'Direction' courtesy of Ramkarthikblogger on FlickrIn December I enjoyed the privilege of delivering a teleseminar on Charity Registration for NonProfit Direct. Thanks Marcia Bloomberg, founder, for hosting me!
I carried on for 45 minutes, then there were questions. You can listen to the audio and view the slides below.
Here’s what I covered:
— What state Charity Registration is
— Why you should comply
— Where you register
— What is a solicitation
— How do you register
— Plan for getting started
— Continuing Ed.
"Bright Optimism" courtesy of Theen Moy on Flickr.I can’t help it. I am optimistic at the beginning of each year. Join me. It feels great.
In January 2010–in the depths of recession–I thought the future was bright. I always think a new year holds great promise and cannot remember being disappointed.
In 2012, I’m genuinely excited to expand my keynote speaking to encourage more love so that we raise more money; broaden the reach of Tony Martignetti Nonprofit Radio through iTunes and at conferences; generate more Charity Registration clients, because the regulatory and compliance environments for charities will tighten as the boundaries between them and corporations blur; automate my Charity Registration work to make it so much easier and cheaper for our clients; perform more stand-up comedy than I did last year; and keep working toward my audacious dream of creating Bloomberg® for nonprofits.
What excites you for 2012? Please share your optimism.
"Registration desk sign" courtesy of NHS Confederation on Flickr.I do a lot of speaking and writing to demystify the morass of state Charity Registration laws, and my blog deserves more attention on the subject. Here are a few basics.
What is Charity Registration. These are the requirements in every state, and D.C., that you register with state authorities before you solicit donations in the state. You either register, qualify for an exemption, don’t solicit there or roll the dice and take your chances.
What is a solicitation. Oh how I wish there was a simple answer. It depends upon the state when you’re talking about email or a “donate now” button on your website. But in every state these are solicitations: U.S. Mail; hosting events; buying advertising space; or having individual meetings, where a donation is requested, any part of which will be used for a charitable purpose.
What about raffles. It’s a solicitation if any part of the donation will be used for charitable purposes and the donation was requested using the methods above.
How do exemptions work. These, too, vary from state to state. Some states, like Arizona and Florida, have paltry exemptions. California and North Carolina, on the other hand, have a decent list of exemptions. Religious organizations are commonly exempt, and many people erroneously believe such nonprofits get an automatic exemption from state registration. Education and healthcare are also commonly exempted, as are small charities that raise less than a threshold set from state to state. In some states you apply for exemption and must be approved. In others, you can walk away if you conclude you’re exempt.
How do you register. My common refrain: it depends on the state. Generally, you fill out a comprehensive form (or a series of forms), add a bunch of documents like tax determination letter; by-laws; articles of incorporation; financial statement; list of board members; IRS form 990; and fundraiser contracts. And, pay a fee.
What about renewals. In most states, you renew annually. In a few, including Hawaii, New Mexico and Oregon, registration lasts indefinitely. In Georgia, it’s every two years.
It’s the coolest, smartest, most efficient conference in nonprofit fundraising and management.
You’ll get inspired by the likes of Craig Newmark (you’ve heard of Craigslist and, his newest, CraigConnects?); Peter Diamandis (X Prize Foundation); Dave Levin (KIPP Foundation); and Abby Falik (Global Citizen Year) as they and a dozen other innovators move you and challenge you.
You don’t have to choose who to be inspired by. You sit in the theater at TriBeCa Performing Arts Center in New York City as the speakers come across the stage to share their twelve to eighteen minute stories and provoke your greatness.
We hear this language all the time in charity circles:
governance
accountability
transparency
board responsibilities
conflict of interest
whistleblower protection
executive compensation
document retention
… and other words and phrases in the nonprofit lexicon. What do they mean to the federal agency that reviews public charities when they apply for tax-exempt designation and again every year when most file an information return?
The most comprehensive (read “burdensome”) of the returns, form 990, asks lots of questions about whether policies are in place, but doesn’t (and shouldn’t) provide any detail as to what the expectations are around these arcane concepts.
If only we could agree on what the practices mean.
I found this gem on the IRS website, “Governance and Related Topics – 501(c)(3) Organizations,” that makes it pretty clear what the agency is looking for. (It’s from February 2008, but these definitions don’t change much.) The Internal Revenue Code does not require documentation or detailed policies in these areas.
But–big but–IRS believes, “A charity that has . . .a knowledgeable and committed governing body and management team, and sound management practices is more likely to operate effectively and consistent with tax law requirements.”(page 1)
That explains the Service’s opinion of the relationship between good governance and tax code compliance, and their interest in the former. So what do these things mean?
Good Governance. This is the broad category. It means having in place “policies relating to executive compensation, conflicts of interest, investments, fundraising, documenting governance decisions, document retention and destruction, and whistleblower claims.” (page 3)
Executive Compensation. You pay reasonable compensation for services rendered. Pay is determined by people knowledgeable about compensation practices and financially uninterested in the levels set. (page 3)
Conflicts of Interest. The Service “encourages a charity’s board of directors to adopt and regularly evaluate a written conflict of interest policy that requires directors and staff to act solely in the interests of the charity without regard for personal interests . . .” You set up the policy and monitor compliance. (page 4)
There is considerably more detail at the page references I’ve given you. Read the document and consult your legal counsel. Do not construe this post as legal advice. It isn’t.
Over the next few weeks I’ll take on additional governance topics from this informative IRS paper.
There are expert attorneys much more knowledgeable than me in the legal requirements for running your nonprofit. I suggest you pay attention to Carter Ellis and Gene Takagi. Gene and his colleague Emily Chan will be regular legal contributors to Tony Martignetti Nonprofit Radio starting in July. I’m sure we’ll talk a lot about governance.
