Can you register for fundraising on your own? Absolutely. Is it a good idea? That depends. In this Q&A, two fundraising compliance experts weigh in. Ify Aduba, nonprofit compliance specialist, and Brock Klinger, nonprofit account manager, discuss what it takes to manage charitable solicitation registration internally, when it makes sense to turn the work over to a professional, and how nonprofits should evaluate their options when making that decision.
Can nonprofits handle charitable solicitation registration themselves?
Brock: It can be done, yes. The forms can be complex, and the tasks can be time-consuming, but anyone willing to read the directions thoroughly can do it. The true measure of proficiency, however, is understanding how to approach the issue of registrations holistically with a plan for long-term compliance in mind.
Ify: The question isn’t so much whether a nonprofit can get it done internally, but whether it is best to handle it that way. I would always outsource charitable registration because it’s not mission. Nonprofit staff, including executive directors, should be focused on mission. There is never a moment when a state form is more important than the hungry/homeless/abused person sitting in front of you—except maybe when it’s overdue, and even then you defer to the mission.
What if we can’t afford to pay a vendor?
Brock: Nonprofits with extremely tight budgets will often work through the paperwork on their own. If a nonprofit doesn’t solicit online and has a limited scope of operations, and if their staff can devote the time, it may seem like the best option.
Ify: But if you add up and place a dollar value on the staff time that gets spent struggling with activities that are ultimately outside of the mission, it’s likely that you have more than enough financial resources to afford to outsource—the dollars just need to be reallocated. For smaller organizations that are only registering in one or two states, the budget impact is minimal. If you start with outsourcing at that level, the incremental increases as you grow and expand are more palatable and barely noticeable for all stakeholders.
Brock: I do think a lot of people assume that outsourcing will be much more expensive than it is. I definitely advise anyone in that position to give us a call and find out the actual costs so they can make an informed decision.
What are some risks of managing charitable registrations internally?
Brock: Many clients come to us after they’ve run into an issue with a disclosure or registration requirement. Without a thorough understanding of state requirements, nonprofits can run into problems with incorrect filings, missed deadlines, improper disclosures, and lack of follow-through. All of that can result in penalties or bad public relations.
Ify: I hear from organizations in that position every day. The cost of poorly managed solicitation registration in fines, lost donors, and negative public relations can outweigh the cost of outsourcing.
What do I need to know to make the decision?
Brock: Organizations considering taking this on alone should first ask themselves the following questions:
Ify: Basically, charitable registration should be like any other task—you want to find the most qualified person to do the job. Find the people who are most experienced, know the systems, have the relationships, have the tools, and let them do it.
Too often, executive directors feel that they need to know how to do everything. An executive director just needs to know what has to happen and who the best person is to do it. Outsourcing charitable registration is all part of building a strong team around you.
The Big Picture
In 41 states, your nonprofit must be registered before you begin fundraising activities. Many charitable organizations don’t realize that online solicitations, including everything from social media and crowdfunding appeals to “donate now” buttons on your website, constitute fundraising across the entire U.S. If you engage in any of those activities, you will need to comply with all applicable state registration and disclosure requirements.
If you’re unsure which requirements apply to your nonprofit and where you need to be registered, you’re not alone. Our compliance experts, including Ify and Brock, are available to answer your questions and help you sort out your options. Brock will also be giving a free webinar that will bring you up to speed on the latest requirements. You can register for the next session here.
Charitable registration is an important part of nonprofit management, and one that should be managed proactively and strategically as part of your budgeting process. While many nonprofits manage the tasks in-house to save money, these efforts may not deliver the savings you anticipate due to the costs in staff time, distraction from your mission, and potential errors and penalties. If you would like to learn more about the rules that apply to your nonprofit, what it would cost to manage your charitable registration needs, and the options available to you, contact us or give us a call at 1-888-995-5895.
Download our white paper on Charitable Solicitation Registration, created in partnership with the National Council of Nonprofits.
Ifeoma (Ify) Aduba brings more than 20 years of experience in nonprofit leadership to her position as nonprofit compliance specialist with Harbor Compliance. She currently serves as president of the board of the Pennsylvania Association of Nonprofit Organizations (PANO), board member of the Bucks County Women’s Advocacy Coalition, and president of the administrative ministries team at Doylestown United Methodist Church (DUMC). Ify holds a B.A. in politics from Mount Holyoke College and a master’s degree in nonprofit management from Eastern University.
Brock Klinger leads Harbor Compliance ‘s fundraising compliance sales team. He handles charitable solicitation, professional fundraising, commercial co-venture, and charitable gift annuity client relationships across all jurisdictions and industries. Brock’s work also includes nonprofit formation services, industry-specific and occupational licensing, and corporate lifecycle services. Brock previously worked as an executive search professional focused on legal, compliance, and regulatory assignments for an international retained search firm. He graduated from the Pennsylvania State University with a degree in finance.