In our effort to keep you posted on some of the more important trends and topics for nonprofits, we are occasionally interviewing experts who we think have something to say. Today, we’re blessed to have bring you an interview with Tony Martignetti, Esq. on state registration. If you’re leading a nonprofit, ministry or charity and not thinking about state registration, you need to.
Tony’s been serving the needs of non-profits since 1997, through his work in planned giving and his expertise in state charity registration. He inaugurated the planned giving programs for Iona College in New Rochelle, New York and St. John’s University in New York City. As founder and managing director of Martignetti Planned Giving Advisors, LLC, he leads a company dedicated to supporting compelling non-profit missions.
Tony is a recognized authority on state charity registration and is the author of the e-book “Charity Registration: State-by-State Guidelines for Compliance.” He has been quoted on planned giving and on the laws and trends of charity registration in The Wall Street Journal, Dow Jones Newswires, Bloomberg Wealth Manager, Yahoo! Finance, The Chronicle of Philanthropy, The Nonprofit Times and other respected publications and media outlets…and now equally prestigious, the Oneicity blog.
Oneicity: Thanks for sharing your time and expertise with us. First start by telling us what “state registration” is.
Tony Martignetti: This is the process by which all non-profits comply with the 51 sets of registration rules where they are engaged in solicitation. Washington, D.C. has its own set of rules.
Oneicity: Do all nonprofits have to register?
Tony: All non-profits that solicit must register. The definition of ‘solicitation’ varies across the states but can be neatly categorized. In a good number of states, such as AZ, FL, GA, IL, NY and NJ, the mere presence of a website that accepts donations triggers the registration requirement. Add CA, MA, TX, and others, if your charity induces residents of those states to your website through advertising, email or paper mail. In all states, face-to-face meetings and direct mail are a solicitation.
Oneicity: State registration for nonprofits has been important in the past, but with the recent changes to the federal 990 form, the need for compliance has increased. What are the 990 changes? What are the new questions?
Tony: Look at question 17 in Part VI and question 3 on Schedule G. These require the charity to list the states where they are required to register and the states in which they have registered or have received notice of exemption from registration. Question 17 asks for the states in which the 990 is required to be filed. That is a basic element of registration.
Oneicity: What are the possible ramifications or penalties of not complying with state regulations?
Tony: In some states the penalties are criminal. In FL, failure to register is a 3rd degree felony with up to 5 years in prison and possible $5000 fine. In AZ, where there are very narrow exemptions, it’s a Class 1 misdemeanor. In PA it’s a 1st degree misdemeanor punishable by fine up to $10,000 and 5 years of prison. Other states have civil, not criminal, penalties. In GA, the civil fine can go as high as $25,000. States like NY will issue a cease and desist order, and failure to comply is civil fraud.
Oneicity: Some of our readers have heard of Unified Registration Forms; what’s the URF and will this meet all of an NPO’s reporting requirements?
Tony: The Unified Registration Statement, or URS, is a single form accepted by 35 of the states. It’s a great time saver for non-profits. But, every state that accepts it also has additional requirements that must accompany the URS.
Oneicity: What are some of the unique requirements if an NPO has a website and has a “donate now” option or in some way solicits on their website?
Tony: I covered that above. It depends on every state’s definition of ‘solicitation.’ Additional states that require registration for the mere existence of ‘donate now’ button are AL, KS, KY, ME, NH, plus a few others.
Oneicity: Is state registration a matter of solicitation or where my donations come from, solicited or unsolicited?
Tony: States demand registration for unsolicited donations when they reach a certain threshold, which, sadly, varies from state to state. There are uniform recommendations, called the Charleston Principles, that encourage states to quantify a dollar amount, number of donations, or percentage of total contributions. Sadly, not all states have adopted the recommended principles.
Oneicity: Thanks so much for sharing your expertise.
We’re always grateful to have experts like Tony take time to share. Tony Martignetti, Esq. is the author of Charity Registration: State-by-State Guidelines for Compliance. His book can be found at www.CharityRegistrations.com. The book is an excellent value if you are concerned about the ramifications of not registering.
As you can tell, this state registration thing is not a simple matter. Apply all appropriate disclaimers. Neither Tony nor Oneicity is giving legal or accounting counsel in this blog post…your mileage may vary…consult your own advisers…objects are closer than they appear….BUT don’t ignore this issue.
So, are you registered? Have you prepared for the new 990 (we blogged about it here)? As always, we want to know what you think.