Charitable Fundraising

Charitable and Civic Fundraisers and organizations that solicit funds on behalf of charitable and civic organizations are regulated by the Internal Revenue Service, the Federal Trade Commission, and the states. If you are planning a cause marketing or charitable sales promotion or a charitable fundraiser, you need to carefully consider the charitable fundraising and solicitation regulations that may apply. 

The IRS is pursuing a policy of revoking the tax exempt status of organizations that cannot show they meet the requirements or have failed to file required annual reports. Under current statutes the IRS does not have any discretion and must cancel or deny the tax exempt status of any organization that is out of compliance. The IRS has a very short, specific instructions that all tax exempt organizations must follow and also has announced special help for revoked organizations. Information can be found on the IRS website. States have followed suit. Charities can complete and electronically file IRS Form 990, 990-EZ, 8868 (extension request) and State Charity Registration Forms online at efile.form990.org.

If you collect donations or are instrumental in a campaign to collect funds for a unqualified recipient, you may be subject to state and Federal legal actions, be required to return the donated funds, be subject to other civil and criminal penalties. If a commercial company works with a charitable or civic organization, it may be subject to commercial co-venturer rules, fundraising rules, and charity and charitable fundraiser regulations that vary by state. If you are judged to be a commercial co-venturer or a charitable fundraiser, even it this happened inadvertently, there can be serious penalties and other legal consequences.

The National Association of State Charity Officials is a good place to start when considering a charitable fundraiser, a charitable sales promotion or a cause marketing campaign.

These articles provide additional information identifying the issues you must review:

State Registration

Be sure your fundraising or sales campaign is properly registered with the states where the campaign will be conducted or where entries or solicitations will be accepted. The National Association of State Charity Officials list of US Charity Offices is an excellent resource.

Sales of Raffle Tickets or Charging Fees for Games of Chance

If you sell or accept donations for a single raffle ticket, even if you give all the other tickets away for free, you may need to qualify as a charity or a charitable fundraiser and register your fundraising campaign. If not you may be in violation of the law. If you charge to participate in a game of chance, you may be in violation of the law.   

Fundraising on the Internet

If you accept donations on the internet, be sure you comply with the rules of the host platform such as Facebook and Twitter.