The University of Georgia Foundation State Solicitation Registration Compliance :: System Access, Security, and Compliance :: UGA Foundation

 


State Solicitation Registration Compliance

POLICY: 6.4
Effective Date: 04/08/2014
Last Updated: 04/08/2014
Policy Owner: Derek Clark

Many states have taken steps to protect the public from fraudulent fundraising solicitations, and today most states have legislation to regulate charitable solicitations by tax-exempt organizations.  Many state statutes have been expanded and/or tightened.  Associations and other nonprofit organizations, particularly Section 501(c)(3) organizations, such as the University of Georgia Foundation, that make legitimate solicitations for charitable contributions must be aware of these laws and recent enforcement activities.

 

Each state has its own definition of what constitutes a solicitation.  For simplicity sake, UGAF will use the most defined and conservative definitions which are found in Pennsylvania law:

 

"Solicitation" - Any direct or indirect request for a contribution and the representation that such contribution will be used in whole or in part for a charitable purpose, including, but not limited to, any of the following:

  1. Any verbal request that is made in person, by telephone, radio or television or other advertising or communication media.
  2. Any written or otherwise recorded or published request that is mailed, sent, delivered, circulated, distributed, posted in public places or advertised or communicated by press, telegraph, television or any other media.
  3. Any sale of, offer or attempt to sell any advertisement, advertising space, sponsorship, book, card, chance, coupon, device, food, magazine, merchandise, newspaper, subscription, ticket or other service or tangible good, thing or item of value.
  4. Any announcement requesting the public to attend an appeal, assemblage, athletic or competitive event, carnival, circus, concert, contest, dance, entertainment, exhibition, exposition, game, lecture, meal, party, show, social gathering or other performance or event of any kind.

Thirty-nine states and the District of Columbia require charities to register before soliciting their residents.  Registration typically involves paying a fee and providing general information (e.g. name, address, corporate status, purpose, proposed registration activities, tax status, information about officers and directors, etc.).  Many states also impose reporting and disclosure requirements such as filing an annual report or other financial information annually with their state regulatory agency.

States may impose additional requirements on an organization.  The UGAF Compliance Officer should be made aware of any proposed contract with a Professional Fundraising Consultant, Professional Solicitor, or Commercial Co-Venturer before bids are submitted through the UGA Procurement Office.  Definitions and expectations for each group are below:

  • Professional Fundraising Counsel (or Consultant) - Plans, manages, advises, consults, or prepares material for solicitation
    • Does not solicit
    • Not paid based on percentage of amount raised
    • Does not have custody or control of funds
    • Generally "invisible" to the donor
    • Must register and/or file contracts in 26 states and the District of Columbia, if applicable
    • State-mandated content requirements
    • May not contract to work with respect to solicitations in a state if not registered or if charity is not registered
  • Professional Solicitor -
    • Direct contact with donor by phone, e-mail, or face-to-face
    • Typically telephone callers or high-dollar donor cultivators
    • Fundraising consultants who do not qualify
    • Must register in 45 states and the District of Columbia, if applicable
    • State mandated content requirements
    • Required disclosures to donors
    • May not contract to solicit in a state if not registered or if charity is not registered
  • Commercial Co-Venturer -
    • "Cause-related marketing"
    • Sells a product or service and advertises that purchase will benefit a named charity
    • 12 states require registration and/or reporting
    • Must have written contract (license) clearly specifying terms, benefit to charity, and reporting and payment requirements.

Many states also require that professional fundraising consultants and solicitors register before they are permitted to conduct their services.  Often states require paid solicitors to register or post bond with the state, whereas they often only impose registration requirements on fundraising advisers.  In addition, some states require certain contractual provisions in all paid solicitors' contracts with charities, and mandate that paid solicitors provide the states with copies of their contracts.