begin the conversation about risks and alternative revenue sources.

It is easy to get lost in the data and struggle to get a clear answer to that financial health question. Zeroing in on a handful of indicators and tracking them over time is the key to understanding your organization’s financial position and whether it is advancing your mission.

Nonprofit 411: Nonprofits, 990’s, and Audits: Be Proactive and Prevent Late Filings

By Jeremy Cork, Manager of Tax Services, JitasaHeadshot JSC

Each year, thousands of nonprofits are required to file a Form 990 with the IRS.  The filing deadline for tax years ending in December is May 15 every year.  Several tasks come with managing this deadline each year: reconciling accounts, year-end adjustments, and closing the year.  Once you have closed your books for the year, you are ready to have your 990 prepared, right?


One of the most important tasks for managing the IRS filing deadline, and often overlooked, is the consideration of a Financial Audit or Review.  Does your organization need an audit? Does your state have audit requirements? Do you have any grants that require a review?  These are questions that all organizations need to address in October, before their year ends–not in January or February.

Regardless of whether an organization keeps its bookkeeping in-house or outsources to a professional bookkeeping service, the discussion needs to happen before the end of the year.  If not, you risk filing your 990 late and paying penalties to the IRS.

Be proactive!

Save yourself stress, time, and money by following these simple tips for a smooth audit-to-tax transition:

  • Start internal discussion for audit/review in October (or 2-3 months before year-end)
    • If you don’t need one, great! Carry on with business as usual, and address next October
    • If you need one, great! You just saved yourself months of delays
  • Reach out to 5 auditors for RFP’s
    • Review RFP’s and select auditor
    • Get on-site/fieldwork scheduled
  • Perform internal year-end book review prior to receiving audit prep list
    • Reconcile all accounts
    • Review payroll, insurance, inventory, etc.
  • Receive audit prep list and collect and gather all necessary documentation
    • Save in separate folder and itemize documents per the prep list.
  • During audit, be prepared to dedicate time to auditor questions and requests
    • Address as soon as possible; post-pone current day-to-day tasks to prevent delays
  • Receive final audited financials and make audit adjustments
    • Books should be tied-out to audit report
  • Ready for 990 tax prep
    • Send final audited financials, final trial balance, and AJE’s to your 990 tax-preparer.

It’s important to understand that audit requirements are usually established at the state-level, NOT the IRS.  The state of incorporation, or any state that you receive significant funding, may require an audit or review when gross receipts meet or exceed a specified threshold – be aware of your state requirements.  If you receive federal grants, those may also have audit requirements; review your grant documentation or reach out to your agency contact to confirm.

Once you go through an audit or review for one year, assume you’ll need to do it next year, and start the process again next October.

Be proactive.  If you don’t need an audit, great.  If you need an audit, but aren’t proactive, you may not find out that you need an audit until your tax preparer says, “Hey, your gross receipts exceed the threshold, you need an audit.” By this point, most audit firms have their schedules filled-up through mid-summer, you may not get your audit scheduled until August or September.  You’ll need to file an extension and risk filing your 990 late, then be faced with IRS penalties. Be proactive!

About Jitasa
Jitasa is a Certified B Corp and a signatory to the United Nations Global Compact that partners with nonprofits and NGOs to make the world a better place. The company is the largest U.S. accounting and bookkeeping solutions provider dedicated to the social sector and represents more than 600 nonprofits that help millions of people and thousands of causes worldwide. for more information.


Nonprofit 411: Preparing for Employment Policy Changes

By Paul Holtzman & Allison Belanger, Krokidas & Bluestein

holtzman-paul-hrbelanger-allison-hrThis year, changes to statutes addressing gender pay equity and pregnant workers will require most Massachusetts organizations to update at least some of their policies and practices. It is crucial for HR and management teams to ensure all policies and procedures are fully established and clearly communicated to employees to prevent legal hurdles and potential reputation risks.

