| Jul 21, 2016 | TaxTips
Issue
Charitable solicitation registration requirements with states are a large area of noncompliance for Christian colleges, seminaries, and universities. Is your institution in compliance with regard to “state charitable registrations?
Situation
Saltwater Christian College (SCC) is a private college that is exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). We had a conversation with their CFO about the growth of the school and how their Development Team has been active – receiving charitable contributions from 44 of the 50 states this year. We ask about whether SCC has registered with all of the required states in accordance with each state’s charitable solicitation laws for charitable organizations.
After a pause, he says, “Umm. I don’t know anything about that.”
We tell him that this is a difficult area to manage as each state (and Washington D.C.) all have separate, distinct, and intricate charitable registration laws. It is also an area where the states are getting more and more active in enforcement, meaning they might disallow fundraising in their state and/or impose penalties. There is little uniformity among the states, however, there have been past and ongoing efforts toward uniformity.
So, what does “solicit” mean? The definition varies from state to state. The National Association of Attorneys General (NAAG) has developed a model charitable solicitation law that can give us an idea. In that document, NAAG defines “solicit” to mean any request, oral or written, and either direct or indirect, for anything of value; any announcement over the press or any written advertisement; or, the sale of, or offer to sell, something in return for a charitable contribution.
The good news is that you might not have to deal with all 51 jurisdictions. 12 states do not have charitable registration laws. In addition, 32 states offer potential exemptions for educational institutions (this may be affected by your accreditation) – but you may have to “notify” these states with a letter or specified form. Thus, generally, if you do not hire a professional fundraiser, Christian colleges will only have to deal with seven states annually.
We tell him, “we can help you navigate all of this.”