What is Charitable Solicitation Registration?

Charitable solicitation registration is a state’s way of regulating fundraising activities within its jurisdiction. Generally, a nonprofit organization must register for charitable solicitation in the states in which it plans on soliciting donations. It is important that these registrations are completed before any fundraising occurs within that state, though some jurisdictions allow for exemptions and registrations are not required until certain revenue thresholds are met. Fundraising activities can include requesting donations through Twitter, making personal asks, or hosting fundraising events. Although your organization may not specifically plan on soliciting donations from a particular state, seeking online donations may also require registering your nonprofit within certain states. If you have compliance questions about which states your nonprofit must register for charitable solicitation, contact Cheshire Law Group.

Charitable Solicitation Registration in Pennsylvania

Most nonprofit organizations planning to solicit donations within the Commonwealth of Pennsylvania must register with the Pennsylvania Department of State – Bureau of Charitable Organizations; however, there are some exemptions from registration for nonprofit organizations. Your organization may be exempt from charitable registration in Pennsylvania if your organization’s gross national contributions are less than $25,000 annually; and/or your organization falls under one of the following categories:

• Organizations of law enforcement, firefighters, or other public safety personnel
• Religious institutions
• Educational institutions
• Hospitals and hospital foundations
• Veteran’s organizations
• Library organizations
• Senior Citizen centers and nursing homes
• Parent-Teacher associations

You can find a complete and comprehensive list of exemptions on the Pennsylvania Department of State’s website under “Business & Charities Registration Information”. If you have any questions about whether or not your organization qualifies for exemption from registration, contact Cheshire Law Group.

If your organization is not exempt, your nonprofit organization should complete Pennsylvania form BCO-10, which can be found on the Pennsylvania Department of State’s website under Business & Charities Registration Forms. As part of your organization’s initial registration, you should include a copy of your organization’s IRS Form 990, financial statements for the previous fiscal year, IRS determination of exemption letter, organizational documents, and bylaws. This registration needs to be renewed annually. The renewal due date can be found on your certificate of registration, which your organization will receive once you have been approved for registration. We recommend having a tax professional or lawyer review before filing, especially if you are a first-time filer.

Charitable Registration in Other States

The forms and requirements for charitable registration differ from jurisdiction to jurisdiction. Some states do not require charitable solicitation registration, while others require extra forms and information in addition to the primary form. Most jurisdictions also require that organizations make written disclosures on solicitation materials.

Commercial Co-Ventures and Hiring Professionals to Assist with Fundraising and to Provide Fundraising Advice

Many jurisdictions also have special registration rules and contractual requirements for entering into commercial co-ventures (e.g., corporate sponsors that contribute a portion of their sales to your organization) and when working with paid professionals in connection with fundraising activities. Checking in with legal counsel before engaging professionals and before entering into these promotional fundraising ventures can help your organization (and your corporate donors) stay in compliance.

For any questions or additional information about registering your nonprofit organization for charitable solicitation, please contact Cheshire Law Group.   This article is intended to be a general resource only and is not intended to be, nor does it constitute, legal advice.

What emails should nonprofits watch out for?

The “Executive Director” sends an email to an employee in the finance, human resources, or payroll department and requests that the employee send W-2s or personal information, including SSNs, for all of the nonprofit’s employees. Except the email is not really from the Executive Director. It is from a criminal with a “spoofed” email account made to mimic the Executive Director’s. The email address will be very similar, but it may be off by a letter or it may add a number, or transpose letters, for example. Most people might miss it and may easily believe the email is from a trusted source. In the most egregious cases, the “Executive Director” sends a second email requesting that a wire transfer be made to a specified account.

The IRS reports that the spoofed email may contain these or similar messages:

• Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
• Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary).
• I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap.

What can nonprofits do to protect themselves?

The IRS urges all employers to alert their payroll, finance, and human resources staff and outside vendors to this new scam and suggests sending W-2 scam emails to phishing@irs.gov, with “W2 Scam” in the subject line. Do not open any links contained in these emails as the links lead to imitation (spoofed) sites, which may carry malware that can infect computers in order to gain additional information.

Proactive steps for nonprofits include:

1. Reviewing existing policies and procedures, as well as staff and vendor training, to ensure neither staff nor vendors send sensitive tax or personal information in response to unsolicited emails. Such a review and periodic training is within reach even for nonprofits with limited budgets.
2. Having policies in place requiring that employees and vendors limit the secured email transmission of sensitive tax or personal information only to known recipients.
3. Discussing with the IT department or IT vendor what steps can be taken to ensure that spoofed emails, especially those from publicly-identified threats, are caught by the nonprofit’s spam filter.
4. Discussing with your insurance broker the availability of insurance to cover the costs associated with an employee inadvertently responding to a spoofed email.

When was the last time your nonprofit reviewed its policies and procedures and insurance coverage? Does your nonprofit have policies and procedures relating to spoofed emails and other cyber threats?

We are here to help. Please call Cheshire Law Group at (267) 331-4157 to discuss a cost-effective review of your nonprofit’s policies and procedures.