Pregnant Workers Fairness

The Federal Pregnancy Discrimination Act prevents employers from discriminating against women for being pregnant and the Americans with Disabilities Act prohibits discrimination based on temporary, pregnancy-related conditions, but neither mandate reasonable workplace accommodations for pregnant women. This year, a new Massachusetts law will go into effect to classify individuals experiencing “pregnancy or a condition related to pregnancy, including, but not limited to, lactation, or the need to express breast milk for a nursing child” as members of a protected class. Beginning on April 1, 2018, Massachusetts employers with six or more employees will be prohibited from:

  • Discriminating against, failing to hire, or firing an employee or prospective employee based on pregnancy or a pregnancy-related condition;
  • Denying employees and prospective employees reasonable accommodations for pregnancy and pregnancy-related conditions (or taking adverse action against someone who requests or uses accommodations), such as more frequent or longer unpaid breaks, paid or unpaid time off to recover from childbirth, modified equipment or seating, job restructuring, or assistance with manual labor;
  • Requiring documentation for certain accommodations, such as more frequent restroom, food or water breaks and private non-bathroom space for expressing breast milk;
  • Forcing an employee to take a leave of absence if a reasonable accommodation would allow the employee to continue to perform the essential functions of her job; and
  • Failing to engage in a timely, good faith, and interactive process with an employee or prospective employee who requests an accommodation that would allow her to perform the essential functions of her position.

Before April 1, employers must provide written notice to all employees about their right to be free from discrimination under the amended anti-discrimination statute, which must be given to new employees when or before they begin employment.  Employers should revise existing materials to include this new protected class.

Pay Equity

In 2016, Massachusetts passed one of the strongest state laws in the nation focused on cultivating equal pay and combating discrimination based on gender. An Act to Establish Pay Equity will take effect on July 1, 2018 and prohibit Massachusetts employers from:

  • Discriminating against employees on the basis of gender in the payment of wages for work that is substantially similar and requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions, unless the variation is based on a legitimate factor, like a bona fide seniority or merit system;
  • Inquiring about an applicant’s wage or salary history before extending an employment offer that contains negotiated compensation terms, to cause employers to pay women based on competitive market rates; and
  • Prohibiting employees from discussing wages or benefits with coworkers.

Therefore, before July 1, employers must update employment applications and interview protocols to strike inquiries regarding salary and wage history and update employee policies to include notice of the rights set forth under the new law. Employers should consider engaging outside counsel for an evaluation of pay practices at least once every three years moving forward.

Nonprofit 411: Online Fundraising: Navigating the Legal Requirements

Online Fundraising: Navigating the Legal Requirements

by Ellen Lubell, Esq., Tennant Lubell LLC

For nonprofits seeking Ellento broaden their donor base, online fundraising is a must. While the technology grows ever more sophisticated, the legal requirements are difficult to navigate. Here’s a guide to help plot your course.

Easy Sailing

Under traditional rules, Massachusetts charities must register for a Certificate of Solicitation with the Massachusetts Attorney General’s Office prior to soliciting donations and renew annually. Charities that use professional solicitors or fundraising counsel must file copies of their contracts for these services. Charities that wish to solicit in any of the 41 other states with registration requirements must comply with those states’ registration requirements, as well.

Turbulence Begins

These rules were easy to follow until online fundraising emerged as a particularly effective tactic. “Donate Here” buttons appeared on websites. Donations could flow from anywhere. Geographic boundaries became meaningless. Existing laws did not take into consideration these new channels of fundraising. Was online fundraising considered solicitation in every state, some states, or not solicitation at all?

In 2001, the National Association of State Charity Officials issued The Charleston Principles in an effort to clarify the rules. These principles were somewhat helpful, but were not law and were not adopted by many states. A “Multistate Registration and Filing Portal” was also initiated by regulators to address the daunting challenge of complying with multiple state registrations, but the portal has yet to be made widely available.

All Hands on Deck

The situation became even more complex when fundraisers saw an opportunity in “crowdfunding” via the Internet. Billions are now raised each year through an ever-growing number of platforms such as AmazonSmile, Charitybuzz, and Network for Good. Some are just payment processing services. Some control the funds that are raised. Some take donations on behalf of many charities simultaneously. Others offer an array of services and tools for online fundraising.

