Nonprofit compliance tips for avoiding fundraising penalties
In our culture that celebrates autonomy and independence, we may be inclined to throw caution to the wind when we come face-to-face with an imposed rule and wonder, “Do I really have to?” In the case of fundraising compliance, we should answer with a resounding, “Yes!”
Managing public funds – whether for a community of individuals or a mix of public and private grantors – is a privilege. Securing and maintaining financial gifts requires relationships built on credibility and integrity. When any funder invests, they want to know your mission and vision. They also want to know that you are building your vision on a solid foundation. Many factors contribute to the success of your fundraising program. A key element of that success is compliance with state fundraising requirements.
In most states, nonprofit organizations are required to register prior to soliciting. Solicitation is what triggers registration requirements, not necessarily receiving funds. Whether you are mailing letters, sending emails, or applying for grant funding, it is your responsibility to understand fundraising compliance requirements before making the solicitation.
What are the risks of noncompliance?
- State agencies have embraced their expanded role enforcing charity regulations and will pursue noncompliant organizations.
- Soliciting without registering may result in costly penalties that pull dollars away from your mission and may even result in losing the right to solicit at all.
- Your organization’s reputation and trust built with funders may be irreparably compromised.
Embrace the rewards of compliance!
- Fundraise broadly and boldly, without concern for borders.
- Build a community of funders who are confident in your ability to manage their investment in your mission.
- Enjoy an increased rate of return on your solicitations and leave no dollar behind.
Forty-one states require charitable solicitation registration. There is an excellent chance that your organization is incorporated in one of those states so educate yourself on fundraising compliance. It’s not enough to just do good work. Know the rules, follow them, and achieve better fundraising results.
(This guest post was contributed by Ify Aduba, a Nonprofit Compliance Specialist for Harbor Compliance, a leading provider of compliance solutions for organizations of all types and sizes.)
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