The Nonprofit FAQ

Does Fundraising on the Internet Require Registration in Every State?
Some resources on this question:

  • The National Association of State Charities Officials -- NASCO -- has a website at http://www.nasconet.org. Among other things, the site offers the text of the "Charleston Principles," a document developed by NASCO members to provide background and guidance for the policy issues involved in charitable solicitations registration for organizations with online presence.

    Slides 22 to 23 of http://www.mncn.org/info_principles.htm on the Minnesota Council of Foundations webiste offer an explanation and analysis of the the "Charleston Principles."

  • The Unified Registration System -- see
    http://www.multistatefiling.org -- provides a method for completing charitable solicitations registrations in multiple states. The webpage also provides a good deal of general information about the subject.

  • Lloyd Mayer of Caplan & Drysdale (http://www.caplindrysdale.com) noted July 25, 2001: "There are actually several companies that specialize in providing state registration services." At least one more such commercial organization performs registrations and deals with related questions on a state-by-state basis (the charge in July 2001 is $150 per state, plus applicable fees). See http://www.charitableregistry.com.

  • Since 2000, The National Center for Charitable Statistics at the Urban Institute has been working with NASCO and several states on an experiment with electronic processing of the information required for online registration and reporting. See http://nccs.urban.org/statistics/profiles.cfm





Jenny Hansell, Assistant Director, HEAVEN, wrote to CYB-ACC on July 31, 1998, to ask:

I'm new to this listserv, and am hoping for some help with an issue I'm researching for my nonprofit, which is called HEAVEN - Helping Educate, Activate, Volunteer & Empower via the Net.

We are planning several online fundraising activities over the Internet, including:

  • Fundraising for our own programs;
  • Fundraising for other nonprofits
  • Selling cause-related products online such as t-shirts, albums, etc. and
    splitting the proceeds with other nonprofits.


I understand that in many states "professional fundraisers" must register. My questions are these:
  1. If we don't employ "professional fundraisers" but undertake all fundraising as paid staff of a nonprofit, must we register?
  2. If we fundraise for other groups as a nonprofit ourselves, but don't take a percentage, must we register?
  3. If we are selling items and splitting the profits, must we register in all these states? What else must we do? I don't think this qualifies as a "charitable co-venture."


Chip Watkins of Webster, Chamberlain & Bean in Washington, D.C., answered later that day:

In response to your questions,

1. Charities that are raising funds are generally required to register in 36 states and DC. States are asserting jurisdiction over fundraising over the Internet, just as they do with respect to mail and telephone solicitations, because their jurisdiction is predicated on the location of the person who is being solicited. Some argue that internet fundraising is different, because the charity does not purposefully direct the solicitation into a state--instead the recipient calls up and locates the website (which may be hosted on a computer in another state). In the long run, I suspect that the regulators will win this fight, because the charity can certainly foresee that a recipient will be physically located in another state.

I'm sure that several on this listserv will disagree with my analysis, and there are not yet any reported cases on the point.

Several services and law firms offer to assist charities in fulfilling their registration requirements.

2. In my view, a charity that is raising funds for another charity, without compensation, and that is itself registered as a charity, need not also register as a professional solicitor. This is both because it is a charity and because it is acting without compensation.

3. See #2. To the best of my recollection, all states that require registration of charities or fundraisers treat sales of products in the same manner as a solicitation for a contribution.

And Barnaby Zall of North Bethesda, MD, added further advice:

As part of your research on state fundraiser/fundraising registration and regulation, you should get and read a copy of Bruce Hopkins book, The Law of Fundraising, John Wiley & Sons, 1991 (may be a later edition). He gives a description of each state's laws and general information about compliance. There are other publications on the same type of topic, but Hopkins is a good general introduction and reference manual.

There are no really simple answers to your three questions. Your issues are complex, in part because they involve the Internet - which in theory has no location, but sometimes is considered to be subject to regulation everywhere. Some time ago we discussed on this list the nature of state and federal regulation of fundraising via the Internet, but I fear that discussion is dated now.

Having said that, you can begin with some of these ideas:
  1. in most states, yes, particularly if you are in your fundraising for others mode.
  2. it depends on state laws. In those cases, it is likely that you will be governed (at least in part) by the laws of the state where your "client" group is located.
  3. Generally yes, if you otherwise qualify as raising funds rather than engaging in business (which raises lots of other issues, such as federal unrelated business income taxation).


The best bet is for you to get knowledgeable legal counsel, especially if you are planning to engage in non-"charitable" commerce. Warning: not every lawyer who pitches in to help her local nonprofit is qualified to handle tax-exemption and fundraising questions. There are a number of good nonprofit
lawyers who haunt this group, and others can be found in the American Bar Association's Tax Section Committee on Exempt Organizations. Yes, they cost money, but so would answering lots of unnecessary state regulators' and IRS questions. Best to use some preventative counseling.

The public policy issues raised by these questions have been discussed quite a bit. One view is contained in Putnam Barber's column that was published in the Chronicle of Philanthropy in November of 1997 and is available online at . Further commentary is obviously welcome. http://www.putnambarber.org/articles/chron9711.html.




Posted August 1, 1998; additional resources added 7/25-26/01 and 1/28/03; minor corrections 4/19/05, 2/23/06 -- PB