Fundraising Registration in 2024: What Changed Over the Last Year?

Keeping up-to-date with regulatory changes in charitable fundraising laws is a crucial responsibility for nonprofits and fundraising professionals. Every new year witnesses a changing legal landscape that may influence how fundraising activities are permitted and regulated. This last year was no exception. In this article, we will be summarizing some of the developments and changes Affinity Fundraising Registration has tracked.

If you have questions about charitable solicitation registration requirements, or want help with the complex registration process, we encourage you to contact Affinity’s team of dedicated professionals helping nonprofits navigate the complex web of state-specific fundraising compliance regulations. There’s an array of services to choose from, all involving some level of charitable solicitation registration, from initial through renewal registration, and ongoing compliance support.

State-Specific Updates

The following are some of the recent shifts in state-specific charitable solicitation registration requirements, including new online registration platforms and alterations in financial thresholds.

California

The state of California has begun accepting credit card payments for online renewals of charitable solicitation registrations, improving upon the prior system which only allowed electronic funds transfers. However, no significant alterations to the registration process itself have been made.

There have been ongoing challenges stemming from the implementation of California Assembly Bill 488 as it applies to third-party fundraising platforms like Facebook and Blackbaud. The state is requiring these platforms to ensure the nonprofits using their services are compliant with the state’s regulations. This policy started last year and is still currently in effect. It’s advisable to adopt a proactive approach when dealing with California’s registration process, given the state is presently experiencing a backlog of six to eight weeks. Plan to initiate the online renewal process immediately after your 990 form is complete. If you fall into delinquency, the process to restore compliance becomes more difficult, requiring hardcopy state forms be signed and mailed. For more information check out this article on Fundraising on Facebook: A Warning to Nonprofits, from Affinity Fundraising Registration.

Connecticut

In June, Public Act 23-98 was passed and became effective on July 1, 2023. This act increased the revenue threshold to $1 million, above which a registered charity is required to undergo a formal audit. It also permitted smaller organizations, those with revenues between $500,000 and $1 million, to submit a financial review conducted by a Certified Public Accountant (CPA). 

Mississippi

Effective July 2023, the Mississippi Code Section 79-11-507 was revised to increase the audit threshold from $500,000 to $750,000. There has been no mention to date of any changes to the CPA review threshold. 

New Jersey

The state of New Jersey also increased the audit threshold from $500,000 to $1 million. This went into effect in 2022 but began impacting most charities in 2023.

Florida

For organizations in Florida whose anniversary-based renewal falls early in their fiscal year, the state allows a 180-day extension to be submitted. However, the extension only lasts until their 990 form and audit (if applicable) are ready. This change has led to some confusion about when to register initially. For more information check out this article on How To Register or Renew Your Nonprofit in Florida, from Affinity Fundraising Registration.

Illinois

Effective on January 21st, 2024, Public Act 103-121 has altered the audit requirement threshold for charitable organizations in Illinois. Previously, organizations that received over $300,000 in contributions from nationwide sources were required to undergo a GAAP-based audit. This threshold has now been raised to $500,000. Furthermore, a new requirement has been introduced; if the contributions exceed $300,000 and the fundraising is solely managed by staff and volunteers, a CPA review must be conducted.

Nevada

Changes to Nevada’s charitable solicitation registration rules include the revision of two state forms on 8/1/2023, replacing the previous revision from 12/15/2022. The first form is for organizations that need to maintain their qualification to conduct business in tandem with their charity registration and report their annual list of officers. The second form applies to organizations that don’t need to report officers but still require a charity registration filing.

North Carolina

In January 2023, North Carolina’s regulators began to reject filings with signatures older than 30 days, creating a significant hurdle for those trying to secure signatures from authorized officers. 

To complicate things further, if there was an error or duplicate filing, the state would issue a refund. However, this has commonly caused a delay in processing times, typically taking three to four months. 

There have also been persistent problems with filings marked as “submitted and unconfirmed”. If you have a filing that has remained unprocessed for two to three months, it is advised to contact the state to inquire why it hasn’t been processed yet. 

North Carolina continues to offer an automatic 60-day extension for charitable solicitation registration, but thankfully has made changes to its extension schedule. Rather than permitting nonprofits to request an additional 30-day extension, the state now offers an extra four-month extension. This aligns North Carolina more closely with the IRS extended deadline schedule, which is followed by many states, saving nonprofits two months of late fees. This new extension schedule applies to any extensions filed on or after October 1st, 2023.

Oklahoma

The state of Oklahoma passed Senate Bill 722 mandating that organizations soliciting for at least a year must provide the state’s Attorney General’s office with a written notice 45 days or more prior to any dissolution, termination, merger, or consolidation. This rule came into effect on November 21st, 2023.

Virginia

Over a year ago, the state of Virginia released a new filing form (rev 11/21), and in January 2023, they started rejecting filings that were submitted using the prior form (rev 4/18). In October 2023, yet another version of the form was released (rev 10/23). To date the state has yet to start rejecting the 2021 form, but based on past experience they surely will soon. Organizations are required to go to the Virginia website to get the new form. If you use any former version of the form you risk having your filing rejected.

Additional Changes to Charitable Solicitation Registration Rules

Online Filing Platforms

As of September 1, 2023, Massachusetts initiated a compulsory online filing platform. However, there is currently a four to six month backlog of previous paper filings. If any deficiencies exist from a prior filing cycle, supplemental paperwork must be submitted. Note that the online system is only applicable to future-due filings and new registrations.

