Screen out Online Donations from states where your organization is not legally registered

WANTED: an online donations ASP that gives us the ability to control whether or not our organization will accept donations from a given state.

Nonprofits are supposed to, and should, register with state governments to conduct fundraising operations legally within a state.  This applies to both online and offline fundraising.

Problem is there are no uniform requirements about which npos must register in which states.  Moreover the cost of registering annually in all 50 states runs about $2,000 in annual state fees, plus the cost of having someone do the paper work.

The states break up into basically 3 groups:

     1.  a few states have no registration requirements whatsoever for charities (Delaware, Wyoming, Iowa, Idaho, Nevada, Nebraska, Indiana, Vermont, and South Dakota)

     2.  some states reportedly do not enforce registration for online donations

     3.  other states do require and enforce registration for online donations, especially if you’re sending emails to people in their state.

What about the Charleston Principles you ask? 1. They are not law, they are guidelines. 2. They require state registration if ever you actively seek donations in a state  (for instance, through email) as well as if ever you receive regular or significant donations from a state.

So the ability to exclude states in Groups 2 & 3 above, if our organization hasn’t registered in those states, while soliciting within our home state and those in Group 1, would keep us legal.

One solution is practiced by Network For Good Powered By Groundspring.  As a nonprofit themselves, they have registered in all 50 states.  Donations are made, for legal purposes, to Network For Good and then passed on to your charity and thus the legal requirements for registration are met. But what if you want to work with a different provider, and/or you don’t want the name, “Network For Good”, to appear on the donor’s credit card statement?

Another solution is offered by Events.org which gives your organization the ability to choose either to accept donations from all 50 states, or to accept donations from only your home state where presumably you are already registered. But what about donations from residents of the 7 or so states that have no registration requirements?  With this approach you’d have to exclude them along with the others.

The technology for screening against only those states a nonprofit chooses is easy enough to implement.

ClickAndPledge.com has this feature in the works, scheduled for April 2009 implementation.  Qgiv.com says they have it too. A couple of providers indicate they could produce a special script that would do the trick (presumably with a special fee attached).

It’s time for the rest of the providers to get busy and make this a standard feature at no additional charge!