Is Your Organization Fundraising Legally?

Nonprofits need a “license to solicit funds” in many states. Soliciting is very broadly defined. Basically, if the organization is communicating with anyone directly (mail, email, peer-to-peer campaign, social media, etc.) and there is any kind of opportunity to donate, you need to be licensed in the state where the person receiving the communication lives. Each state has different requirements, exemptions, and renewal processes, so it is important to look at the regulations individually by state. To make matters even more complicated, different departments manage this in different states. In Michigan and Indiana, this is managed through the State Attorney General’s office. In Florida, it’s the Department of Agriculture and Consumer Services.

This is not meant to overwhelm, but to inform! Below are a few steps you can take if you are unsure of what to do next:

1. Make sure you have a license to solicit in the state your nonprofit is registered. There are some nonprofits that are exempt, so don’t panic if you aren’t licensed (for instance, in Michigan, exempt organizations include churches, some schools, and certain veterans’ organizations). Do your research on qualifications and requirements for an exemption, as you may still need to file paperwork in that state.

2. If you only solicit in a couple other states beyond your home state, google “license to solicit donations in ” and research what the next steps are in those states.

3. If you solicit more broadly or have active social media fundraising where it is difficult to determine geographic reach, it might be worth engaging a partner to help! Start by consulting with your organization’s legal counsel if you have it. We have worked with the firm Copilevitz, Lam & Raney, PC, who are professionals in this space. Another great resource is Harbor Compliance. They have provided key information on Fundraising Registration Solutions as well as a Fundraising Compliance Guide.

4. If you solicit donations in a state and you aren’t licensed, you may be contacted by the state’s licensing body at some point. Our experience has always been that states are very flexible in working with you to get things rectified and are not typically punitive right off the bat.

5. Being compliant and transparent builds trust with donors – so take this seriously and commit the time to making sure you are on track!