Nonprofit 411: To Build Your Fundraising Capacity, Start With a Plan

by Betsy Gonzalez, Harbor Compliance

A national study of fundraising challenges found Gonzalez head shotthat 23 percent of nonprofits, and 31 percent of nonprofits with operating budgets under $1 million, had no fundraising plan in place. Yet only 7 percent of high-performing nonprofits were without a plan.[1]

Creating a comprehensive road map for your fundraising efforts clearly pays off. And since 41 states require nonprofits to register before fundraising, and 25 states require special disclosure statements, it’s important to include state fundraising requirements in your plans. Unfortunately, the requirements are not always well understood. As Tim Delaney, president of the National Council of Nonprofits, recently noted, “Charitable solicitation laws vary widely from state to state and compliance can be confusing, costly, and time-consuming.”

The National Council of Nonprofits and Harbor Compliance created a Best Practices Partnership and published a white paper to help nonprofits understand charitable solicitation requirements. Mike Montali, CEO of Harbor Compliance, said, “The new guide and ongoing relationship with the Council of Nonprofits will make sure nonprofits nationwide have access to information that will help them advance their missions.” The white paper can be found here.

As a quick overview, let’s cover a few of the highlights.

The first step is to determine where you’re soliciting and what the requirements are in those states.

Soliciting = Asking for Donations

Soliciting means, simply, asking for donations, including traditional appeals such as mailings, fundraising events, phone solicitations, and advertising. But it also includes some activities you may not expect, such as personal requests by board members and grant applications. If you send a letter to a list of donors in ten states, you are soliciting in those states, and you may be subject to their registration requirements. In some states, the requirements only kick in after a certain dollar threshold. In others, it only counts if you actually receive donations from residents there. It is best to assume that you’re fundraising wherever your messages are reaching, and research the requirements in all of those states.

Digital Fundraising

So what does that mean in the age of digital fundraising? “Something as simple as having a ‘donate now’ link on your nonprofit’s e-newsletters that go beyond your state’s borders may equate to ‘fundraising solicitation’ that triggers a registration obligation in some states,” Tim said. Basically, if you’re fundraising on social media, through email, or through your website, you may need to meet registration requirements in all states where they apply.

To build their fundraising programs to full capacity, many nonprofits simply register nationally. Others hold back, assuming that nationwide registration must involve a lot of time and expense. In fact, state fees are small, particularly compared to the potential upside of fundraising nationally, and a compliance partner can eliminate the administrative burden. The biggest mistake you can make is to assume that nationwide registration is out of reach. Consult an expert and get hard numbers before making a decision.

Access the Complete Guide

This is just a quick overview of state charitable solicitation requirements and how they might factor into a comprehensive fundraising plan. To help nonprofits understand the requirements and maintain good standing, the National Council of Nonprofits teamed up with Harbor Compliance to publish Charitable Solicitation Compliance: an Explanation of State Charitable Registration Requirements. The guide provides valuable information you can use to design a fundraising plan that will take your nonprofit to new levels of performance.

If you have questions about fundraising compliance, get in touch and we’ll be happy to answer them.

 

About the author

Betsy Gonzalez is a copywriter and editor for Harbor Compliance, a leading provider of compliance solutions for nonprofits and businesses at all phases of development. Since 2012, we have helped more than 10,000 organizations apply for, secure, and maintain licensing and registration across all industries including other considerations such as appointing a registered agent, obtaining a certificate of authority, annual reporting, and renewals.

[1] Underdeveloped: A National Study of Challenges Facing Nonprofit Fundraising, CompassPoint and the Evelyn and Walter Haas, Jr. Fund. https://www.compasspoint.org/underdeveloped