In Michigan, an online filing platform that was developed and launched in 2022 was deactivated in January 2023. The state intends to cease the use of the Unified Registration Statement by year-end, only permitting nonprofits to file using the state form going forward. Fortunately, the state form is straightforward and doesn’t require a signature, making it easy to email to the appropriate state department. By using the state form for renewals, nonprofits can obtain automatic extensions, making it in their best interest to adapt to this new process. 

Minnesota had planned to initiate a state filing platform in summer 2023, but the launch was postponed. The state is currently working on developing the platform, but a new deployment date hasn’t been announced yet.

Effective January 1, 2023, West Virginia made online filing mandatory and began to refuse hard copy filings. In general, the process is going smoothly, however, in the event of back filing or incomplete filings, it is crucial to have all necessary paperwork prepared for submission to the state. The state has been quick to complete its reviews (usually only taking four to five days).

Paper Forms

When states shift to online filing, it can make tracking their reporting requirements more challenging. In contrast, states that use paper forms make it easier to monitor any changes. Nevada, Oregon, and Virginia updated their forms, and there is a clear and easy-to-follow process. However, when states using online filing systems make a change, these changes are not always immediately apparent, and therefore the filing process can be more difficult to navigate. 

Federal Updates

States are not the only ones making changes. The IRS has made modifications to forms 900 and 990-PF, including reporting compensation. If payments are issued to third-party management companies, these must be expressed as compensation and not displayed as a one-time lump sum. 

In connection with cryptocurrency donations, additional guidance was published by the IRS on January 10. 2023. If you make a donation to a charity in crypto exceeding $5,000, you are required to have a qualified appraisal. The IRS doesn’t regard cryptocurrency as cash, but rather as property, which lacks the characteristic of a security. No charitable deductions will be applicable without an authoritative appraisal. 

Federal updates also offer potential future legislative changes. US Senate Bill 566 is a prime example. Although it hasn’t yet passed the Senate, the bill proposes a new tax deduction. If approved, individual taxpayers who don’t ordinarily itemize their deductions could claim a tax deduction from 2023-24 for charitable contributions. The limit would be one-third of the normalized standard deduction. 

NASCO Updates

Beyond government organizations, independent bodies such as the National Association of State Charity Officials (NASCO) contribute to the conversation surrounding legislation changes. NASCO’s annual meeting emphasized the challenges of acquiring CPAs and alternative charitable business structures. There is no update on the multi-state registration filing process.

Enforcement

Several states have implemented significant updates to their charitable solicitation registration enforcement processes. In California, they have begun to issue notices to cease soliciting, targeting organizations that solicit donations without valid registration. Similarly, Michigan has started issuing more notices of intended action to deny registration for long-past-due, non-compliant organizations, with accompanying penalty fees amounting to $4,000, and three years of close observation. Pennsylvania also started issuing more notices of intent along with penalty fees, specifically targeting entities with a chronic record of non-compliance. These updates reflect an increasing effort from these states towards stricter enforcement of rules governing charitable solicitations after a period of “relaxed” enforcement during the pandemic.

Backlogs

The registration process presents an ongoing challenge for several state bodies due to the backlog created by overwhelming paperwork and procedures. Although this process has been simplified in many states, some are still struggling to keep pace, resulting in considerable delays. Many can process filings in a timely manner, usually spanning between two days to two weeks. However, it’s not the case for all, as states like California, Illinois, Oregon, and New Jersey are averaging a more lengthy period of two to six months. Despite the advances and ease provided by digital processing, the nature of this human-driven process exacerbates the issue, leading to these unavoidable backlogs.

Changes Within Your Nonprofit

Being attentive to changes within your nonprofit is not solely limited to transformations at the state and federal levels. Keep in mind that your data is dynamic, and states need to be promptly informed about alterations. Examples of such modifications could include the introduction of new board members, exemption criteria revisions, funding deficiencies, or mergers.

Assistance for Managing Filings

Managing a handful of state filings internally is challenging, but depending on your resources, it can be manageable and cost-effective. However, if you have limited resources or are dealing with 10 or more filings, it’s prudent to seek out adequate support, rather than solely relying on in-house management.

When doing your own research, be wary of the information you find online. There is a wealth of resources available, but it’s essential to ensure you’re accessing reliably accurate and up-to-date information to avoid any legal issues or missteps. Always opt for reputable sources known for their expertise in nonprofit and charity laws, or consider working with a trusted professional in this field. Affinity Fundraising Registration has a lot of helpful online resources. You can also check out the NOLO guide which has state-by-state details.

If you’re looking for comprehensive, customized assistance with state charitable solicitation registration filings, Affinity can help. We offer three levels of service to meet the needs of charities of all types and sizes. We also offer a unique product – our Seal of Compliance – which is a verification graphic that nonprofits can display on their website to showcase their registered status.

For more information about how Affinity Fundraising Registration can help you gain and maintain compliance, please contact us to request a free estimate.

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The information provided on this page is intended purely for educational purposes and should not be construed as legal advice. Every effort has been made to ensure the accuracy and completeness of the information up until the published date. However, laws related to fundraising registration are subject to change, and variations may occur between states. Furthermore, the interpretation and enforcement of these laws can often be complex, and the specifics of your situation can impact how the law applies.

Affinity Fundraising Registration is not a law firm and, as such, cannot provide legal opinions. For all specific legal questions or concerns, we strongly recommend consulting with a qualified attorney who is experienced in nonprofit law and compliance. Hiring a legal professional ensures that your organization is fully aware of its obligations under the law and can act accordingly to remain compliant. 

By using this site, you acknowledge that Affinity Fundraising Registration holds no liability for any consequences, legal or otherwise, resulting from actions taken based on the information provided on this page.