Using a Professional Fundraiser? What Nonprofits Need to Know

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Posted on November 20, 2017 by Harbor Compliance in Fundraising and Grants, Nonprofit Compliance.

When you need more time, energy, or boots on the ground to realize your fundraising goals, bringing in a fundraising counsel or professional solicitor can provide welcome reinforcement. Yet hiring outside fundraising help imposes specific charitable solicitation registration requirements on both parties. Understanding the types of contracts you can enter into, how they affect registration requirements, and how to stay compliant will ensure that your campaign yields the results you’re hoping for without any unpleasant surprises.

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Compliance Checklist for Nonprofits

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Professional Solicitor Vs. Fundraising Counsel: What Are They?

Both fundraising counsel and professional solicitors are independent contractors hired to help your fundraising efforts succeed. They do not include your nonprofit’s officers, employees, or volunteers, nor do they include legal or financial advisors.

Professional solicitors or professional fundraisers actively participate in solicitation, which is the act of asking for funds. Solicitation can take the form of personal requests for donations as well as emails, phone calls, letters, advertisements, or appeals on websites or social media. It’s important to note that a solicitor doesn’t have to collect or handle funds in order to be considered a solicitor. The act of asking is enough.

Fundraising counsel or consultants provide advice or help with managing your charitable campaign. They don’t actively solicit donations.

Requirements for Professional Solicitors

While state requirements vary, 45 states require professional solicitors to register and provide copies of their contracts before soliciting. Contracts must also be submitted whenever the solicitor enters a new agreement, generally at least 10 days prior to the start of the campaign. Some states require professional solicitors to acquire surety bonds.

In addition, professional solicitors must typically submit a financial report within 90 days after the completion of a charitable campaign, although this requirement also varies by state.

Like many regulated professions, professional fundraising may require licenses for individual solicitors as well as firms. Firm licenses authorize corporations, partnerships, or other entities to provide services within the state. Read the requirements in every state for individual professional solicitors and professional solicitation firms in our comprehensive online license guides.

Requirements for Fundraising Counsel

State requirements for fundraising counsel are similar, though slightly less stringent. A few states require fundraising counsel to secure bonds. To learn more, consult our comprehensive guide to state requirements for fundraising counsel.

Considerations for Nonprofits

Some considerations for nonprofits that hire professional solicitors or fundraising counsel include:

Registration Thresholds: If your charity’s annual revenues are under state thresholds for registration, contracting for outside fundraising help may subject you to new requirements. Be sure to check specific requirements in each state where you solicit before signing any contracts.

Contract Disclosures: Most states require nonprofits, like fundraising professionals, to submit copies of fundraising contracts to state charity offices. With both sides submitting contracts, registration gaps are easy to detect. It’s critical to ensure that your nonprofit is fully registered in every state where it is required.

Oversight: While fundraising professionals are responsible for their own registrations,  it’s wise to ensure that any professionals you hire are fully compliant with registration, bond, and record-keeping requirements in all states where you solicit. Doing so confirms that you’re working with a reliable partner and safeguards your campaign from disruptions.

Lay the Groundwork for Fundraising Success

With proper planning for compliance on both sides, use of outside fundraising professionals can be a great way to take your fundraising efforts to new heights. Regardless of your methods, charitable solicitation registration is the foundation of fundraising success. If you need help managing the requirements, talk to a compliance specialist today.

Want to learn more about charitable solicitation registration? Download our latest white paper, “Charitable Solicitation Registration: Navigating the Complexities,” produced in partnership with Charity Navigator.