Professional Fundraising Organizations • Capstone Charity Resources

Professional Fundraising organizations

Professional Fundraising (PFR) organizations are required to register once they are under contract, and before commencing work, with a non-profit to provide fundraising support. These registrations are required in almost every state, including states that do not require the charity to register for Charitable Solicitation.

Professional Fundraisers are divided into two key categories when it comes to registration:

Professional Fundraising Counsel
Professional Fundraiser

While the definitions vary state-by-state, there are some commonalities:

Professional Fundraising Counsel most frequently refers to organizations that assist nonprofits with planning, organizing and executing fundraising campaigns or strategies. Any time a charity contracts with an organization for advice on any aspect of fundraising, state registration is almost always required. Some key points to consider:

The PFR Counsel never accepts or takes possession of funds. It provides advice, strategies, messaging, etc. to the Charity.
The contract between the PFR Counsel and the non-profit must contain very specific language in some cases, based on the Charitable Solicitation Registration requirements in each state.
Registrations requirements are based on where the charity (or others on their behalf) are fundraising, NOT where the PFR is soliciting clients. This is a common misperception.
Both the non-profit and the PFR Counsel must disclose the names of the contracted partners on their respective Registrations. As a result, if a charity discloses on their Charitable Solicitation Registration documents they are under contract with “Professional Fundraising, Inc.”, the state will immediately verify that Professional Fundraising, Inc. is registered in their state. If the PFR is not registered, stern letters outlining the significant fines and penalties which will be levied unless the PFR immediately registers.
The reverse is also true – a PFR is required to list all contracts with non-profits. The state will then verify the Charitable Solicitation Registration status of the charity. If the charity is not currently registered, letters outlining the respective fines and penalties, up to and including cease and desist demands, are sent.
While charities may be exempt in some states from the Charitable Solicitation Registration requirements, rarely are PFR Counsel firms exempt.

In addition to the above points, a Professional Fundraiser who is under contract to make calls directly to potential donors, and may or may not directly receive the funds, has additional requirements:

The PFR must post bonds in varying amounts, depending on state requirements.
Additional documentation relative to the financial results of any fundraising campaign are required to be submitted.
Documentation about each person employed by the PFR firm who makes calls must be provided. This information must be kept current at all times.
Typically, the information requested is much more rigorous than for the PFR Counsel.
Fines and fees may be higher than those charge to PFR Counsel.

Fundraising compliance continues to undergo scrutiny with the growing use of online fundraising tools, social media solicitations, email solicitation, etc. The best approach to compliance is to have a discussion with a professional who can guide you through your specific situation.