Does a Nonprofit Need to Register in the State to Fundraise?

Non-profit organizations, also known as NGOs, are bodies that do not function with any government. They are usually run by individuals either on a national, international, or community level. These NGOs have their different specializations and areas of interest, but their goal is usually the same which is to promote humanitarian causes. 

In general, there are two main categories of NGOs: the advocacy NGOs and the operational NGOs. The advocacy group promotes or defends a cause; they also seek to change public policy. As for the operational NGOs, their focus is on the implementation and design of projects for development. 

A registered charity or NGO is one that has undergone the required charity registration in the state. This registration is required to enable the nonprofit organization to solicit funds and donations. 

It is at the level of state that this registration is carried out and completed. Every non-profit organization has a government office where they can belong to. It is this government office that they register with. What this means on a usual basis is that the organization will register with the state’s secretary or attorney general. 

However, note that the law differs among states, so you should confirm what your state requires. Most of the nonprofits that solicit funds need to register, but there may be a few that are exempted from this rule such as education groups, nonprofit hospitals, and religious organizations. 

When we say “soliciting”, we are not only referring to professional fundraisers and campaigns that request money directly. It also involves placing a “Donate” icon on your organization’s website. 

 

Is Registration Required In My State?

In principle, a charitable organization does not need to be registered to perform its development and welfare activities. However, the NGO may not be able to carry out some specific activities if not registered. 

There are some states where for an NGO to be recognized, it must be duly registered. The few states that do not concern themselves with NGO registrations are South Dakota, Vermont, Indiana, Iowa, Arizona, Wyoming, Montana, Delaware, and Nebraska. 

But even some of these states may have rules about receiving and soliciting donations. Hence, it is necessary that you check what your state policies are. 

Most states require the NGOs to supply donors with information about their organization, finances, leadership, mission, and several other things that are deemed necessary. This is to guide potential donors in making a decision. 

 

Here is the list of the states in the US that requires disclosure and solicitation registration:

Arkansas, Florida, Colorado, Georgia, Illinois, Maine, Michigan, Minnesota, Maryland, Minnesota, Nevada, New Jersey, New York, Texas, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Virginia, Wisconsin, West Virginia, Washington, and Mississippi. 

Meanwhile, the following states require only charitable registration:

Alabama, Alaska, Connecticut, California, Kansas, Hawaii, Kentucky, Louisiana, Massachusetts, Missouri, New Mexico, New Hampshire, North Dakota, Oklahoma, Tennessee, and Utah. 

 

What Do I Need to Register?

The requirements for registration will most likely be different among the various states. However, there are some basic components like filling an application form and sending it to the designated government office. Other documents that may be required include a description of your organization and a designated letter. 

This registration process needs to be completed before funds can be solicited publicly by whatever means. Also, you should know that most states have a process of renewal for solicitation registration. The timeframe for this renewal varies between states; for some, it is annually while others may take longer. 

 

Why Does Registration Matter?

 

Registered NGOs have a legal status that enables them to have office-level interactions. The members can represent the NGO, and they can also open a certified bank account or even sign contracts. Registered NGOs may also apply for grants and financial assistance from governmental, international, and national donors. 

Donors are more confident in donating to registered organizations than non-registered ones. To them, the registration is like an approval stamp from the state, guaranteeing that the donations will be used responsibly. When people donate, they want to be sure that their money is being used for a cause. The disclosure and registration give them this assurance. 

Also, a non-registered organization may incur penalties like fees, fines, non-tax exemptions, and even poor PR. During the registration process, your NGO is recognized by authorities that can render guidance and support, training opportunities, concessions, and technical assistance. 

Another reason why it is advisable to register your NGO is that registration distinguishes fake from real. This is a weak reason, however, because some fake NGOs can disguise themselves when going through the process. 

However, it does give you an edge above the others that are not registered. You should also consider having a disclosure policy where all your dealings are available to the public. After all, people are more inclined to give to a transparent organization than one that is not. 

 

 

Conclusion

In most states, it is mandated for all charitable organizations to register themselves. To overlook this may be costly. Thankfully, this registration process is quite simple and only involves less stress. As long as you have all the required documents, the entire process may only take a few weeks. Aside from the fact that registration is compulsory for your state, you will also benefit from this process as it increases the odds of getting donations and raising funds. At the end of the day, the hassle will be worth it. 

To end this article, we would like to remind you once again that each state has its own stipulated policy for registering NGOs. Do well to find out the requirement in whichever state you are in and follow through with them. You may also browse specifically for the state you intend to do your registration to find out more. 

If possible, get the contact of the government office where this process is done in your state to get direct information. However, note that sometimes, the person handling the phone may not give you all the necessary information, so you may want to just go there yourself. Once the registration process is complete, you are free to run your organization the way you deem fit. Remember that it is independent of the government, so they will not require feedback from you. The only time you may need to return to the government office is when you need to renew your registration after the stipulated period. The process of renewal is usually less stressful than the original registration process. 

 

We hope that with this article you have enough information to decide on whether or not to register your NGO.

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