Hiring a Professional Fundraiser
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Before your nonprofit hires a professional fundraiser to solicit donations, both the nonprofit and fundraiser must comply with state charitable solicitation laws. This article outlines what your nonprofit must do to comply.
Who are professional fundraisers?
Professional fundraisers, professional solicitors, and professional fundraising consultants are the companies and individuals in the business of providing fundraising services. Telemarketing, direct mail, and door-to-door professionals that your nonprofit can hire all fall under this umbrella. For simplicity, this article refers to all of these companies and individuals as "professional fundraisers". In 45 states, professional fundraisers are regulated by charitable solicitation laws. Professionals who have contact with the public (they solicit for you) face the largest amount of scrutiny. Professionals who help you plan or manage solicitation without interacting with the public face less scrutiny.
What are charitable solicitation laws?
In order to protect donors, states require nonprofits and professonal fundraisers to register before soliciting residents. Nonprofits are regulated by laws in 39 states and D.C. Professional fundraisers are regulated by laws in 45 states.
What must the nonprofit do?
The nonprofit carries the primary burden for lawful compliance of solicitation efforts and can face fines and penalties for noncompliance. It must:
- Register before it solicits or has a professional fundraiser solicit on its behalf. Registration must be submitted in each state where solicitation will occur. See our state-specific guides in the sidebar for filing instructions, forms, and fees.
- Include required disclosures to donors.
- Disclose professional fundraiser contracts to the state authority, where required. Be mindful of the timeline for disclosing new and amended contracts.
- Maintain your fundraising license by filing annual renewals and financial reports.
What must the nonprofit do to oversee professional fundraisers?
Professional fundraisers should independently comply with registration, reporting, and disclosure requirements outlined by charitable solicitation laws. Nevertheless, before hiring any professional fundraiser, it is good business sense to audit their compliance. Ensure any professional fundraiser you hire is compliant with registration, bond, and record-keeping requirements. Confirm their fundraising registration is on file with the state and up-to-date (many states maintain a public website where you can check). Discuss their knowledge of and compliance with their legal duties. Always document your contracts with professional fundraisers in writing. You may need to file each new contract with a professional fundraiser with the state authority. Contracts filed with the state are publicly available.