First, failure to comply can embarrass you. New Jersey governor Chris Christie’s “Hurricane Sandy New Jersey Relief Fund” is a generous, well-intentioned endeavor. The website says it’s a “charitable non-profit organization” but the fund is not registered with the New Jersey Division of Consumer Affairs, Charity Registration Section.
I have neither the time nor inclination to check registration status for specific charities, unless they’re my registration clients.
In this case, blogger Blue Jersey had the time and was so inclined. I think that’s embarrassing for the fund. Performer Mary J. Blige was embarrassed earlier this year when her charity was investigated by the New York attorney general.
Do you think only high profile charities are at risk? There was a small Connecticut police charity exposed by a freedom of information act complaint. The head of the organization was fined $22,500.
Second, your board members are at risk because they’re fiduciaries to your nonprofit. I explain the risk and share an example in this video from the Direct Marketing Association Nonprofit Federation.
Finally, the IRS wants to know if you’re complying. Form 990 (here), part VI, question 17 asks for the states in which you’re required to file the 990. That’s a part of registration in every state.
To help you get into compliance I wrote “Charity Registration: State-by-State Guidelines for Compliance.”
Come into the flock of compliant charities and register in each state where you solicit. It matters.