5 Compliance Rules You Must Know Before Your Next Fundraising Event
Fundraising events can be a great way for you to engage, educate, and inspire your members and ultimately generate revenue for your association. Understanding compliance requirements will ensure that your event brings the success you seek, rather than an unpleasant surprise. Here are 6 rules to follow before your next fundraising event:
1. Register to fundraise where required
Communication is key to any successful event and determines where you must register to fundraise. Before you begin emailing, posting, and tweeting about your event, make sure you understand the basics of fundraising licensing. States define fundraising solicitation as asking for donations, regardless of the means. Solicitation takes place wherever the fundraising message is received, regardless of whether a donation is given in response to that solicitation. Those event emails, tweets, and posts could mean that your association is fundraising in all 50 states. If so, you may need to register to fundraise in many of them.
State law governs fundraising registration, reporting, exemption, and renewal. Currently, 41 states require nonprofits to register before they solicit donations from their residents. Annual renewals of those registrations, as well as regular reporting, is also typically required. 25 states mandate that nonprofits include specific disclosure language in all fundraising solicitations. As part of your event planning and budgeting process, determine where you must register. This clickable map of the requirements of each state includes specific details and instructions.
2. Confirm fundraising professionals are registered where required
Bringing in a fundraising professional to help with your event can be a great strategy, but requires specific registrations and reports in many states. While each state has its own definitions, a fundraising professional is generally an independent person or firm (rather than an employee or volunteer) who is paid to assist you with its fundraising. Fundraising professionals include both fundraising counsel and professional solicitors. In most states, both types of fundraising professionals are required to register, renew annually, and report regularly. If you have hired a fundraising professional to assist with events or campaigns in multiple states, they may need to register and report in multiple states.
Although registration and reporting are the responsibility of the fundraising professional, it’s wise to make sure that all of the people you hire are compliant. Hiring a professional fundraiser may bring extra state scrutiny to your association. You may be required to submit contracts to the state, as well as provide details about the relationship between your association and the fundraising professional. You can learn more about the requirements for each type of professional fundraisers and the organizations that work with them in this professional fundraiser guide.
3. Meet state fundraising disclosure requirements
In addition to fundraising registration requirements, 26 jurisdictions require nonprofits to include some form of disclosure statement when communicating with donors. This may include items such as:
- The full legal name of your nonprofit
- Address and contact information
- The charitable purpose for which funds are being solicited
- Your fundraising registration number
- Directions for contacting state authorities to obtain copies of your financial or registration information
Typically, disclosures must be included on any written solicitations, as well as donor receipts, reminders, and confirmations. These requirements may also apply to online solicitations such as social media posts and web pages. In-person, email, and telephone solicitations also require disclosures in some states, and there may be a different disclosure requirement for each type of solicitation.
Remember that solicitation occurs where the message is received, not where it originates. This means that you may be required to include disclosures from multiple states in your fundraising appeals and donor communications. With such varied requirements, be sure that each fundraising activity you engage in meets the guidelines of all appropriate states.
4. Obtain all needed state and local gaming licenses
Bingo, auctions, raffles, casino nights, and other types of gaming can be a fun way to raise funds and build a sense of community at your event. If you are planning to engage in these activities, you need to investigate before signing with your event venue. Be sure to first check with the municipality where your desired venue is located to confirm that the charitable gaming of interest is allowed there.
If so, determine if you must also obtain a specific state gaming license, as well as a local gaming permit. Nonprofits that use games for fundraising purposes are typically required to apply for a license or permit from the state. Most states allow nonprofits to conduct a variety of gaming events in conjunction with an event as long as the organization holds the proper license. Depending on the activities you are planning, you may need to obtain more than one license. Be sure to comply with state restrictions on who is permitted to conduct and attend gaming activities. Finally, be sure to file all required post-event reports with licensing authorities. Consult a charitable gaming compliance guide to ensure that your event gaming meets all legal requirements.
5. Plan ahead to ensure success and compliance!
The time required to register in a given state can vary from a few days to a few months. Be sure to account for the state’s processing time when calculating your event compliance timeline. Carefully track deadlines for each state’s registration applications and all required reports. Include reminders to follow up on each submitted application. Then complete and submit all registration applications far enough in advance to confirm that you will be in total compliance before the big day!
Make sure that your event is memorable for all the right reasons. Compliance minimizes risk, protects the reputation of your association, and sets your event up for success. With careful attention to detail, comprehensive event software, and detailed compliance guides, you can be confident that you meet all state regulatory requirements triggered by your event. To make sure that your association understands and complies with all registration obligations, consider hiring a specialist who is knowledgeable about nonprofit fundraising compliance to manage these details for you. That way, you’ll have more time to focus on your mission and members.
Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review the information you provide to us for legal accuracy or sufficiency.
Sharon Cody, J.D. is the Nonprofit Partnership Manager at Harbor Compliance, a leading provider of compliance solutions. Sharon is passionate about educating nonprofits on the role of compliance as both a best practice and an industry differentiator. Her more than 30 years of experience as an attorney, charitable fundraiser, foundation executive, and nonprofit board member give her unique insight on the use of nonprofit compliance as a strategic tool to enhance an organization’s reputation and increase its revenue. Sharon can be reached at firstname.lastname@example.org or 1-717-431-9162.