The Way Forward

How do you get through the fog to stay legally compliant? Here are the basic principles:

  1. If you use a platform such as Network for Good that is a “donor-advised fund” (a philanthropic fund that distributes funds to charities), you don’t need to register. It’s prudent to review the legal “terms of use” of each online platform to determine which are (and which are not) donor-advised funds.
  2. If you use an online platform that is not a donor-advised fund, you need to register. Compliance requirements vary from state to state, but generally, you should:
    • Register in your state of domicile and file all required contracts with professional solicitors and/or fundraising counsel.
    • Register in any other states:
      • In which you follow up fundraising with direct communications via email or other means;
      • In which your campaign is targeting people or businesses; and/or
      • From which you receive donations on a repeated and “ongoing” basis or a “substantial” basis (as defined by the state).
  3. Register if you send email solicitations, just as you would a letter or fax.
  4. Registration is unnecessary if you use your website or social media simply to inform the public about your organization.
  5. Periodically check fundraising platforms and social media to make sure your organization’s name is not being used for unauthorized fundraising.

Whatever method you use to fundraise, these rules still apply:

  1. Make sure donors understand that you may use donations as you see fit (donors may not direct how donations are used).
  2. If you promise to use donations for a particular purpose, follow through.
  3. Provide prompt written acknowledgment to any donor who makes a contribution of $250 or more via any method.
  4. If you give something to donors in return for donations (e.g. attendance at dinners or tote bags), your written acknowledgement should state the fair market value of the services or goods received and indicate that only the portion of the donation that exceeds this value is tax deductible.

There may be still guesswork in compliance. You may need to balance certainty with practicality. The inevitable evolution of fundraising technologies, combined with an absence or patchwork of state statues, may yet leave you adrift. Compliance is critical, however, to maintain tax exemption and the trust of donors. If you have questions, seek advice from an attorney.


Ellen Lubell provides guidance to nonprofits on regulatory compliance, risk management, governance, fundraising, and best practices for preserving tax-exempt status.

Nonprofit 411: Beyond Fundraising: Board Members as Ambassadors

By Lisa A. Cohen, CEO, Capital Motion

LACHeadshot (1)Nonprofit boards of directors have two key areas of responsibility: governance and fundraising. Governance has a set of responsibilities that are required and must be completed by each board. Fundraising could be more generally described as overseen by “tradition.” For a whole host of reasons, the topic of fundraising by boards is often both fraught and not openly discussed, making it the proverbial elephant in the room.

While the activities of governance are fairly well defined, there are as many ways to carry them out as there are boards, standing committees, leadership teams, and organizations. Some approaches work quite well, while others are opportunities for improvement. There are many ways to create structure around improving governance models for organizations. Board and board-leadership communication are also often areas of opportunity for improvement, and many organizations actively work on nurturing these processes.

On the other hand, both board members and nonprofit leaders can experience frustration about the challenges of the fundraising component of the board members’ role. There seems also to be less clarity about how to proceed positively. The traditional approach most boards have taken is to give board members a personal “give” (donation) goal, and often to establish a “get” (donation they are asked to obtain from others) goal as well. There also exists an expectation of going above and beyond those goals to obtain additional donations whenever possible.

This system works well when board members have the financial resources to give personally and the networks from whom to “get” support. This system also works well when the information and tools from their nonprofit are in place to support making the requests confidently, and when the board member feels comfortable discussing other people’s philanthropy that results in donations.  When some of these pieces are missing, challenges can arise.

Rather than positioning board members as just “fundraisers,” which may take them outside of their comfort zones, we recommend a positive and proactive approach that takes advantage of where they are in their own worlds.

By broadening part two of the board role beyond fundraising to ambassadorship, we accomplish several things. This language frames what is happening more appropriately to include telling the story of the nonprofit, which requires learning and deeply understanding the story and programs of the nonprofit. It also reframes the activity more broadly than just, say, selling event tickets, to include the idea of helping others identify where and how they would like their philanthropic dollars to go. This is how development professionals think about what they do. It also includes the idea of developing productive relationships that go beyond just dollars and that may also result in other kinds of fruitful partnerships for the organization: for example, gaining contacts that may support program delivery, its public policy work, or other elements of mission delivery.

The concept of ambassadorship broadens the role of board member beyond that of individual donor and fundraiser and opens the conversation to a more productive partnership at a leadership level. This, in turn, has the potential to encourage others in that ambassador’s circle to consider why this charity is so important to that ambassador. That is, after all, how philanthropic decisions are born and nourished.

Lisa A. Cohen is the CEO of Capital Motion, an advisory firm that works with mission-driven organizations and provides strategic planning and board development services; engagements develop, grow, and support organizational capacity for sustainable mission delivery over time.