When my son turned 18, he informed us that he intended to purchase his first vehicle. Since he’d been borrowing our car for a few years, we readily agreed that this was a positive step toward his financial independence. We helped him read reviews and he ultimately purchased a truck that we felt was both safe and fuel-efficient. We thought, “Excellent! Case closed.”
Fast-forward six months to my son’s first experience with a snowstorm and a resulting fender-bender. When the police arrived on scene, they asked for his registration and insurance. Turns out, he didn’t have either!
Similarly, choosing not to register your nonprofit organization when you are, in fact, soliciting donations, is akin to driving your vehicle without registration and insurance. Wait, what?
Allow me to explain some information that is not always readily known – even by nonprofit executives!
There are 40 states, including Washington, D.C. that require nonprofit registration. In most states, a 501(c)3 must register before it begins fundraising and regardless of whether the organization receives funds (except for California).
Knowledge can be both a blessing and a curse. For my son, who in hindsight was clueless about state regulations requiring registration and insurance, his ignorance was bliss. But it hit him later – in his pocketbook. (Rest assured, we didn’t foot that bill!)
In the same way, there can be severe consequences for failing to register your charity for nonprofit registration if you are fundraising. After spending most of my career in compliance and regulatory roles, my advice is simple: don’t wait! In this case, ignorance is NOT bliss!
Your nonprofit could face severe ramifications for failing to register, including:
• Receiving a cease and desist order for your fundraising efforts
• Board and staff members may be required to pay the financial penalties associated with failing to register
• Retroactive fines and fees in certain states
As my son learned with his first vehicle purchase, it’s better to be knowledgeable and prepared! Ensure that your nonprofit does not have to deviate from its mission or waste valuable time and money. Registering now can save you both in the long run!
If I can be of assistance, don’t hesitate to contact Capstone Charity Resources!