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2012-04-03 Charitable Soliciations
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2012-04-03 Charitable Soliciations

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  • 1. CHARITABLE SOLICITATION REGISTRATION Chip Watkins, Esq. Webster, Chamberlain & Bean, LLP April 3, 2012Thrive. Grow. Achieve.
  • 2. WHO MUST REGISTER? ―CHARITIES‖ • Section 501(c)(3) – 39 states and DC • Section 501(c)(4) – Many states (not DC or California) • Anyone making a ―charitable appeal (Pennsylvania and some other states)Charitable Solicitation Registration/ Page 2
  • 3. WHO ELSE MUST REGISTER? FUNDRAISING CONSULTANTS –25 STATES (PA DEFINITION) • Any person who is retained by a charitable organization for a fixed fee or rate under a written agreement to plan, manage, advise, consult or prepare material for or with respect to the solicitation in this Commonwealth of contributions for a charitable organization, but who does not solicit contributions or employ, procure or engage any compensated person to solicit contributions and who does not have custody or control of contributions.Charitable Solicitation Registration/ Page 3
  • 4. WHO ELSE MUST REGISTER? • Professional Solicitors (Paid Fundraisers) • 40+ states • Any person who is retained for financial or other consideration by a charitable organization to solicit in this Commonwealth contributions for charitable purposes directly or in the form of payment for goods, services or admission to fundraising events, . . . or a person who plans, conducts, manages, carries on, advises, consults, whether directly or indirectly, in connection with the solicitation of contributions, sale of goods or services or the production of fundraising events for or on behalf of any charitable organization, but does not qualify as a professional fundraising counsel . . .Charitable Solicitation Registration/ Page 4
  • 5. WHO ELSE MUST REGISTER? • Commercial Co-Venturers (7+ states) • NJ definition: ―Commercial co-venturer‖ means any person who, for profit or other consideration is regularly and primarily engaged in trade or commerce other than in connection with the raising of funds or any other thing of value for a charitable organization, and who advertises that the purchase or use of his goods, services, entertainment or any other thing of value will benefit a charitable organizationCharitable Solicitation Registration/ Page 5
  • 6. SOLICITATION • Request for contributions • Offer to sell product or service • Announcement of event to benefit charity.Charitable Solicitation Registration/ Page 6
  • 7. EXEMPTIONS RELIGIOUS ORGANIZATIONS • Sometimes from statute • Sometimes from registration and reporting • Churches are exempt in every state. • Church-related organizations that are not required to file Form 990 are exempt in every state except AZ and WV. • Form 990 filers exempt in about 25 states.Charitable Solicitation Registration/ Page 7
  • 8. EXEMPTIONS EDUCATIONAL INSTITUTIONS (SCHOOLS, COLLEGES, AND UNIVERSITIES) • May be exempt from registration in all but 8 states. • Exemption may include affiliated foundations, alumni associations, and booster clubs in 23 states. • Usually requires accreditation • Excludes ―think tanks,‖ etc.Charitable Solicitation Registration/ Page 8
  • 9. EXEMPTIONS • Hospitals (and in some states, affilated organizations) • Membership Organizations • Small EOs whose fundraising is conducted exclusively by volunteers • Gross receipts < $25,000Charitable Solicitation Registration/ Page 9
  • 10. CONTRACT REQUIREMENTS • 20-25 states have verbatim required content for contracts between charities and consultants, solicitors, or CCVs. • 20 states require contracts to be filed with the state. • All contracts related to fundraising should be reviewed for compliance by legal counsel before signing by charity.Charitable Solicitation Registration/ Page 10
  • 11. CROSS-CHECKING • A charity may not contract with an unregistered consultant, solicitor, or CCV. • A vendor may not contract with an unregistered charity. • State will require registration (or proof of exemption).Charitable Solicitation Registration/ Page 11
  • 12. CHARITIES—INITIAL REGISTRATION • Unified Registration Statement accepted by 35 states. www.multistatefiling.org • 10-12 states require supplements • CO, HA, and NM—online only • RI –Submit all document on CD-ROMCharitable Solicitation Registration/ Page 12
  • 13. CHARITIES—ANNUAL RENEWAL/REPORT ABOUT ½ THE STATES ACCEPT THE URS OTHERS REQUIRE THEIR OWN FORMS USUALLY REQUIRES FORM 990 OR 990-EZ AND/OR AUDITED FINANCIAL STATEMENTS. RENEWALS/REPORTS DUE: • Form 990 due date (w/ extensions, usually) • Fixed date • Anniversary of registrationCharitable Solicitation Registration/ Page 13
  • 14. FORM 990/990-EZ • Scrutinized by states • Follow instructions • Use only IRS forms/schedules • No non-standard attachments • Functional expense reporting • Schedule G (Fundraising) • Review by legal counsel before filingCharitable Solicitation Registration/ Page 14
  • 15. DISCLOSURES TO DONORS • 12 require verbatim disclosures in written solicitations. • Many states require disclosure that caller is a paid (or ―professional) solicitor. • Disclosure of FR percentage is not required except in response to a question; must answer truthfully.Charitable Solicitation Registration/ Page 15
  • 16. IRS RECEIPT REQUIREMENTS GIFT OF AT LEAST $250, OR PAYMENT OF AT LEAST $75 IN EXCHANGE FOR A BENEFIT: • Date of gift • Amount of gift • Whether any benefit was received in exchange for the gift • Estimated FMV of any benefit • Statement that deduction is limited to excess of gift over FMV of benefitCharitable Solicitation Registration/ Page 16
  • 17. ―INSUBSTANTIAL‖ BENEFITS • FMV is lesser of $99 or 2% of the amount of the payment • Payment is at least $49.50 and cost of ―token item‖, e.g., calendar, mug, t- shirt, umbrella, key chain, is not more than $9.90 • Charity sends free, unordered items whose aggregate annual cost is not more than $9.90 and tells donor she can keep the items without making a contribution.Charitable Solicitation Registration/ Page 17
  • 18. ―INSUBSTANTIAL‖ BENEFITS • Rev. Proc. 90-12 • Modified by Rev. Proc. 92-49 • Inflation-adjusted annually • See Rev. Proc. 2011-52, Sec. 3.25(2)Charitable Solicitation Registration/ Page 18
  • 19. QUESTIONS?Charitable Solicitation Registration/ Page 19
  • 20. THANK YOU!! CHIP WATKINS, ESQ. WEBSTER, CHAMBERLAIN & BEAN, LLP (202) 688-3548 CWATKINS@WC-B.COMCharitable Solicitation Registration/ Page 20